Iluka’s Strong 2022 Result Driven by High Prices Offsetting Rising Costs, FVE Reduced to AUD 10.50

No-moat Iluka’s 2022 result was impressive, driven by higher mineral sands prices and a weaker AUD/USD rate, partially offset by lower sales volumes and higher unit costs. Adjusted net profit after tax, or NPAT, nearly doubled to about AUD 600 million, or AUD 1.41 per share. Adjusted EBITDA increased 45%, to about AUD 950 million. The AUD 300 million adjusted EBITDA increase was mainly due to higher average realised mineral sands prices (up AUD 400 million) and a weaker Australian dollar (up AUD 110 million), partially offset by lower sales volumes (down 170 million) and higher unit costs (up AUD 90 million). Ignoring Sierra Rutile, which the company demerged and spun off to shareholders in June 2022, total sales volumes for zircon, rutile and synthetic rutile fell 13%, to about 630,000 metric tons. EBITDA margins increased as higher mineral sands prices more than offset a 21% increase in unit cash costs.