With unit costs up to US$288 per tonne, from US$244 per tonne in the previous quarter, and realised pricing on alumina missing Credit Suisse’s expectations at US$376 per tonne, Alumina Ltd’s cash margin declined -26% in the March quarter.
The broker noted the company warned costs would be US$70m higher in the quarter, but production issues, maintenance and shipment delays at Australian refineries further contributed, although the company expects these pressures to ease in the quarter ahead.
With the company guiding to a further US$85m increase in its alumina cost base given raw material and energy costs in the March quarter, Credit Suisse has increased its first half costs to an expected US$285 per tonne, and US$305 per tonne in the second half.
The Outperform rating is retained and the target price decreases to $2.00 from $2.30.
Sector: Materials.
Target price is $2.00.Current Price is $1.87. Difference: $0.13 – (brackets indicate current price is over target). If AWC meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges – negative figures indicate an expected loss).
