Kenmare Resources confident despite slide in revenue, earnings

(Sharecast News) - Titanium and zircon producer Kenmare Resources reported a 33% year-on-year decline in first-half revenue on Wednesday, to $154.5m. The London-listed firm attributed the drop to lower shipments, pricing, and an unfavourable product mix at its Moma Titanium Minerals Mine in northern Mozambique.

Despite the challenges, Kenmare said it ended the half-year with a record net cash position of $58.9m, after paying $34.7m in dividends and investing $49.1m in capital expenditure.

EBITDA fell 43% year-on-year to $63.2m, while profit after tax declined 69% to $20.9m.

Despite the downturn, Kenmare declared an interim dividend of 15 cents per share, adding that it expected the full-year dividend payout to be at the higher end of its 20% to 40% profit after tax target range.

Operationally, Kenmare achieved a 4% increase in both heavy mineral concentrate (HMC) and total finished product production, reaching 659,000 tonnes and 490,800 tonnes, respectively.

However, total shipments dropped by 14% due to poor weather and operational maintenance.

The company said it anticipated stronger performance in the second half of 2024, with increased shipments and a more favourable product mix, including the dispatch of two delayed zircon shipments.

Kenmare said it continued to make progress on sustainability initiatives, including reductions in greenhouse gas emissions and improvements in land rehabilitation and biodiversity.

The company also reported a lower lost time injury frequency rate (LTIFR) of 0.09 per 200,000 hours worked.

Corporate changes were also underway, as Michael Carvill stepped down as managing director, with Tom Hickey, the current finance director, set to succeed him.

Kenmare was also in the process of identifying a new chief financial officer.

The company said it remained on track to meet its 2024 guidance for ilmenite production, targeting 950,000 to 1,050,000 tonnes, supported by higher forecast grades in the second half of the year.

It was also advancing the upgrade of its wet concentrator plant (WCP) A, with 54% of the capital committed by the end of the first half, and 75% expected by year-end.

Constructive discussions with the Mozambican government regarding the renewal of Kenmare's implementation agreement for the Moma Mine's Industrial Free Zone were also ongoing.

"As previously announced, Michael Carvill, Kenmare's founder, today steps down as managing director after almost four decades," said chairman Andrew Webb.

"I would like to again express the board's appreciation and thanks to Michael, who leaves the Company with a robust balance sheet, strong and capable team, a tier one asset, a market-leading position and a robust balance sheet.

"Tom Hickey, Kenmare's finance director, has been appointed to succeed Michael."

Webb noted that Hickey had 24 years of experience as a public company director, with a "strong background" in finance, natural resources and African operations.

"Kenmare is on track to achieve 2024 guidance and in H1 we delivered an EBITDA margin of over 40%," he added, but noted that reduced shipments impacted the company's financial performance.

"Shipments have strengthened early in the second half, supported by strong visibility of customer orders, high finished product inventories and seasonally better weather conditions.

"Consequently, revenue is expected to be second-half weighted.

"With net current assets of almost $200m at the half year, including record net cash of $58.9m, we are well positioned to fund our capital commitments and shareholder returns."

At 1011 BST, shares in Kenmare Resources were up 2.45% at 335p.

Reporting by Josh White for Sharecast.com.