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Orica Ltd

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Morningstar Rating for Stocks Fair Value Economic Moat Capital Allocation

Placing Orica Under Review

Orica expects fiscal 2015 earnings to be 10% to 15% below broker consensus at AUD 415 to AUD 440 million, considerably below our last AUD 528 million forecast. Approximately AUD 40 million reflects one-off items, including increased environmental provisions and reduced asset sales compared to the previous year. There are also additional one-off costs associated with acceleration in the transformation program to drive gross benefits. But adverse price resets are a key driver of the downgrade, and these affect our longer-term investment thesis.

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