Alumina posts $8.2M loss

ALUMINA chief executive John Bevan said there was a “tough” start to 2012 with the company recording a $US8.2 million ($A7.8 million) underlying loss amid weakening aluminium prices.
Alumina posts $8.2M loss Alumina posts $8.2M loss Alumina posts $8.2M loss Alumina posts $8.2M loss Alumina posts $8.2M loss

Lauren Barrett

The company, which was placed on credit watch by ratings agency Standard & Poor's in March, reported the loss today in addition to conceding to a net loss after tax of $14.6 million for the first half of 2012.

Alumina posted an underlying net profit of $77.7 million in the same corresponding period and achieved net profit after tax of $67.7 million.

The loss is a reflection of the weakening aluminium price, which like all commodities, has been hit hard by general investor jitters triggered by fears of contagion in the eurozone.

Aluminium traded at $US1796 per pound on the London Metal Exchange overnight, a significant drop from $2339.50/lb a year ago today.

While earnings were down, Alumina sought comfort from strong operating cash flow achieved through its joint venture with US aluminium giant Alcoa World Alumina and Chemicals, of which Alumina has a 40% stake in

Earnings before interest, tax, depreciation and amortisation from the JV totalled $161 million, while revenue reached $2936,000.

The company said profits from its refineries had been partly offset by losses incurred at its two aluminium smelters in Victoria.

While Bevan admitted it was tough times for the company, there had also been some strong points.

"It was a tough half, but the operations performed strongly," he said.

"The AWAC refining operations continued to generate positive EBITDA margins and AWAC was able to self-fund the sustaining capital requirements of the business."

Despite strong operating cash flows, the company said the current volatility in external markets had promoted the company to conservatively manage cash flows and balance sheet and therefore "the board has determined that no interim dividend will be paid"

Looking ahead, Alumina remained realistic but hopeful.

"While the short-term outlook remains volatile, we are encouraged by the continued strong physical demand for aluminium and evidence of some positive catalysts for improved alumina pricing are emerging," Bevan said.

"The AWAC assets remain at a competitive advantage to global peers with a flexible operating capacity and low cash cost profile."

Shares in Alumina were last trading down 3.8% or A3c to 75.5c.

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