Once again iron ore exports have come to the rescue of the country’s second steelmaker, Arrium Ltd (ARI).
The company, which exports ore from its deposits near Whyalla in South Australia, said the group’s iron ore shipments drove an 83% rise in full year underlying earnings to $296 million for the year to June 30.
The iron ore mining and export business boosted earnings before interest, tax, depreciation and amortisation 86% to $686 million, which, judging by the fall in iron ore prices, might be about as good as it gets for a while.
The company had record iron ore export of million tonnes in the year to June, up 51% from the 8.3 million in 2012-13.
Arrium expects exports to rise to around 13 million tonnes this year, but based on current prices of less than $US95 a tonne, the shipments will be at prices lower than the $US111 a tonne average received in 2013-14.
At the lower levels, the iron ore exports will still make a significant, but lower contribution than they did in 2013-14.
The surge in iron ore export income helped revenue for the June 30 year rise 2% on the same period last year to $7 billion.
While the solid profit from the iron ore business more than offset weak contributions from steelmaking and the mining consumables business, it wasn’t enough to allow the board to maintain the final dividend.
It was cut in half to 3 cents a share, from the interim 6 cents, making a total of 9c a share for the full year. But that’s still up 4 cents a share from the 2012-13 year.
That will see payout for the final half to $41 million from nearly $82 million for the higher interim, a sign the board is looking to conserve cash.
ARI 1Y – Iron ore drives Arrium earnings
Arrium managing director Andrew Roberts said in yesterday’s statement that the increased earnings reflect the growth of Arrium’s mining business.
“We are now realising the full benefits from our mining expansion,” he said in a statement to the ASX.
But Arrium’s core steel business remains depressed given the weakness in Australian construction and the high dollar.
The division reported underlying earnings before interest, tax, depreciation and amortisation of $51 million, down from $64 million in 2012-13, thanks to lower sales volumes.
The group’s mining consumables business reported underlying EBITDA of $187 million on slightly lower revenue as demand for grinding media in the mining sector in Australasia slumped.
The company announced a final unfranked dividend of 3¢ a share.
On Monday Arrium announced that AGL chairman Jerry Maycock would be its new chairman after Peter Smedley retires at the group’s AGM in November.
Arrium shares jumped nearly 12% to 84.5 cents.
