Iluka Resources Limited (ASX: ILU) has released its H1 2020 report this morning, announcing it will not pay a dividend amid challenging market conditions. Here are the key points from the report.
Key points for H1 2020
Iluka, the zircon and rutile miner, reported revenue of $456.6 million, a drop of 16.3% compared to H1 2019 as demand for zircon fell. Total sales declined by 19.9% but revenue was partially offset by favourable movements in the AUD:USD exchange rate.
The mineral sands EBITDA margin fell from 42.7% to 38.8% during the half, resulting in a 23.9% decline in mineral sands EBITA to $177 million. Underlying group EBITDA fell 17.8% from $273.9 million to $225.1 million, roughly in line with the decline in revenue.
Operating cash flow also took a hit, falling 46.2% from $179.9 million to $96.7 million while free cash flow was $46.2 million, compared to -$65.2 million in H1 2019. Net cash increased from $43 million to $62 million over the six months to 30 June 2020.
On the bottom line, net profit after tax (NPAT) fell 17.5% to $113.2 million.
Iluka’s Managing Director Tom O’Leary
was pleased with the result given the current circumstances, saying, “Iluka has recorded a solid first half result given the impact of COVID-19 on zircon and titanium markets and the global economy broadly. Given the volatility experienced throughout the world over recent months, we’re pleased with the earnings and cash position we’ve delivered.”
Iluka’s interim dividend
Given uncertain economic conditions, a decline in revenue, and Iluka’s focus on cash preservation, the company has decided not to pay an interim dividend for H1 2020. The H1 2019 dividend was 5 cents per share.
Moving forward
The demerger of the royalty business, Deterra Royalties, is being pushed ahead with board approval to move to a shareholder vote in the coming weeks. Iluka would retain a 20% stake in the business.
The company also intends to progress its Balranald technology trial, which is a third technology trial to determine the economic viability of its Underground Mining Technology (UMT). Iluka hopes this technology may unlock assets within the portfolio that are not accessible by conventional mining methods, and there could also be potential to commercialise UMT in the future.
Iluka says it will continue to focus on cash preservation and disciplined capital allocation moving into H2 2020.
To stay up to date on the latest reports and announcements, check out Rask Media’s ASX reporting season calendar.
[ls_content_block id=”14948″ para=”paragraphs”]
