Iluka Earnings: Mineral Sands Markets Could Be Improving

No-moat Iluka Resources’ adjusted 2023 EBITDA of roughly AUD 610 million was down roughly 30% on 2022 but 17% higher than our forecast. The AUD 270 million decline in adjusted EBITDA reflected lower sales volumes and higher unit costs, partially offset by a weaker Australian dollar, with prices stable. Adjusted net profit after tax of about AUD 340 million, or AUD 0.81 per share, fell 42% on last year. Iluka’s mineral sands business generated negative free cash flow of AUD 70 million, driven by higher inventory and a large one-off tax payment. Along with lower earnings, this meant the fully franked final dividend of AUD 0.04 per share represented just Iluka’s share of the dividends it received on its 20% stake in wide-moat Deterra Royalties. Total dividends of AUD 0.07 per share fully franked were down 84% on last year.