Iluka Resources attracted plenty of attention in the six months to June with two major strategic moves.
The first was the $1.25 billion rare earths project at its Eneabba operations in WA which will transform the company.
The second was the spinoff of the underperforming Sierra Leone mineral sands business into a standalone company listed on the ASX.
Both were big decisions for the company and overshadowed a third major development until the company released its June half results on Wednesday and that was a massive surge in revenues and profits.
The company revealed that its revenue jumped nigh on 30% to $954.9 million in the six months to June which in turn saw a near 70% leap in EBITDA to $505.4 million.
Net revenue was up nearly a quarter at $836 million and net after tax profit from continuing operations was up 176% at $368.5 million for the half.
Iluka said its EBITDA margin for mineral sands rose from solid 40.7% in the June half of 2021 to 52.9% in the June half of this year (which is bank-like in profitability)
The company said the revenue boost reflected high prices spanning all of its products. Zircon prices lifted 40%, while rutile prices were 23%.
The lower Aussie dollar also had a positive impact on Iluka’s revenue.
All this saw shareholders feel the joy – a 108% rise in interim dividend to 25 cents a share from 12 cents previously.
And, as they say on the TV shopping channel, ‘wait – there’s more’:
Iluka said demand for its products remained strong and supply was tight.
Demand from European tile producers was robust, but Chinese tile production was under pressure from the slide in that country’s troubled property and home building sectors.
But demand from the ceramics industry in Brazil and Mexico was higher, and foundry and fused zirconia demand remained elevated in the Americas.
Iluka said its third quarter zircon sales for this year are fully contracted with supplies continuing to be tight.
Iluka said there was minimal spot volumes of its high-grade titanium feedstocks available between now and the end of the year. Demand is high in North America, with supply security a priority for customers amid the Ukraine war and other global challenges.
Iluka said it was now seeing strong customer interest in its remaining uncontracted tonnages from 2023.
Commenting on the results, Iluka CEO Tom O’Leary said the company had delivered strong outcomes in the first half, both in terms of financial performance and progress on our strategic priorities.
“In a macroeconomic environment characterised by inflation and uncertainty, we increased margins and strengthened our balance sheet. This was the result of strong demand for Iluka’s products, industry supply constraints and resultant pricing traction.” He also pointed out that Iluka was “well placed” as customers prioritise security of supply.
And for the rest of the year and into the new year he added:
“Our Australian operations are configured at maximum settings and sales over the second half are likely to continue to be constrained by production. Furthermore, the second half will see first production from the restart of Synthetic Rutile Kiln 1 at Capel.
“Other approaching development milestones include the commencement of ground works for the Eneabba rare earths refinery; the completion of the definitive feasibility study for the Balranald project; and the completion of preliminary feasibility studies for the Wimmera and Atacama project.”
Iluka shares closed up almost 10% at $10.38.
