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Incitec Pivot Ltd’s first-half net profit has slumped 41 per cent. The explosives and fertiliser maker slashed its dividend as weaker sales, falling materials prices and restructure costs hit the company.

Net profit for the six months to March 31 dropped to $99.6 million from $169.8 million in the previous corresponding period.

Incitec cut its interim dividend by 79 per cent to 2.1 cents per share, down from 10.2 cents the year before.

Incitec said challenging trading conditions were likely to continue in the second half of the fiscal year 2009, even if moderated by the lower Australian dollar.

The company took an after-tax charge of $70.2 million. Of that, $34.6 million resulted from writing down the value of phosphate-rock prices on Incitec’s books to net realisable value, after demand for fertilisers slumped.

A further $20.5 million charge related to the integration of Dyno Nobel, and $11 million was written off for the early closure (at a date to be fixed) of the Cockle Creek superphosphate plant, on Lake Macquarie in NSW.

Incitec said it had changed its dividend policy, and will now pay out 20 to 40 per cent of net profit because of the need for prudence in current economic conditions.

The company’s first-half sales revenue more than doubled to $1.71 billion from $749 million the year before. This was largely because the Dyno Nobel business, which Incitec bought in June last year, contributed to sales for the first time.

Explosives revenue grew 42 per cent to $1.01 billion as the slump in the Australian dollar boosted takings. Explosives revenue in US dollars fell five per cent to $US679.2.

Dyno Nobel contributed $128.9 million to before-tax earnings.

Fertiliser revenue fell seven per cent to $697.1 million, while earnings before interest and tax slumped 43 per cent to $143.3 million as a persistent drought on the east coast of Australia and uncertainty created by falling commodity prices restricted planting volumes.

Incitec benefitted from its integration of Dyno Nobel, with savings of $54.3 million as the company integrated head offices and reduced overheads and assets.

The company’s total borrowing costs more than tripled to $59.3 million, mainly because of the debt Incitec used to buy Dyno Nobel.

Interest cover declined to 11.5 times from 13.3 times the year before.