AWAC-Alcoa JV partner Alumina's margins hit by price rout

Australian company Alumina, the junior partner in the AWAC joint venture with Alcoa, said lower alumina and aluminium prices and unfavourable currency movements had negatively impacted margins during the final quarter of last year.

The comments came as Alcoa, the first major US company to report fourth quarter results, said its revenues slumped 18 per cent in the period amid sharply lower aluminium prices.

Alumina chief executive Peter Wasow said higher production at the group’s Australian refineries, along with productivity gains, energy savings and a clamp down on costs had somewhat offset the margin declines.

“AWAC continues to adjust its portfolio to improve its cost position and ensure continued competitiveness in the prevailing market conditions,” Mr Wasow said.

AWAC’s production of alumina was 3.7 million tonnes over the three months to the end of December. Alumina Limited received $35.2 million of dividends and distributions from AWAC, and contributed $2.4m towards AWAC during the quarter, leaving the company’s net debt at around $US101m at the end of last year.

The ASX-listed Alumina stock and US-based Alcoa stock have both fallen around 50 per cent over the past year.

Alcoa said revenue dropped to $US5.25 billion ($A7.5bn) in the latest quarter, slightly below analyst expectations and down from $US6.38bn a year earlier

Raw aluminium prices have fallen over 25 per cent to about $US1500 per tonne in the past year amid a supply glut that worsened this year as demand has faltered in China, the world’s largest consumer of aluminium and one of the metal’s largest producers.

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