Orica (ORI) – Finding the solution

Orica manufactures, distributes, and sells commercial blasting systems, explosives, mining and tunnelling support systems to the mining industry, and various chemical products and services in Australia, Canada, the US, and internationally. The company was formerly known as ICI Australia and changed its name to Orica in February 1998. Orica was founded in 1874 and is headquartered in East Melbourne, Australia.

Orica (ORI) met market expectations when it posted its highest earnings before interest and tax (EBIT) in more than a decade in FY25, underpinned by solid demand for its specialty chemicals and explosives products, tighter cost control, and a more balanced supply-demand equation in the ammonium nitrate market. The company, which added another $100 million to its share buyback program, guided to FY26 EBIT growth “across all segments”, buoyed by strong fundamentals in the gold and copper sectors that make up around half of its group sales. Orica also firmed up its divisional medium-term outlook as follows:

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Blasting solutions – EBIT growth is now expected above that of GDP “through the mining cycle”, supported by improved product mix, wider margins earnings and technology benefits, up from previous guidance of just ‘growth’;

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Digital solutions – Growth in EBIT is now forecast to be in the mid-teens, up from low double-digits previously, as customer adoption accelerates and exploration activity increases; and

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Specialty chemicals – EBIT growth is now guided to high single-digits, up from mid-single-digits prior, buoyed by strong mining sector activity, especially in the gold industry.

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Post the result, we have raised our EPS estimates by 2.1%, 2.3% and 8.5% for FY26, FY27 and FY28, respectively, to incorporate higher earnings assumptions for the specialty chemicals and blasting solutions divisions, which leads us to raise our target price to $26.00 from $23.00. We maintain our Buy on Orica.