Dyno Nobel née Incitec Pivot (DNL): Today, the global fertiliser and explosives manufacturer reported their full-year 2025 results, which provided few surprises as the profit result was pre-released. Overall, a solid result, but with a lot going on as the company pivots away from fertiliser to focus exclusively on explosives. The HNW Core has a 3.6% weight to DNL.

 Key Points:

  • Solid Underlying Earnings: NPAT increased by 6% to $ 423M at the top end of guidance. More importantly, earnings per share rose by 10% due to market share buybacks that have reduced the share count. Explosives in Australia and North America were relatively solid; fertilisers were stronger than expected in the second half, driven by higher DAP prices.
  • Asset Sales:  Cash from the asset sales announced in May has started to flow into the company’s coffers in late 2025. This will be used to fund further share buybacks. The last remaining fertiliser asset is the Phosphate Hill DAP plant, with the company saying that they are negotiating with
  • Capital Management: In FY25, the company’s $1.4 billion capital return program has already returned $930 million to shareholders, with $470 million remaining to be distributed. This share buyback will recommence tomorrow.
  • US Expansion funded by Trump!: DNL is expanding its TNT manufacturing capabilities by building the first TNT plant in the United States since the 1980s, located at its facility in Kentucky. Unusually, the US government is funding the US$435 million construction cost to reduce US reliance on imported TNT, with first production due in 2027. This will satisfy DNL’s demand for TNT and give the company a revenue stream for operating the plant, a very attractive and capital-light prospect for DNL shareholders.
  • Dividend Up: FY25 dividend up +12% to 11.9 cps. The low 51% payout reflects both low franking credits due to offshore earnings and a company preference to return capital to shareholders via share buybacks and tax-effective returns of capital.
  • Why is the Stock Up: The shift towards less volatile earnings from explosives has seen DNL provide earnings guidance for the first time, with prior periods influenced by volatile fertiliser prices. Management has guided to FY26 profit growth between +6-15% with EPS growth above that due to share buybacks.

CEP Strategy:  DNL is Australia’s largest manufacturer of fertilisers, supplying around 50% of the nation’s fertilisers, though not for much longer. Additionally, DNL is the world’s second-largest manufacturer of explosives used in mining, quarrying, and construction and the largest in the USA. DNL takes advantage of lower US natural gas prices via their new ammonia plant in Louisiana. DNL offers us exposure to a well-run global chemical company that benefits from US shale gas, improving demand for Australian agricultural produce and a falling AUD. DNL trades on 13x earnings and a dividend yield of 4%. In the near term, we would expect DNL to continue to re-rate higher as a pure explosives business similar to Orica, as selling the fertiliser will reduce earnings volatility.

 DNL finished up +7.8% to $3.46.