Iluka Resources Ltd's full-year profit could slide by almost $40 million based on figures provided by the mineral sands miner at its annual general meeting today.
Iluka Resources Ltd's full-year profit could slide by almost $40 million based on figures provided by the mineral sands miner at its annual general meeting today.
Iluka chairman Ian MacKenzie reiterated Iluka's existing 2007 net profit after tax forecast of $90 million to $100 million, however, he said the forecast was based on an average Australian dollar exchange rate of US75 cents.
Mr McKenzie said the average exchange rate during 2007 was US79.9 cents, adding that every US1 cent increase in the Australian dollar against the US dollar would shave $8 million from its profit.
Around 96 per cent of Iluka's production is sold in US dollars.
Based on the US79.9 cent average Iluka's forecast profit would fall by $39.2 million.
Speaking to reporters after the meeting, managing director David Robb ruled out a profit-downgrade based on currency movements.
Mr Robb said the exchange rate was difficult to predict and some analysts had forecast the dollar to fall later this year.
He added that Iluka shipped more volume in the "later" part of the year.
Mr Robb said the company would reassess its financial position in the coming months and update shareholders at its half-yearly result.
He said the exchange rate was uncontrollable and he was concentrating on areas in the business he could control to help drive greater profitablity and deliver shareholder value.
At his first general meeting as managing director Mr Robb told shareholders that the company was undergoing a significant transition period and he was confident he could turn the company's fortunes around.
Mr Robb replaced Mike Folwell as managing director in October 2006 following a period of significant share price underperformance.
"As I think about the next 12 to 18 months and mentally 'roll forward' the clock to a time when we have completed the work outlined today and stand on the threshold of full production from the Murray Basin and start up of Eucal Basin operations, I am confident the perceptions of Iluka will be different to those that exist today," he said.
"Our challenge is to deliver that transformation."
Mr Robb said a review of Iluka's South West mining operations was continuing, which could ultimately lead to the miner pulling out of the region.
He said the review ranged from letting the business opearate "as usual" but in a better and more profitable fashion to changing the structure of the mining operations to divestment of assets.
"It is clear that, as presently configured, the South West business does not deliver adequate financial returns," Mr Robb said.
Mr Robb said the review of the South West business would be completed and a new business model implemented in the second half of the year.
Iluka revealed that the value of its 6,674 hecatre land holding in the South West had doubled from $35 million to $70 million based on rural land use following a recent assessment by Grant Samuel.
