The Incitec Pivot Ltd (ASX: IPL) share price is tumbling lower in early trade after an update on the Waggaman Ammonia Plant. At the time of writing, the Incitec share price is trading at $2.68, down 8.22%.
Image source: Getty Images
Why is the Incitec Pivot share price under pressure?
Shares in the Aussie explosives, industrial chemicals, and fertiliser manufacturer are currently the worst performing amongst the S&P/ASX 200 Index (ASX: XJO).
The big catalyst was an update from its Waggaman ammonia plant. On 15 February 2021, Incitec expected to recommence operations at the plant by mid-March. This was after the first planned turnaround since commissioning the plant in 2016.
After mechanical completion of the turnaround on 6 March, Incitec shutdown the plant on 17 March following a dry gas seal failure and vibrations in the turbine.
Incitec said further investigations are underway into the root causes of both issues and repairs are also underway. Incitec now expects production to recommence at Waggaman by mid-April.
The update has seen investors push the Incitec Pivot share price lower, tumbling nearly 10 per cent in early trade. Incitec said there would be further adverse impact due to the delays.
The Aussie manufacturer is expecting an earnings before interest and tax (EBIT) impact of $36 million in FY2021. On a net profit after-tax basis, the total impact is $28 million per today's release.
Incitec will depreciate the finalised $80 million turnaround cost over a four-year period. That depreciation impact has been incorporated in the FY2021 earnings updates.
Those numbers have put the Incitec Pivot share price under pressure as the S&P/ASX 200 Index climbs higher today. The benchmark Aussie index has gained nearly 1 per cent today in a strong return to trade after Easter.
Corporate Travel Management Ltd and Chorus Ltd (ASX: CNU) are among the other ASX 200 shares to fall in today's trade. Cleanaway Waste Management Ltd (ASX: CWY) was leading the gainers as at the time of writing.
