Adbri has earned a net profit after tax of $29.1 million for the first half of 2020, despite the economic strain of COVID-19.
The aggregates giant has refrained from supplying a full year earnings guidance due to the uncertainties about the pandemic.
Adbri recently announced Alcoa would not be renewing its lime contract with the company beyond 30 June 2021 and will move to imported lime product. The company said it will continue to develop mitigation strategies for the future reduction to its lime earnings.
Lime volumes increased by four per cent in the first half of 2020 due to Western Australia’s gold and nickel markets demanding the resources, with lime prices higher than the comparative period.
Adbri listed several key strategic initiatives including lime volume and earnings recovery, reduced costs and operational improvement, targeted downstream integration and diversification, increased infrastructure exposure, and increasing value opportunities in its land holdings.
Federal and state government stimulus packages have deflected much of the impacts COVID-19 may have inflicted on Adbri, “particularly the fast-tracking of construction projects including infrastructure spending, home building grants and stamp duty relief,” the company stated.
Adbri chief executive officer Nick Miller said the company has been largely unfazed by COVID-19, as Australia’s resources sector continues its operations.
“Adbri remains in a strong financial position and notwithstanding the impact on demand of natural disasters and weaker domestic housing, our wholly owned operations have expanded their cash earnings margins,” he said.
“Despite the COVID-19 pandemic, our volumes have maintained a solid trajectory and some parts of our operations have outperformed the prior period.
“Mining demand has remained uninterrupted, resulting in higher volumes than in [the first half of 2019] while the construction materials sector is expected to continue to benefit from various government stimuli, particularly to fast-track shovel-ready construction projects, including infrastructure spending, home-building grants and stamp duty relief.”
The company’s cement sales dropped by six per cent compared to the first half of 2019, due to the impact of bushfires, floods, smoke and market softening in New South Wales. However, mining projects saw Adbri’s cement volumes rise by – seven per cent in Western Australia.
Concrete volumes dropped by 13 per cent, once again due to the swathe of natural disasters in NSW and Queensland, along with market softness. Victorian demand defied the odds and enjoyed an increase in activity across the commercial, multi-residential and industrial precast markets.
Adbri also recorded a 41 per cent decline in its Total Recordable Injury Frequency Rate – to 11.6 compared to the corresponding 30 June 2019 period. It expects a total capital expenditure of $130 million for 2020.