![James Fazzino is preparing to leave the fertiliser and explosives giant after 14 years with the company.](http://web.archive.org./web/20170714231245/http://www.afr.com/content/dam/images/g/w/0/u/6/f/image.related.afrArticleLead.620x350.gxamc8.png/1499931816277.jpg)
Incitec Pivot is closing in on the appointment of a new chief executive to replace its long-serving Valiant-driving boss James Fazzino.
Fazzino is preparing to leave the fertiliser and explosives giant after 14 years with the company. He announced plans in February to step down, triggering a search for his replacement.
It is believed the board initially favoured an external candidate but attention is turning to internal frontrunner Simon Atkinson. There was concern an external candidate would shake things up too much at a time when the company is running smoothly. Shareholders want management to focus on the company's existing assets, such as its new ammonia plant in the US state of Louisiana.
The low-profile Atkinson joined the company from Orica in 2003. He has a lot of commercial finance experience and is currently president of Dyno Nobel Asia Pacific & Global Technology, and in 2016 was appointed president of the group's Asia Pacific downstream business.
Whoever replaces Fazzino will have big shoes to fill.
The former accountant and car enthusiast, who regularly appears in the finance press to talk about his Valiant collection, stood out in the CEO landscape because he was not afraid to speak his mind when it came to government policy.
More expensive
He put his money where his mouth is by opting to invest $1 billion building a new plant in Louisiana instead of New South Wales where it would have been a lot more expensive.
He is leaving the company in good shape, which means the board will want to pick a replacement who will not rock the boat. Incitec shares rose 5.3 per cent to $3.58 on Thursday after UBS upgraded the stock to a buy. The stock rose 1.8 per cent on Tuesday and a further 1.5 per cent on Wednesday.
Another big Australian explosives maker, Orica, learned the hard way what can happen when you pick the wrong guy to run a company which did not need fixing.
Apart from an environmental issue at the company's NSW ammonium nitrate plant, Orica's former boss Graham Liebelt had the company running smoothly when he stepped down in 2011. He was replaced by Ian Smith, who wanted to overhaul things at the company but ended up departing suddenly as the spotlight turned on his sometimes aggressive and confrontational management style.
Incitec chairman Paul Brasher will be mindful of the Orica situation when he selects Fazzino's replacement.
Volatile commodity prices
UBS analysts upgraded the stock this week to reflect the cashflow from around $2 billion it has invested in new projects at Moranbah in Queensland and Louisiana since 2010. While UBS says the cashflow from those projects will be fully realised from the 2017 financial year, the company's valuation has languished due to volatile commodity prices.
It expects the company's net debt to EBITDA to moderate from 2.8 times to 1.5 times by end of the financial year driven by capex moderation and cash generation from the new Waggaman plant in Louisiana.
UBS says a weaker outlook for fertiliser pricing is already priced into the company's valuation.
While investors are worried about volatile commodity manufacturing businesses, explosives earnings are stable or growing.
Fazzino has been chief executive since 2009 when he took over from Julian Segal and transformed the group into a global industrial chemicals company. Fertilisers now account for around 25 per cent of earnings compared to 50 per cent previously.
He should be able to exit on a high and wants to take time out and focus on his role as adjunct professor at LaTrobe University. Incitec in May reported higher first-half profits on flat revenues, with the 2013 US investment now paying dividends as the Louisiana plant ramps up production this year.
michael.smith@fairfaxmedia.com.au