Alumina Limited reports 26% drop in H1 2019 profits on lower alumina price; interim dividend cut to half

Alumina Limited updated on the company’s Q2 and H1 financial results during Q2 2019 Earnings Conference Call on August 22.

Alumina's H1 2019 profit has fallen by 26 per cent on lower alumina prices. The company has cut its interim dividend to half after the results. The company cut its interim dividend to 4.4 US cents per share, halved from 8.6 cents per share declared after H1 2018.

Net profit fell to US$210 million ($A310.6 million) for the first six months of 2019, down from US$ 286.4 million in H1 2018. Earnings and cash flows were affected by a 12 per cent decline in alumina prices. The average realised price during H1 2019 dropped to US$375 per tonne, offset slightly by a 3.0 per cent reduction in production cost to US$218 per tonne.

Chief executive officer Mike Ferraro said that the tight supply condition in Western world alumina market of 2018 had subsided.  Supply disruptions came to an end and all the curtailed capacities were more or less back on stream. This is supported by ramp up in the new refineries.

"We expect a modest alumina surplus for the rest of 2019," Mr Ferraro said during the earning call.

"Aluminium demand is expected to grow consistent with longer-term trends and this will help support the alumina price in the future."

Alumina Limited’s operations cover bauxite mining, alumina refining and aluminium smelting. Alcoa’s bauxite and alumina segment is represented by Alcoa Worldwide Alumina and Chemicals (AWAC), a joint venture which is owned 40% by Alumina Limited and 60% by Alcoa.