Orica (ASX:ORI) is expected to post 4% to 6% lower earnings per share in fiscal 2026-2027 due to reduced North America and Indonesia volume growth and increased supply costs, Jefferies said in a note on Monday.

The investment firm noted that Orica's termination of 500,000 tons per annum ammonium nitrate (AN) supply agreement with CF Industries, following a $169.5 million litigation settlement, has created a structural shortfall in the North American market, where sourcing AN will be challenging.

The volume gap will need to be filled through imports, spot purchases or premium-priced APAC shipments, which is expected to impact core profit by AU$30 million from fiscal 2027.

Although, Orica's acquisition of Nelson Brothers is seen to somewhat offset the CF-related supply disruptions, with contributions of AU$35 million to core profit annually.

Jefferies kept its buy rating but cut the price target to AU$24.04 from AU$25.73.