Why the Alumina (ASX:AWC) share price climbed higher today

The Alumina share price rose today as the company reported its third quarter results. We take a closer look.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Alumina Limited (ASX: AWC) share price is trading higher after the company announced a strong quarterly report. It comes as the miner trades close to its 52-week low of $1.30.

On today's news, the Alumina share price closed 1.77% higher at a price of $1.44.

What Alumina does

Alumina owns 40% each of the Alcoa Worldwide Alumina and Chemicals (AWAC) entities. This forms part of the Alcoa Corp (NYSE: AA) business. The company is engaged in investing in bauxite mining, alumina refining and selected aluminum smelting operations.

Alumina has developed a reputation for being an exceptional dividend distributer. However, with the headwinds brought on by COVID-19, shares in the mining company have been on a downward trend. The company is in the S&P/ASX 200 Index (ASX: XJO) with a market capitalisation of more than $4.1 billion.

Why did the Alumina share price rise?

Alumina's share price increased on the back of strong quarterly results. The company saw strong growth in its aluminium segment of earnings before interest, taxes, depreciation and amortisation (EBITDA) which was up 35% to a total of $119 million. In contrast, bauxite earnings fell to $124 million, lower due to the appreciation of the Australian dollar.

In terms of the company's production levels, the results saw little change. Both the mining and refining business saw changes of 0.1 mega tonnes. The refining business increased in volume whereas mining decreased.

Despite the good news for shareholders, net distributions fell. Distributions in Q3 were lower as Q2 had benefitted from the flow-on effect of higher margins earlier in the year. This, combined with Alumina's payment to the Australian Tax Office, reduced available cash for distribution. As such Alumina's net distributions were $46.3 million.

What did management say?

Commenting on the results, Alumina Limited CEO Mike Ferraro said:

Building on last quarter's record daily alumina production, the current AWAC system produced a record total production for the quarter, driven by increased plant stability. The joint venture continues to focus on the safety of AWAC employees and the wider communities.

The alumina price is currently $274/t amid continuing signs of a promising economic recovery in China and higher LME aluminium prices. However, COVID case numbers in many countries have started to increase again and the economic impact of the continuing pandemic remains unclear.

The Alumina share price finished the day 1.77% higher at $1.44. However, the share has had a challenging year to date, falling 38%.

Motley Fool contributor Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A golfer celebrates a good shot at the tee, indicating success.
Share Market News

Here are the top 10 ASX 200 shares today

ASX investors finally enjoyed a win this Thursday...

Read more »

a man sits back from his laptop computer with both hands behind his head feeling happy to see the Brambles share price moving significantly higher today
Industrials Shares

Up 39% in a year, is there more growth to come for this ASX 200 share?

IML Equity Analyst Josh Freiman shares his views on a major ASX 200 industrial stock.

Read more »

Man looking at his grocery receipt, symbolising inflation.
Share Market News

What the latest US inflation print means for ASX 200 investors

The ASX 200 is likely to benefit if the US Fed cuts interest rates again in December. But will it?

Read more »

guy helping girl invest in shares and dividends
Opinions

5 ways for investors buying ASX shares to stay focused during economic uncertainty

AMP Chief Economist, Dr Shane Oliver, offers advice on how to handle the Trump factor.

Read more »

A worried man holds his head and look at his computer.
Share Fallers

Why Graincorp, Light & Wonder, Orica, and Wildcat shares are falling today

These shares are having a tough time on Thursday. But why?

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Catapult, Flight Centre, Nufarm, and Xero shares are storming higher today

These shares are having a strong session on Thursday. But why? Let's find out.

Read more »

A male investor sits at his desk looking at his laptop screen holding his hand to his chin pondering whether to buy Macquarie shares
Opinions

1 ASX growth stock down 30% I'd buy right now

This international business is growing core earnings at a strong rate.

Read more »

Concept image of a man in a suit with his chest on fire.
Record Highs

How long can the CBA share price keep this up?

Australia's biggest bank is running hot. Does it make any sense?

Read more »