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ABC - Adbri News Story

A$2.28 0.0  1.3%

Last Trade - 7:10am

Basic Materials
Mid Cap
Market Cap £803.9m
Enterprise Value £1.09bn
Revenue £832.6m
Position in Universe 206th / 1835

BUZZ-Bitter lime: Analysts view Alcoa contract loss as a 'major hit' to ADBRI

Sun 5th July, 2020 9:27pm
** Brokerages raise concerns over ADBRI Ltd's  ABC.AX  loss
of Alcoa contract, expect it to hit the company's profitability 
    ** The construction firm on Friday said unit has been
informed that Alcoa of Australia Ltd elected not to renew lime
supply contract expiring on June 30, 2021*:nL4N2EA0KP
    ** Citi says contract loss drives "material step change in
profitability"; adds that lime is typically a high fixed cost
business and assuming ~40% fixed cost base and a 40% EBIT
margin, this would imply a A$45 million ($31.16 million)
negative EBIT impact
    ** "In our view, Adbri will likely need to reprice lower at
renewal to retain these volumes or risk losing the contract all
together"- Citi
    ** Jefferies says contract loss is a "major hit" to ABC and
the credibility of the management team; adds ABC remains firmly
under attack from imports in Western Australian and South
    ** "This major contract loss means fixed costs across the 
Munster plant will now need to be spread across lower volumes
from 2H21 onward, unless ABC can find a home for around 500kt
tonnes that have now been displaced by imports"- Jefferies
    ** Two of 12 analysts rate the stock "buy" or higher, 6
"hold" and 4 "sell" or lower– Refinitiv data

($1 = 1.4443 Australian dollars)

 (Reporting by Shruti Sonal in Bengaluru; Editing by Daniel
 ((; Twitter: @shrutisonal26))
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