Alumina Ltd’s First-Half Numbers Lower Due to Rough Commodities Market

Alumina Ltd’s First-Half Numbers Lower Due to Rough Commodities Market
Downtown Melbourne. Source: Wikimedia

Australian firm Alumina Ltd. published its half-year results yesterday. Though still in the black, their first-half numbers reflect the continued challenging commodities market.

Alumina reported an after-tax net profit of US$8 million for the half, which is down year-on-year from US$122 million. The firm took a US$5 million hit from the restructuring of Alcoa Worldwide Alumina and Chemicals’ (AWAC) asset portfolio. The loss was somewhat offset thanks to the monies received in the sale of Dampier Bunbury Natural Gas Pipeline in April of this year.

The firm went on to say that its EBITDA dropped by US$450 million in the half to US$281 million, and that the EBITDA margin for alumina in the half was US$46 per metric ton, down year-on-year from US$104 per metric ton.

“The Company delivered a solid financial performance despite tough market conditions, reflecting in part benefits of restructuring the AWAC portfolio and a focus on cost cutting within AWAC,” said Peter Waslow, Alumina’s Chief Executive Officer. “Pleasingly, cash distributions from AWAC were higher than the previous year at around US$84 million for the half. Third party bauxite sales continue to expand and we have a number of options to capture market opportunities as they arise. Finally, both Alumina and AWAC continue to maintain a conservative financial profile with very low levels of debt.”

Alumina’s press release went on to say that it would continue asserting its rights in the Alcoa split. Alumina raised concerns over shareholders’ rights earlier this year, prompting Alcoa to seek a declaratory judgment in Delaware courts. Alumina filed a counterclaim in late June, asking the court to halt Alcoa’s split until Alcoa fulfills rights Alumina says it has in the AWAC agreement. Additionally, Alumina seeks to have Alcoa obligated to receive other offers for Alcoa’s rights in AWAC as Alumina indicates is required under the first option rights within the AWAC agreement. The case is set to be heard on September 20.

Alumina Ltd’s sole business activity is as the owner of a 40% share in AWAC. AWAC mines bauxite, extracts alumina, and smelts pure aluminium. It has about 17% of the global alumina market. Alcoa owns the remaining 60% of AWAC and operates the day-to-day business.