Fresh from a 5% share price rise on Thursday, shareholders of Iluka Resources Limited (ASX: ILU) may be disappointed by the 2% drop in the company’s shares today. Key takeaways from the report for investors are as follows:
- Mineral Sands Revenue – $819.6 million, rising 13.1% year over year
- Mineral Sands EBITDA – $270.6 million, up 13.4% from $238.6 million last year.
- Net Profit (Loss) After Tax – $53.5 million, which is up from a loss of $62.5 million in 2014.
- Earnings per share – 24.2 cents per share for the full-year.
- Dividend per share – 25 cents per share, a 31.6% change year over year.
- The company ended the year with zero debt and $155 million of free cash flow.
According to CommSec, analysts were expecting earnings per share of 23.6 cents, so the full-year result of 24.2 cents per share beat by 2.5%. The same analysts had forecast a full-year dividend of 20 cents per share. So the announcement of a final dividend of 19 cents per share (25 cents for the full year) should be received well by the market.
Iluka’s shares are down almost 11% in the last 12 months following a decline in profitability over the past couple of years, due to decreasing demand for its mineral sands products. I’m sure investors will be pleased with the result today and the potential for it to start to retrace these losses now.
In the full-year report management has stated that production was up 29% for the year, and that although demand is subdued, growth still exists in certain segments, and the medium-term demand for zircon will challenge supply.
Like many of the resource shares such as BHP Billiton Limited (ASX: BHP) and Santos Ltd (ASX: STO), Iluka will be hopeful for increasing demand coming out of China in 2016. Talks of a slowdown will have caused concerns for investors, but these earnings will have helped calm a lot of these fears for now.
Iluka looks to be heading in the right direction. For me, management is clearly running the company efficiently despite the difficult environment it is working in.