Mining & Resources
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Increase in average DWC driven by higher inventory loads and longer collection cycles, however working capital performance was mixed across the sector participants.
Our sample of Mining & Resources companies reported an average fall in revenue of 4% in FY24. However, there was a mix of outcomes at the company level, with 51% of operators actually reporting sales growth. A number of the companies that reported lower sales had exposure to depressed commodity prices for lithium and, to a lesser extent, coal and LNG. EBITDA margins fell by an average of 7% across the sample, but for those companies that did achieve higher revenue, 85% also managed their cost base well and delivered earnings growth.
From a working capital perspective, DWC increased by 1.8 days to 43.5 days in FY24. In a reversal of the FY23 movements for all tested metrics, our sampled companies held more inventory, with average DIO increasing by 2.7 days (to 78.9 days). There was also a lengthening of customer collection cycles, with average DSO increasing by 2.2 days (to 35.4 days). Close to 60% of the sample that were paid more slowly by their customers also held more inventory, increasing the pressure on cash flow for those operators.
Close to 60% of sampled companies that took longer to collect from their customers (higher DSO) passed this onto their suppliers through slower payments (higher DPO). This was particularly the case for the “majors”, with the majority of the larger operators with higher DSO extending their supplier payment cycle (and all of these companies doing so by two weeks or longer). Average DPO for the entire sample increased by 3.4 days (to 64.6 days) in FY24.
Our Australian sample companies sat within the range of DWC achieved in Asia, Europe and the US.
Going forward, we expect to see the working capital cycles of Mining & Resources industry participants continue to be impacted by the combination of the accelerating ‘boom bust’ commodity price cycle, relatively high inflation, and the lumpy deployment of capital to fund the transition to renewable energy.
Net working capital performance
Sector outlook
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Financial Year
Days | 2023 | 2024 | Change |
|---|---|---|---|
DSO | 33.2 | 35.4 | 2.2 |
DIO | 76.2 | 78.9 | 2.7 |
DPO | 61.2 | 64.6 | 3.4 |
DWC | 41.7 | 43.5 | 1.8 |
Best & Worst
Days | Best | Worst | Spread |
|---|---|---|---|
DSO | - | 134.4 | 134.4 |
DIO | 1.5 | 231.6 | 230.1 |
DPO | 247.0 | 6.2 | (240.8) |
DWC | (6.1) | 130.2 | 136.3 |
International Benchmarking
Days | Asia | EU | US |
|---|---|---|---|
DSO | 39.3 | 50.1 | 38.5 |
DIO | 71.3 | 71.9 | 43.7 |
DPO | 66.3 | 89.5 | 91.9 |
DWC | 48.4 | 40.0 | 24.0 |
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