(Updates with details on sale, full-year earnings)
SYDNEY, Nov 19 (Reuters) - Australian explosives maker Orica Ltd said on Wednesday it had agreed to sell its chemicals business to funds advised by U.S. private equity firm Blackstone Group LP for A$750 million ($653 million).
Orica also reported a 2 percent increase in full-year statutory net profit to A$602.5 million, from A$592.5 million, and said that volatility and uncertainty in global resources markets made it difficult to provide guidance for the full year ahead.
“However, the company does not expect a significant improvement in the resources market, reinforcing the requirement for the company to achieve its transformation objectives,” Orica said in a statement.
Orica said in August that it had decided to sell or spin off its chemicals business, realising a long-held plan to become solely a mining business.
At the time, it said it was leaning toward a demerger, but said on Wednesday a sale “would likely result in higher and more certain value for shareholders.”
The chemicals business sale, which fell short of analyst price estimates of as much as A$1 billion, includes the chemicals trading businesses in Australia, New Zealand and Latin America and the Australian Chloralkali manufacturing business. It also includes food and nutrition supplier Bronson & Jacobs.
Its 2 percent rise in profit for the year ended Sept. 30 was in line with guidance provided by the company, which also lifted its full-year dividend by 2 percent to A$0.52.
Orica said it planned to cut 500 jobs next year, adding to 1,300 positions that have been axed over the past two years.
Combined with other cost cutting, that could result in pretax financial benefits of between A$140 million and A$170 million next year and a further A$60 million to A$80 million in 2016, the company said.
“Orica’s cost base is being reset and the company better positioned to meet customers’ needs in dynamic market conditions,” Managing Director and Chief Executive Ian Smith said in a statement. “This process will also allow Orica to capture the benefits of any improvement in the commodity cycle.”
Orica expects the chemicals sale, which is subject to approval from Australia’s Foreign Investment Review Board (FIRB) and New Zealand’s Overseas Investment Office, to be finalised in the first quarter of next year.
1 US dollar = 1.1471 Australian dollar Reporting By Jane Wardell; Editing by Steve Orlofsky