The Western Areas Ltd (ASX: WSA) share price is pushing higher on Tuesday following the release of its full year results.
At the time of writing the nickel producer’s shares are up 2% to $2.48.
How did Western Areas perform in FY 2020?
For the 12 months ended 30 June 2020, Western Areas delivered a 14.8% increase in sales revenue to $308.4 million.
This was driven by a 20% increase in the average realised price of nickel (before payability) to $9.42 per pound, which offset a small decline in production to 20.9kt and sales to 19.9kt.
Thanks to a big improvement in its earnings before interest, tax, depreciation and amortisation (EBITDA) margin to 38%, Western Areas’ EBITDA increased 50.9% to $121.9 million.
And finally, on the bottom line, the company’s net profit after tax jumped 124% to $31.9 million. This was its biggest profit in seven years.
At the end of the period the company had a very strong balance sheet with a cash balance of $144.8 million and no debt.
This allowed the company to declare a fully franked final dividend of 1 cent per share, bringing its full year dividend to 2 cents per share. This was flat on the prior corresponding period despite the strong profit growth. Management appears intent to reinvest its funds into growth opportunities.
Well-positioned for growth.
Western Areas’s Managing Director, Dan Lougher, was pleased with FY 2020 and appears confident on the future.
He commented: “Thanks to the very strong financial performance we have delivered in FY20, the balance sheet is in great shape to continue to fund development of our growth projects, enable advancement of our exciting exploration opportunities and pay a dividend to shareholders.”
“Western Areas is now set for long term nickel exposure, in what is expected to be a growing market for some years to come thanks to EV linked battery demand. The long-life Odysseus project makes Western Areas one of the few companies that can demonstrate a clear mining reserve that extends into the 2030’s and beyond,” Mr Lougher added.
FY 2021 guidance.
In FY 2021 the company is guiding to production of 19,000 tonnes to 21,000 tonnes of nickel concentrate. This compares to production of 20,900 tonnes in FY 2020.
This is expected to be achieved with a unit cash cost of $3.25 per pound to $3.75 per pound. This will be an increase from $3.13 per pound in FY 2020, but still materially lower than this year’s realised price before payability of $9.42 per pound.
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