The Alumina Limited (ASX: AWC) share price jumped 2.57% higher to $2.79 in early trade despite the company missing lowest estimates for its full-year earnings.
Unpacking Alumina's results
Alumina reported an 87% increase on prior corresponding period (pcp) in statutory net profit after tax (NPAT) to $635.4 million in the full-year, missing estimates of ~$690 million by a significant margin.
On an adjusted basis, the company's $689.9 million NPAT was more in line with expectations as management cited the tight Western alumina market following "severe disruptions in 2018". The company has been buoyed by a high average realised alumina price (up 33% on 2017 numbers) as the world's largest Alunorte mine in Brazil remains out of action.
The company's net receipts from its joint venture Alcoa World Alumina & Chemicals (AWAC) rose 158% on pcp to US$678.2 million for the year. The company's free cash flow rose 172% on pcp to US$662.1 million while the balance sheet remains steady with net assets of US$2,135.8 million.
In a big plus for shareholders, management has confirmed Alumina as a top dividend stock on the ASX by increasing the interim dividend by 105% to a fully-franked 8.6 cents per share (cps). This includes expected receipts of US$193.6 million of net distributions from AWAC entities which has been factored into the final dividend.
This saw the company pay a final dividend of 14.1 cents per share fully-franked dividend (up from 9.3 cps in FY17) which translates to a juicy 11.5% dividend yield on yesterday's closing price of $2.72 per share.
Management cited ongoing US-China trade tensions as affecting sentiment on aluminium despite higher expected demand growth in China from electric vehicles, high-speed rail and growing exports of high-value products.
Foolish takeaway
While the year-on-year numbers seem impressive from Alumina, I would still expect the share price could take a bit of a beating. With the Alunorte mine out of production, I think many in the market (including myself) thought we'd see a strong full-year result by the company supported by higher prices.
The Alumina share price is up 22.52% for the year but I think we could see some cooling off on the ASX today after missing earnings estimates.
For those not interested in Alumina's juicy dividend, I'd suggest checking out these top growth shares that have been tipped as market beaters.
