Orica's Supply Chain Scare Gives Way to a Record Result and a Hydrogen Milestone

Ammonium nitrate supply disruption and currency headwinds hit the stock hard, before premium product adoption and a green hydrogen FID drove a sharp recovery.

6 Oct 2026 · 3 min read

Orica fell nearly 15 to 17 percent in the March quarter on ammonium nitrate supply issues from its major US supplier and a stronger Australian dollar, even as fund managers used the weakness to build new positions, before a record half-year result and a green hydrogen project reaching final investment decision drove a strong recovery through mid-2026.

Supply chain disruption and FX headwinds hit a strong operating base

Pendal Group said the stock fell 14.7 percent even as its first-half update was modestly positive at the operating level, with core trading sound and Mining Chemicals and Digital Solutions expected to deliver EBIT growth of 15 percent and 20 percent respectively, while Explosives EBIT was expected slightly below the prior period due to the absence of a one-off carbon credit benefit. Investors Mutual Limited said the stock dropped 17.4 percent after guidance flagged the stronger Australian dollar would hit earnings, though it believes longer-term prospects remain strong, and trimmed its position early in the quarter. Paradice Investment Management said Orica de-rated on ammonium nitrate supply issues from its major US supplier, with emerging currency headwinds leading several brokers to cut earnings estimates, though the fund stayed overweight and also initiated a new position in fellow explosives maker Dyno Nobel.

Orica saw a de-rating during the quarter on the back of ammonium nitrate supply issues from its major US supplier. Emerging FX headwinds led to earnings downgrades from several brokers.

— Paradice Investment Management, Monthly Report, March 2026

Fund managers see an opportunity in the disruption

Pengana Capital Group said it continued building its position, viewing the nervousness over ammonium nitrate supply chain disruption and customers' mining operations as an opportunity, while Oracle Advisory Group bought a new position during the quarter. Ten Cap, which had performed strongly since its initial March 2025 purchase, used the opportunity to reduce its position as valuation became more stretched, while noting near-term pressure from feedstock sourcing issues in certain markets expected to weigh on costs. Airlie Funds Management said the combination of a broad February and March repricing of quality businesses had thrown up new opportunities, including establishing a position in Orica.

A valuation debate at the top of its range

Medallion Financial held at hold, noting the stock sits toward the top end of its long-term price range with valuation the highest it has been in some time, describing a company that boomed during the mining boom through to the GFC and has largely gone sideways since, never fully recovering from the subsequent slowdown in mining investment, while pivoting somewhat toward being more of a mining technology and services business.

This is a company that really boomed during the mining boom, throughout the GFC and the years after, and it's basically been going sideways ever since, never fully recovering from the slowdown in mining investment.

— Medallion Financial, Article, June 2026

A record result and a hydrogen milestone

Investors Mutual Limited said Orica rose 19.5 percent following a record half-year result in May, with first-half underlying net profit up 8 percent, driven by growing adoption of premium blasting products and digital technology offerings amid robust gold and copper markets, with management guiding to full-year earnings growth across all divisions. Pendal Group said the stock rose 1.9 percent after Orica reached a final investment decision on its 50 megawatt Hunter Valley Hydrogen Hub, supported by federal and state government grants including a ten-year, $432 million funding commitment from ARENA's Hydrogen Headstart Program, to be built between 2026 and 2029 with first production expected in 2029, ultimately replacing around 7.5 percent of natural gas usage once at full production.

First-half underlying Net Profit after Tax (NPAT) was up +8%, driven by growing adoption of Orica's premium blasting products and digital technology offerings amid robust gold and copper markets.

— Investors Mutual Limited, Quarterly Report, June 2026

What fund managers say they are watching next is resolution of the ammonium nitrate feedstock sourcing issues, continued adoption of premium blasting and digital technology products amid strong gold and copper mining activity, delivery of the Hunter Valley Hydrogen Hub through its 2026-29 construction period, and whether the stock's now-elevated valuation proves sustainable.