ORICA has flagged a hefty $367 million write-down in the value of its Minova equipment division, before the release of its earnings on Monday.
The write-down will slash its annual net profit for the year to September to $400 million, it said. This is well down from analysts' forecasts of a net profit of about $650 million for the year.
Orica's announcement came after the close of the market and is likely to weigh on the stock on Monday morning. Shares closed 18¢, or 0.7 per cent, lower at $25 on Friday.
The net profit before the write-off is expected to be $650 million, it said, which is up marginally from last year's net profit of $642 million.
No reason was given for the write-off.
Minova, which sells items such as steel bolts and resin capsules for roof support in underground mines, has struggled to perform since Orica paid $857 million for the business in 2006.
There has been ongoing speculation over the past few years of a possible write-down against the book value of the group, and the write-down is also likely to trigger a new bout of speculation of the sale of the unit.
The shares of mining services companies, including Orica, have been hit in recent months by collapsing bulk commodity prices, weak capital markets and the clouded outlook for both Chinese and global demand for resources.
Orica had earlier said the temporary shutdown of its Australian Kooragang Island ammonia and ammonium nitrate plants because of chemical leaks had reduced earnings before interest and tax by about $90 million.
Previewing Orica's earning result in a research note published on Thursday, JPMorgan analyst Stuart Jackson said he expected a further decline in Minova's earnings ''driven by intense discounting'' by increased competition for falling sales volumes.