Incitec Pivot Ltd T.IPL

RE:Four take aways from the news release

[graffiti99]

hawk35 wrote:
1.  Decision not to sell Storage is not because of a lack of interest.  Virus makes due dillegence process impossible.  You can hardly do site visits and intensive meetings with accountants and auditors when everyone is under lock down / isolation.  Sale process could be restarted post virus.

2.  Company is considering taking on a partner for Heartland.  Evidently they have been open to this for the last year.  Now, since the project has passed the half way milestone, potential partners would find this opportunity much more attractive with less project risk.

3. Dividend cut was higher than the 50% I was expecting.  However the savings from the dividend will finance Heartland to completion without a partner and without the sale of Storage.  The company stated "they will look for opportunities to increase the dividend in the future as business conditions permit." 

4.  These changes do not suggest problems in the core business.  Take or pay is still strong and company expects the core business to perform well.

A good summary. I too was expecting a 50% cut, maybe hoping for no cut, so 72% is a bit of pain. However this is textbook if you’re forced to cut. Get everything done in one shot. What you don’t want to do is keep cutting and keep cutting. Seems likely to me that eventually the pandemic will end, opec + will resolve, heartland will move forward and the cash flows will justify dividend increases. Still, tough day for IPL shareholders