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Penrice Soda cuts losses in FY'13
Aug '13
Penrice Soda Holdings Limited reported an underlying net loss after tax for the year ended 30 June 2013 of $21.4 million (FY2013: $6.7 million). Statutory net loss after tax was $50.1 million (FY2012: $63.6 million) and includes impairment and restructuring charges of $30.0 million.

Penrice Soda Financial Results

- Underlying net loss after tax $21.4 million (FY2012: $6.7 million)
- Statutory net loss after tax $50.1 million (FY2012: $63.6 million) (includes impairment and restructuring charges of $30.0 million)
- Statutory operating net cash outflow of $3.0 million (FY2012: $6.1 million)
- Net debt increased to $112.1 million from $96.5 million
- No dividend declare

The increase in underlying net loss was primarily in the soda ash business unit of the chemicals business and was due to the impact of lower prices, sales and production volumes, partly offset by an increased contribution from its sodium bicarbonate business unit. With the imminent closure of the soda ash plant at the end of the year and softening demand for soda ash, inventories were sold at reduced prices, further reducing profits.

Statutory operating cash flow for the year was improved with a net cash outflow of $3.0 million, compared to $6.1 million for the prior year. Operating cash flow increased, despite margin erosion, due to a sustained focus on cash generation, including working capital reduction of $8.6 million and an interest deferral of $6.3 million on the interest deferred, five year term debt facility.

Significant items included chemicals business restructuring costs in the second half of $8.8 million and first half impairment of the chemicals business of $21.2 million, all related to closure of soda ash plant and chemicals business restructure.

Penrice Managing Director and CEO, Guy Roberts, said that “The year was a very significant one in Penrice’s growth as a chemicals company. The closure of our Australian soda ash manufacturing and switch to an import/distribution joint venture in Pro Asia Pacific will put the chemicals business and the entire company on a more sustainable and profitable footing.

“The chemicals business earnings were well down with an underlying EBITDA loss of $2.6 million (FY2012: underlying EBITDA of $11.4 million) on a substantial loss in the soda ash business unit. That loss was the key driver of the company’s previously announced plans to restructure its operations and turnaround financial performance.”

“The export orientated sodium bicarbonate business ran well with record sales and was the substantial contributor to group earnings, leveraging strong market positions in Asia.”

“The South Australian quarry and mineral business delivered a decreased EBITDA of $1.4 million (FY2012: underlying EBITDA of $3.9 million) on 25% less sales volume than the previous financial year, with levels at 25 year lows in residential construction activity in the state. Cost savings and production efficiencies helped offset sales decline and the overall result, while disappointing, was creditable in the circumstances.”

As expected, net debt was up to $112.1 million from $96.5 million, including for capitalized interest on the interest deferred, five year term debt facility and the $8 million loan to the company from its JV partner which funded the business restructure in the second half.

Click here to read full results

Penrice Soda Holdings

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