The Iluka Resources Ltd (ASX: ILU) share price is rocketing after the company released its half-year earnings results today.
The company's share price is currently swapping hands at $10.07, a 6.56% gain. In comparison, the S&P/ASX 200 Index (ASX: XJO) is up 0.65% at the time of writing.
Let's take a look at what the ASX mineral explorer reported to the market.
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Iluka delivers 186% profit boost
Highlights of Iluka's H122 financial presentation for the six months to 30 June 2022 include:
- Net profit after tax (NPAT) soared 185.7% on H121 to $368.5 million
- Underlying group earnings before interest, tax, depreciation and amortisation (EBITDA) lifted 70.5% to $525.5 million
- Net total cash increased to $600.3 million
- Free cash flow of $349.8 million
- Interim fully franked dividend more than doubled to 25 cents per share.
What else did the company report?
Iluka advised that mineral sands revenue lifted 29.8% to $954.9 million, and EBITDA surged 68.9% to $505.4 million. The EBITDA margin for mineral sands lifted from 40.7% in H121 to 52.9% in H122.
The company said the revenue boost reflected high prices spanning all of its products. Zircon prices lifted 40%, while rutile prices soared 23%. The lower US dollar also had a positive impact on Iluka's revenue.
Iluka's interim dividend soared 108.3%, from 12 cents per share in H121 to 25 cents per share in H122.
The company completed the demerger of Sierra Rutile in the first half of 2022. The explorer also made a final investment decision on the Eneabba rare earths refinery in Western Australia.
Management comment
Commenting on the results, Iluka managing director Tom O'Leary said:
Iluka delivered strong outcomes in the first half, both in terms of financial performance and progress on our strategic priorities.
In a macroeconomic environment characterised by inflation and uncertainty, we increased margins and strengthened our balance sheet. This was the result of strong demand for Iluka's products, industry supply constraints and resultant pricing traction.
What's ahead?
Iluka said demand for its products remained strong and supply was tight. European tile production was robust, while Chinese tile production faced challenges in the property market along with COVID-19 restrictions. The company added that demand from the ceramics industry in Brazil and Mexico was higher, and foundry and fused zirconia demand remained elevated in the United States.
Iluka's zircon sales for the third quarter of the calendar year 2022 are fully contracted amid tight supplies.
Iluka highlighted only minimal spot volumes of its high-grade titanium feedstocks were up for grabs in the second half of FY22. Demand is high in North America, with supply security a priority for customers amid the Ukraine war and other global challenges.
Iluka said there was strong customer interest in its remaining uncontracted tonnages from 2023.
O'Leary said Iluka was "well placed" as customers prioritise security of supply. Looking ahead, he added:
Our Australian operations are configured at maximum settings and sales over the second half are likely to continue to be constrained by production. Furthermore, the second half will see first production from the restart of Synthetic Rutile Kiln 1 at Capel.
Other approaching development milestones include the commencement of ground works for the Eneabba rare earths refinery; the completion of the definitive feasibility study for the Balranald project; and the completion of preliminary feasibility studies for the Wimmera and Atacama project
Iluka share price snapshot
The Iluka share price has surged more than 13% in the past 12 months, while it has gained 1.4% in the year to date. Iluka shares have climbed 4.5% in the past month.
Iluka has a market capitalisation of more than $4.2 billion based on the current share price.
