Iluka shares fall after $20.9m net loss
Page 1 of 1
The mineral sands miner records "poor" half-year results, with higher sales volumes unable to offset lower prices.
Shares of Iluka Resources (ASX: ILU) were nearly 7 per cent lower at midday on Thursday, after the mineral sands miner reported a net loss of $20.9 million for the half year to 30 June 2016.
The result compares to a $20.4-million profit in the first half of 2015.
Iluka attributed the result to lower income received from its Mining Area C iron ore royalty (MAC), and higher first-half nonproduction cash costs associated with a significant investment in trialling an innovative mineral sands mining technique.
Other factors influencing the result included lower US-dollar prices for zircon, lower ilmenite sales and sales mix factors, the company said.
During the half, operating cash flow was negative $15.5 million, with receipts from customers down $106.8 million, while net debt increased to $124.1 million from $80.2 million at 30 June 2015.
Iluka's interim dividend was halved on the same period in the previous year to 3 cents a share, fully franked.
The dividend is payable on 6 October 2016 for shareholders on the register as at 9 September 2016.
Iluka managing director David Robb said the poor half-year financial results reflected a lack of overall revenue growth, despite 15 per cent higher zircon/rutile/synthetic rutile sales volumes.
"Lower prices prevailed, especially for zircon, as Iluka responded to competitor price positioning, but gross margins were protected through reductions in unit costs of goods sold," he said in a statement to the ASX.
"Earnings and free cash flow generation were adversely affected, influenced in part by the timing of sales towards the end of the half and therefore lower collections occurring within the half.
"As the company has indicated previously, free cash flow is expected to be second-half-weighted."
More from Morningstar
Nicholas Grove is a Morningstar journalist.
© 2016 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written content of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). The article is current as at date of publication.
Uncover winning investment ideas and strengthen your portfolio with a 4-week free trial to Premium:
- Your Money Weekly Newsletter
- Independent Fund Analyst Research
- Portfolio X-Ray
- Investment Picks