Shares in Adbri fell sharply today after the ASX company reported a fall in net profit and provided updates on major projects at Kwinana and Kalgoorlie.
The upgrade of its Kwinana cement manufacturing facility, originally budgeted to cost $199 million, is expected to jump by 15 per cent.
The company said this took into account known inflationary and supply chain pressures.
The upgrade is designed to consolidate most of Adbri’s WA operations at Kwinana and increase annual production capacity by 36 per cent to 1.5 million tonnes.
The company said the upgrade was about 25 per cent complete as at June 30, while procurement was about 75 per cent committed.
It is scheduled for commissioning in mid 2023.
Adbri plans to spend about $120 million on the Kwinana project in the current financial year – about 40 per cent of its total capex budget for the year.
When Adbri commenced the Kwinana upgrade in October last year, managing director Nick Miller said it would self-manage the project.
“That was a deliberate decision given the heated West Australian market,” he said at the time.
“We have turned away from a turnkey contract to a self-delivery model.
“Part of the self-delivery model is to access small to medium sub-contractors in the market where we have seen better value in what is a very heated market.”
Adbri also said today that its definitive feasibility study for a Kalgoorlie lime kiln is on track for completion in the first half of next year.
The study includes mine planning and front-end engineering design.
Adbri signed a supply contract for Northern Star Resources’ Super Pit last year and is hoping to win a contract to supply Lynas Rare Earth’s planned processing plant.
The company has reported a 15 per cent fall in net profit to $48.1 million for the half-year to June 2022.
Its performance was adversely affected by extreme wet weather on the east cost of Australia, anticipated lower lime volumes, and higher costs for raw materials, shipping, transport, power and fuel.
This was partly offset by ‘out of cycle’ price increases, aided by continued strong demand from the construction and resources sectors, and profits on property sales.
The company is pursuing further property sales, including a small parcel of land in Kewdale, which is expected to settle this year.
Adjusting for these factors, underlying net profit was down 1.3 per cent to $54.3 million.
The interim dividend was cut to 5.0 cents from 5.5 cents previously.
The company said its underlying earnings were expected to grow in the current half year but did not quantify the likely increase because of the uncertain economic and operating environment.
Adbri’s shares were trading 18.4 per cent lower at $2.17 at 10:30am Perth time.
