Iluka December quarter output down 37%
Iluka Resources Limited (ILU) reported a 37.3% drop in mineral sands December quarterly production and 26.3% fall in CY production versus the previous corresponding periods. The company said the lower annual production reflected its response to the global financial crisis and sharply weaker demand, especially in the first half of 2009.
Iluka reported a 34.9% drop in mineral sands sales revenue to $576 million (pre-currency hedging) for CY09 versus the pcp. After currency hedging, the company said sales revenue was down 37.5% to $533 million versus the pcp.
Iluka reported December quarter sales revenue before hedging of $227.3 million, down 19.8% on the pcp and added that sales revenue in the second half increased appreciably from the low first half level.
The company said operational changes announced in the first half resulted in markedly lower second half zircon production as well as ensuring that full year production more closely matched sales.
“In this regard, Iluka’s second half zircon production was 37.3% lower than the first half, with the result that zircon sales in the second half exceeded second half production by approximately 80,000 tonnes,” Iluka said.
“Full year zircon production of 263,000 tonnes declined by 31.7% from the record year of 2008.”
The company said Zircon demand recovered progressively through the second half of 2009, particularly in China, with approximately 80% of Iluka’s annual sales second half weighted and over 50% of the year’s sales being recorded in the December quarter. Iluka said the latter reflected the combination of severe demand retraction and customer inventory draw down evident in the first half of the year.
“Whilst China’s demand for zircon has rebounded strongly and is trending above pre-GFC levels, demand recovery has been more muted in Europe and North America,” the company said.
Iluka reported a 9.3% decline in rutile production year-on-year to 127,000 tonnes, below initial expectations.
The company attributed the decline to delays in the commissioning of the Murray Basin Stage 2 project.
Iluka said synthetic rutile production for the year declined by 13.3% to 405,000 tonnes, due to the company’s decision to idle two synthetic rutile kilns, which occurred during the year.
The company said it has the capacity, through its new production sources of Jacinth-Ambrosia and Murray Basin and through a restoration of full production in Virginia, to increase zircon and rutile production above pre-GFC levels as demand recovers and then grows.
As at 1016 AEDT, Iluka shares were up 2c to $3.51.
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