Shares of ASX-listed Alumina Limited (AU:AWC) dropped 2.5% today following its fourth-quarter trading update. Alumina reported a notable growth in adjusted EBITDA (earnings before interest tax depreciation and amortization) over the third quarter figure. Even so, investors’ concerns over falling aluminium prices and demand uncertainty dragged the shares down.
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Alumina’s sole investment and mining operations are through Alcoa World Alumina and Chemicals (AWAC). AWAC is a joint venture between Alumina (40% ownership) and American mining giant Alcoa (NYSE:AA). AWAC is one of the world’s leading producers of alumina and bauxite. Alcoa shares also fell 2.8% in Wednesday’s after-hours trading on weak Q4 sales.
Alumina’s Q4 Performance
Alumina’s Q4 adjusted EBITDA rose 58.5% sequentially to AU$84 million. This was attributed to steady production levels coupled with lower prices of caustic soda in the quarter. Meanwhile, Alumina’s quarter-end net debt position rose to AU$294.3 million from $268.9 million at the end of the previous quarter. The rise in Q4 debt level was due to increased net contributions to AWAC and higher finance costs.
2023 was marred by lower aluminium prices, higher production prices, and supply pressures. This forced Alumina and Alcoa to take the decision to fully curtail production at the Kwinana refinery in Western Australia. Plus, Alcoa is mulling strategic options to streamline the loss-making San Ciprian refineries.
Moreover, the Western Australian (WA) government finally approved AWAC’s request to continue bauxite mining and downstream alumina refining in the state in December. All these actions are set to improve AWAC’s performance going forward.
What is the Price Target for Alumina?
On TipRanks, the Alumina Limited share price target of AU$1.07 implies 9.7% upside potential from current levels. Also, AWC stock commands a Strong Buy consensus rating backed by four Buys and one Hold rating. It is important to note that all these ratings were assigned before the trading update and could change based on analysts’ reviews.
