Western Areas cuts pay amid loss

The board and management of Western Areas will take a pay cut after the nickel miner slumped into the red with a $20 million half-year net loss.

Western Areas said today the impact of the depressed nickel price led to the company’s revenue taking a $54.2 million hit, leaving $105.9 million for the six months to December.

The result compared with a $23.6 million net profit achieved in the previous corresponding period, and was affected by expenditure and impairments on its non-core assets totalling $12.2 million.

The company declared no interim dividend.

Earnings before interest, tax, depreciation and amortisation fell 75.2 per cent to $18.6 million, while operating cash flow fell 83.3 per cent to $14.6 million.

As a result of the continued lagging nickel price, the board and senior management of the company has taken a 10 per cent salary cut.

“Western Areas has previously experienced and seen through the challenges of a volatile nickel price,” managing director Dan Lougher said.

“With the repayment of all convertible bond debt, the lowering of our corporate debt and operating costs and our ability to defer capital expenditure, the company is well positioned to take advantage of opportunities and an anticipated recovery in the nickel price.

“Our underlying reported net loss is entirely a function of the significant reduction in the nickel price, driving a reduction in revenue.

“This reduction effectively drops to the bottom line and free cash flow before tax.”

Operationally, Mr Lougher said the company delivered well for the year, lowering its cost of sales by around $500 per tonne of nickel.  

“We also continue to have positive cashflow from operations,” he said.

“The company took decisive action in October 2015 by announcing the deferral of capital expenditure and some exploration activities into FY17. 

“These decisions are only possible due to prior period investments in the business and reflect the operational flexibility we’ve built into the business model.”

Western Areas shares were 3.6 per cent lower to $2.12 each at the close of trade.