Alumina (ASX:AWC) stock price falls despite dividend increase

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Shares in Alumina Limited (ASX:AWC) are lower today after the company released its preliminary report and financial results for the year ended December 31, 2021.

As of this writing, Alumina’s stock price is trading less than 1% in the red at $2.12 apiece.

Alumina share price drops despite 9% dividend hike

Key findings from the company’s results today include:

  • Alumina net income after tax (NPAT) of US$187.6 million up 18% YoY
  • Final dividend 2.8 US cents per share, an increase of 9%
  • Alumina prices are restrained by higher transportation costs, but rebounded following supply disruptions in the second half
  • EBITDA of US$1,146.2 million, an increase of US$250.3 million over the prior corresponding period (pcp)
  • Alumina refinery margin was US$85 per tonne, an increase of US$16 per tonne over pcp
  • Net cash inflow of US$488.1 million, an increase of US$9.6 million

What else happened to Alumina during this time?

Half of Alumina was marked by a statutory net profit after tax of $187.6 million for the year 2021, compared to $146.6 million in 2020.

EBITDA was recognized at $1.14 billion after climbing over $250 million during the year, resulting in free cash flow (before dividends) of $146 million. dollars, a decrease of 12% compared to the pcp.

Average realized alumina price was US$321/tonne and represented a 20% gain over the prior year, while cash cost per tonne of alumina produced increased 19% to $236 .

Net debt also closed higher on the pcp at US$56 million. However, this was partially offset by a 6% increase in net revenue from AWAC, also known as Alcoa World Alumina & Chemicals, which is 40% owned by Alumina and 60% by Alcoa Corporation.

Other than that, the market has been positive for alumina as aluminum prices continue to climb in 2022, building on the returns of the past two years.

“Primary aluminum prices are at record highs due to stronger demand, supply disruptions and higher energy costs. Alumina prices have also increased and are currently above $420 per tonne,” he said.

“In particular, the demand for aluminum for electric vehicles and the construction sector continues to grow. As
As a participant in the aluminum supply chain, Alumina Limited is well placed to support this growth.

Management commentary

Speaking at the announcement, Alumina CEO Mike Ferraro said:

In 2021, AWAC showed resilience in the subdued first half markets and took full advantage of opportunities once markets turned positive in the second half. As a result, Alumina Limited was able to increase dividends to shareholders for 2021 by 9%. The realized alumina price for the year was higher, but API was still constrained by higher transportation costs attributed to disruptions in global shipping. Distributions, although still higher than last year, were partially affected by higher input costs and unplanned outages. AWAC’s average cash cost in 2021 was again in the lowest quartile of the global cost curve and our alumina refining portfolio has the lowest average CO2 emissions intensity among major refiners .

What future for Alumina?

The company forecasts 12.8 million tons of alumina production for the year 2022, a slight change from this year’s result.

As far as aluminum is concerned, the company estimates that it will produce 165,000 tons of metal, a jump of 14% compared to the current result.

He also expects sustaining capital expenditures (capex) to be around US$300 million for the year, representing a change of 73%, while he expects capital expenditures of growth will reach approximately $40 million.

Alumina Stock Price Overview

Over the past 12 months, Alumina’s stock price has gained 25%. It still climbed 14%.

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