The collapse in demand that came with the global financial crash savaged the December-year earnings of mineral sands heavyweight Iluka Resources.
Iluka swung from the profit of $77.5 million posted in 2008 to a loss for 2009 of $108.6 million.
Earnings results from
today and throughout the season
Iluka said that the loss was after a number of non-recurring items that reflected its response to an ‘‘unprecedented reduction in demand associated with the global economic crisis’’.
Those items included a previously announced non-cash impairment charge of $67.6 million before-tax from write-offs of orebodies that would not now be mined, as well as restructuring and idle capacity cash costs of $57.8 million before tax ($41.7 million in the second half).
The latter figure includes redundancy costs associated with a reduction in Iluka’s workforce by almost 30 per cent.
Iluka said that the severe global contraction in demand for mineral sands products, especially in the first half, resulted in a 35.6 per cent fall in mineral sands sales revenue before currency hedging to $576 million.
It said sales (in tonnes) of zircon collapsed by 54 per cent while it sale of the lower value products were also hit.
Despite the earnings pressure, Iluka spent up big in 2009. Capital expenditure for the year was $521.6 million on new projects in the US, the Murray Basin Stage 2 expansion in Victoria and the Jacinth-Ambrosia project in South Australia.
"This marks the completion of Iluka’s major capital expenditure phase, with 2010 accrued capital expenditure expected to be around $100 million,’’ Iluka said.
Net debt as December 31 was $382.1 million, up from $215.7 million. ‘‘In the context of current group earnings and cash flows, the board has decided not to pay a 2009 final dividend,’’ Iluka said.
bfitzgerald@theage.com.au
The Age
