(Reuters) - Australia's Orica Ltd <ORI.AX>, the world's No. 1 supplier of commercial explosives, said on Monday annual underlying profit fell 1 percent due to higher raw materials costs and a stronger local currency.
Orica said consolidated underlying profit before individually material items for the year ended Sept. 30 was A$386.2 million ($295.29 million), compared to A$389.1 million a year ago.
Increases in gas and ammonia prices reduced margins by A$59 million from a year earlier while a stronger local dollar shaved A$15 million off pre-tax profits in 2017, the company said.
Production in the company's Australia Pacific and Indonesia segment rose, offsetting the impact of rising input commodity prices.
"While the mining sector has begun to recover and mine plans are beginning to normalise, the 2017 year continued to be challenging, with substantial headwinds across every region," Orica CEO Alberto Calderon said.
The company declared a final dividend of 28 Australian cents per share, down from 29 cents per share a year earlier.
In 2016, the company abandoned its policy of never cutting dividends and switched to a payout ratio of 40 percent to 70 percent of underlying earnings to shore up its balance sheet and stave off a credit downgrade.
The company said it expects current headwinds to extend into 2018 and capital expenditure to be at the upper end of its stated range of about $300 million to $320 million.
(Reporting by Nicole Pinto in Bengaluru, Editing by Byron Kaye and Paul Simao)
