By Rhiannon Hoyle

Australian explosives giant Orica said it will buy back up to 400 million Australian dollars (US$252 million) in shares on market, reflecting the company's confidence in its fiscal strength and outlook.

Chief Executive Sanjeev Gandhi said the buyback is in line with a refreshed capital management framework announced in an investor day presentation Wednesday, under which Orica will retain its dividend payout ratio target of 40% to 70% of underlying earnings. It will continue to look at options for share buybacks in future.

"We have continued to deliver consistent profitable growth and improved cash flows, supported by strong demand for our innovative products, technologies and services across the global mining and civil infrastructure value chains," Gandhi said.

It has been nearly a decade since Orica bought back shares. The company has been expanding and diversifying its operations in an overhaul that included eight acquisitions in four years, as it sought to grow beyond its core blasting operations in specialty chemicals and digital technologies.

The buyback is expected to start on or after March 28 and be conducted over up to 12 months. It "demonstrates the board and management's confidence in Orica's financial strength and outlook now and into the future," said Gandhi.

Market conditions will dictate when and how many shares Orica purchases under the buyback.

Analysts widely expected the company to buy back shares after Gandhi last year announced a review of Orica's capital allocation framework, a guide for how it allocates cash to meet strategic goals.

"We needed a lot of capital for M&A," Gandhi said in an interview in November. "Now all of that is done, so I think it's a good time to start thinking about the other tools in our toolbox, including buybacks."

Orica's recent deal-making spree has given it a foothold in the U.S. market, including sodium cyanide manufacturing plants in Nevada and Texas.

Gandhi has previously highlighted the appeal of the U.S. market for Orica, saying it has abundant energy supplies, a large and growing population, and massive infrastructure investment plans, including in data centers to support the development of artificial intelligence.

Orica reported a 77% jump in annual net profit for the year through September. Its final dividend was up by more than half compared to a year earlier and represented 59% of underlying earnings.

The company introduced its earlier capital management framework in fiscal 2016, which included replacing a progressive dividend policy with its current policy to pay shareholders between 40% and 70% of underlying earnings.

Orica on Wednesday said directors approved the suspension of its dividend reinvestment plan, which will be reinstated later at a time determined by the board.

Orica said it remains committed to keeping a strong balance sheet consistent with a investment-grade credit rating. It will target leverage--net debt divided by earnings before interest, taxes, depreciation and amortization--of between 1.25-2.00 times, excluding leases.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

(END) Dow Jones Newswires

March 11, 2025 18:34 ET (22:34 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.