26 February 2007

Dyno Nobel net profit exceeds prospectus forecast

Dyno Nobel today announced and EBITDA result of US$175.4 million and a net profit after tax of US$83.3 million for the full year ended 31 December 2006.  This result is prepared on a statutory consolidated basis.

The table below also provides the Company's pro forma (equity accounted) prospectus forecast prepared as part of the listing on the ASX in April 2006, and the Company's pro forma (equity accounted) actual result for the year 2006.  On a pro-forma basis, EBITDA for the year was US$192.0 million, delivering a net profit after tax of US$91.2 million.  This exceeds the prospectus target of US$82.8 million.

A maiden dividend of 2.8 AU cents will be paid in April 2007.

Dyno Nobel Chief Executive Officer, Mr. Peter Richards, said he was delighted with the results.  "The results reflect a successful inaugural year across the business, a year in which Dyno Nobel delivered on its strategy, laid the foundation for growth and exceeded prospectus forecasts.

"The events of the past year have transformed our business and importantly, our success has been achieved by focusing on our core value of safety and the hard and clever work of all our employees," said Mr. Richards.

By the end of 2006, Dyno Nobel had finalised ten acquisitions across North America which, according to Mr. Richards, contributed to improving distribution capabilities, achieving operational efficiencies and expanding the Company's footprint across the customers' value chain.  "We are already benefiting from the synergies these acquisitions are delivering," Mr. Richards added.

Subsequent to financial year end, the Fabchem acquisition, in which Dyno Nobel acquired a 29.9 percent stake in the Chinese explosives manufacturer, will give the Company a strong platform for entry into China and more broadly, the Asian market.

The recent announcement to proceed with the Dyno Nobel Moranbah (DNM) project, an ammonium nitrate (AN) plant in Moranbah, Queensland, will position Dyno Nobel as the leading low cost supplier in the Bowen Basin area of Queensland.  "Coupled with our Queensland Nitrates facility joint venture (QNP), we now have unparalleled access to what arguably is the largest concentrated AN market in the world.  The support of three global mining companies gave the Company the confidence to go ahead with DNM which will transform our business in Australia by generating significant new manufacturing margins," said Mr. Richards.

Mr. Richards said "Dyno Nobel has established a solid foundation upon which our future success will be built.  The macro indicators also point to a favourable climate which translates into a strong demand for Dyno Nobel's products and services."

Dyno Nobel entered the S&P/ASX 100 in December 2006.

-ENDS-
For media enquires contact:
Gloria Barton, Cannings 0413 520 603

Operational Review
North America
Consolidated sales revenue for the year ended 31 December 2006 from continuing operations was US$1,037 million on a pro-forma equity basis, which is 6.8 percent ahead of the prospectus forecast, and underpinned by slightly improved volumes.  The higher revenue delivered and EBITDA of US$165.9m which is 1.7 percent above the prospectus forecast.

Dyno Nobel's North American business performed well with solid demand despite the softening of the US housing market which contributes ~8 percent of revenue.  The AN plant operated at record production levels.  Seismic demand was also very strong in 2006, particularly in Canada.

The pull-through and synergy benefits of the acquisitions made during the year were consistent with expectations and the focus on operational initiatives, such as the integration of the Spanish Fork booster business, provided significant operations efficiencies.

Dyno Nobel is building two new shock tube lines to meet the growth in demand for initiating systems, while the expansion of the Cheyenne ammonium nitrate plant is on track and on budget.

Asia Pacific
Consolidated sales revenue for the year ended 31 December 2006 from continuing operations was US$221 million on a pro-forma equity basis, which is 2.6 percent ahead of the prospectus forecast.  The revenue delivered EBITDA of US$28.6m, which is 11.2 percent above prospectus and reflects a slight improvement in gross margins.

Dyno Nobel's Australian operations performed strongly, particularly in the Coal and Iron Ore sectors, while over US$45 million of new business was acquired in targeted market sectors in the Asia pacific region.  QNP also contributed strongly in the second half.

The electronic detonator joint venture has not delivered in line with expectations in 2006 due to a slower penetration of markets resulting from delays in bringing technology improvements into the market place and a stronger than expected competitive environment.  The 2006 result was a loss of US$3.4 million (pro-forma on a 50 percent basis) compared to the prospectus loss estimate of US$2.6 million.  Restructuring measures were taken late in the year ensure that Detnet delivers a break even result in 2007.

Outlook
Looking forward, Dyno Nobel expects to enjoy solid growth in its core business, benefiting from capacity expansions, efficiency enhancements and continued strong global demand for resources.  In addition, several exciting opportunities exist for re-entry into exited markets through acquisition.

Background
Dyno Nobel (ASX-DXL) is a leading supplier of industrial explosives and blasting services to the mining, quarrying, seismic and construction industries.  Dyno Nobel is the market leader in North America - the largest explosives market in the world - and the second largest supplier in Australia - the third larges explosives market in the world.

Dyno Nobel employs more than 3,500 people and has 36 manufacturing facilities in Australia, Canada, the US and Mexico.  Dyno Nobel has a market capitalisation of approximately AU$2 billion.  Dyno Nobel is renowned for its excellent safety performance and as a provider of innovative explosive products and services, which together deliver groundbreaking performance for its customers.