Iluka Earnings: Down on Lower Volumes and Higher Costs

No-moat Iluka’s 2023 first-half result was similar to our expectations, except the AUD 0.03 fully franked interim dividend. It was lower than we expected and roughly 90% down on last year, impacted by higher inventory and a large one-off tax payment as well as lower earnings. Adjusted net profit after tax fell 29% to about AUD 200 million, or AUD 0.48 per share. Adjusted EBITDA declined 22% to roughly AUD 370 million on a 50% margin, down from 57%. The AUD 100 million decline in adjusted EBITDA reflected lower sales volumes and higher unit costs, partially offset by higher realized prices and a weaker Australian dollar.