Dyno Nobel's (ASX:DNL) planned exit of its Phosphate Hill plant in Queensland by the end of fiscal 2026 may create an earnings gap, with a material drop in earnings per share projections for fiscal 2027 despite progress at Dyno Explosives, Jefferies said in a note on Monday.
The brokerage, however, raised its fiscal 2026 earnings per share estimates by 7%, driven by a 20% jump in the plant's core profit due to higher production and lower costs.
The company reported Monday fiscal 2025 earnings of AU$0.226 per share excluding material items, up from AU$0.207 a year earlier.
"The absence of sufficient organic growth to fully offset the earnings hole will likely shift capital allocation attention to M&A (mergers or acquisitions) beyond the next 6 months, in our view," said analysts at Jefferies.
However, obvious mergers and acquisition targets remain unclear for the company's explosives business.
Jefferies maintained its hold rating and price target of AU$3.38 for the company.
Dyno Nobel's shares were down nearly 1% in recent Tuesday trade and earlier reached their lowest since February 2023.
