Release Date: February 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you remind us of your exposure to the US market and provide insights on the global aluminum market following proposed US tariffs? A: Graham Kerr, CEO: Approximately 9% of our group revenue comes from the US, with 5% from our ferronickel book and 16% from aluminum. The US tariffs could impact trade flows, but without significant changes in domestic production, the effect on our business may be limited. The US imports about 80% of its aluminum demand from Canada, and tariffs might lead to higher premiums in the US market.
Q: Regarding CapEx changes this year, is it mainly about timing, particularly around Hermosa? Should we expect increased CapEx next year? A: Sandy Sibenaler, CFO: Yes, the rephasing of expenditure means it will now come through in FY 26. This was due to negotiations around prepayments for fabrication slots. There are no other changes to the phasing of the Taylor expenditure program.
Q: How are you thinking about capital allocation going forward, especially with strong free cash flow expectations? A: Graham Kerr, CEO: Our capital management framework remains unchanged, focusing on distributing surplus cash after basic needs. We prioritize buybacks as we believe we trade below our worth. Decisions on capital returns, including special dividends, will depend on cash in the bank and market conditions.
Q: With the environmental approval uncertainties at Worsley resolved, why hasn't the impairment been reversed? A: Graham Kerr, CEO: The deferred decision impacts are multi-dimensional and long-term. We won't return to full production until FY 27 due to infrastructure and clearing requirements. Operating costs have increased due to revised conditions, impacting NPV. Sandy Sibenaler, CFO: Under IAS 36, we apply reversal trigger testing under sustained low commodity prices, and no trigger was identified.
Q: What is your net long/short position in alumina once the full portfolio is running at normal capacity? A: Graham Kerr, CEO: Historically, about 50% of our alumina is placed in our smelters. This year, it's about 51%. We expect this to remain stable as we match alumina and bauxite to smelter needs. Most exposure is on the Australian side, with long-term deals indexed to Middle East pricing.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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