ORI Shareholders: A Five-Year Lesson in Patience and Persistence

As a shareholder in Orica (ASX:ORI), you might be feeling a bit disheartened if you invested five years ago. The company's share price has fluctuated, and while it has seen some growth, it has not kept pace with some of its peers in the dividend stock sector. However, it is essential to remember that investing is a marathon, not a sprint, and that long-term success often requires patience and persistence.

Orica, a global leader in specialty chemicals and blasting solutions, has faced various challenges over the past five years, including changes in commodity prices and market demand, as well as strategic changes and acquisitions. These factors have contributed to the company's financial performance and dividend growth. Let's take a closer look at how Orica has evolved during this period and what shareholders can learn from this experience.

1. Commodity Prices and Market Demand: Orica's financial performance has been positively impacted by sustained high commodity prices and strong market demand for its products and services. However, these factors have also presented challenges, as changes in commodity prices can affect the company's earnings and dividend growth. For instance, in the half year ended 31 March 2023, Orica reported underlying earnings before interest and tax (EBIT) of $323 million, up 32% on the prior corresponding period (pcp). However, the company's revenue growth rate of 0.33% is significantly lower than the industry average, which may have impacted its ability to increase dividends at a faster pace or invest in growth initiatives.
2. Strategic Changes and Acquisitions: Orica has made several strategic changes and acquisitions in recent years to improve its dividend growth and overall performance. These include the acquisition of Axis, a digital solutions company, which has opened up new international markets for Orica and contributed to the company's growth. Additionally, the acquisition of Terra Insights, a data analytics and visualization solutions provider, has driven strong adoption of digital solutions and contributed to the growth of Orica's Digital Solutions segment. Furthermore, the acquisition of Cyanco, a sodium cyanide producer, has expanded Orica's product offerings and helped the company to tap into new markets. These strategic moves have helped Orica to improve its earnings growth and maintain a strong return on net operating assets (RONA) of 12.8%.
3. Dividend Payout Ratio and Earnings Growth: Orica's dividend payout ratio has remained relatively consistent over the past five years, with the company maintaining a payout ratio of around 50%. This payout ratio is in line with the company's historical payout ratio and is comparable to the average payout ratio in the mining services industry. However, Orica's earnings growth has been slower compared to its peers, with the company reporting earnings per share (EPS) growth of around 5% over the past five years, while the industry average is around 10%. This slower earnings growth may have contributed to Orica's underperformance compared to other dividend stocks in the sector.



In conclusion, Orica's share price performance over the past five years has been a lesson in patience and persistence for shareholders. While the company has faced challenges and underperformed compared to some of its peers, it has also demonstrated resilience and growth through strategic changes and acquisitions. As a shareholder, it is essential to maintain a long-term perspective and focus on the company's fundamentals, rather than being swayed by short-term fluctuations in the share price. By doing so, you can better position yourself to benefit from the company's growth and dividend payouts in the years to come.

As Orica continues to evolve and adapt to the changing market landscape, it is crucial for shareholders to stay informed and engaged with the company's progress. By doing so, you can make more informed decisions about your investment and better navigate the ups and downs of the market.