Alumina Limited sits tight on dividend payments

Alumina is holding off paying dividends despite recent price improvements and the post-balance-date equity injection of $452 million from China's state-owned Citic.

There was no surprise on the dividend decision as sharply lower alumina and aluminium prices plus the revenue-sapping effects of the strong dollar led the Melbourne-based Alumina to post a loss of $US52.5m ($51.16m) compared with a profit of $US128m in 2011, when dividends totalled US6c a share.

Alumina chief executive John Bevan said that the 2013 year had started on a positive note.

"However, the outlook for the market in 2013 remains uncertain with macro-economic conditions, particularly in Europe, remaining difficult," he said.

The reported loss was slightly better than the $US60m loss the market had been expecting, with embedded energy derivative revaluations and retirement benefit obligations again proving difficult for analysts to pin down ahead of the result.

Alumina's immediate outlook has changed dramatically since this month's placement to Citic. Its net debt has been slashed to $US216m with the proceeds. The placement establishes Citic as Alumina's biggest shareholder, with a 13 per cent stake. Alumina's only interest to the Chinese is its 40 per cent stake in the Alcoa-managed AWAC, the world's biggest alumina producer and a partner in the Portland and Point Henry aluminium smelters in Victoria.

Citic's move on to Alumina's register has been widely read as a challenge to Alcoa, which has long been tipped to have Alumina as a takeover target at a time of its choosing, given its management of AWAC.

But now Citic has 13 per cent, taken up at $1.235 a share, and it can move to 15 per cent through on-market purchases. Alumina shares closed down 2.3c at $1.22.

Mr Bevan said that despite very difficult conditions, Alumina was "heartened by the sound operational performance of AWAC and the progress made on important initiatives that will ultimately strengthen the company's position and improve returns to shareholders".

"Production creep at our low-cost refineries, planned curtailments at our higher-cost refineries and hard-won productivity improvements across the board ensured that costs were controlled and operations continued to generate cash," he said.