07:00 London, 09:00 Helsinki, 11 August 2017 -
Afarak Group Plc ("Afarak" or "the Company") (LSE: AFRK, NASDAQ:
AFAGR)
AFARAK GROUP: INTERIM REPORT Q2/2017
Robust performance in Q2, Group
EBITDA at EUR 4.8 million.
HIGHLIGHTS IN THE SECOND QUARTER OF 2017
Afarak's EBITDA stood at EUR 4.8 million, compared
to EUR 0.8 million, a year earlier. This robust improvement,
compared to the same quarter in 2016, was mainly driven by higher
ferrochrome prices and strong market fundamentals.
-
Compared to a year earlier, ferrochrome market
prices were higher, though lower than those registered in the first
quarter. As a result, year-on-year performance was notably
stronger, but below the record results registered in quarter one.
This was in line with the market sentiment communicated in quarter
one
-
Revenue increased by 20.0% to EUR 47.4 (Q2/2016:
39.5) million
-
Processed material sold decreased by 26.4% to
20,773 (Q2/2016: 28,214) tonnes, reflecting the full switch from
silicomanganese to ferrochome production at Mogale
-
Tonnage mined increased by 2% to 41,427
(Q2/2016: 40,618) tonnes
-
Personnel increased considerably during the
period mainly driven by the employment of 82 temporary workers on a
test project in Serbia and new appointments at Mogale in South
Africa.
-
EBITDA stood at EUR 4.8 (Q2/2016: 0.8) million
and the EBITDA margin was 10.2% (Q2/2016: 2.0%)
-
EBIT was EUR 3.3 (Q2/2016: -0.9) million, with
the EBIT margin at 7.0% (Q2/2016: -2.2%)
-
Profit for the period from continuing operations
totalled EUR 1.4 (Q2/2016: -1.0) million, with cash flow from
operations standing at EUR -7.3 (Q2/2016: -0.4) million. Cash and
cash equivalents at 30 June totalled EUR 11.7 (30 June 2016: 13.2)
(31 March 2017: 16.2) million. Net interest-bearing debt was EUR
-5.0 (-7.7) (31 March 2017: -11.1) million.
-
An extraordinary capital distribution of EUR
0.02 per share and a total of EUR 5.2 million was paid to
shareholders during the second quarter
-
In view of the realised cash flow and the funds
required for capital expenditure and investments in the second half
of the year, the Company will not be paying an additional capital
redemption
Key Group figures
|
|
Q2/17 |
Q2/16 |
H1/17 |
H1/16 |
2016 |
Revenue |
EUR million |
47.4 |
39.5 |
104.1 |
80.3 |
153.6 |
EBITDA |
EUR million |
4.8 |
0.8 |
17.5 |
4.1 |
5.5 |
EBIT |
EUR million |
3.3 |
-0.9 |
14.4 |
0.8 |
-1.0 |
Earnings before taxes |
EUR million |
1.0 |
-1.3 |
7.8 |
-0.4 |
-3.1 |
Profit |
EUR million |
2.9 |
-1.0 |
7.1 |
-0.8 |
-0.9 |
Earnings per share |
EUR |
0.01 |
-0.00 |
0.02 |
-0.00 |
0.00 |
EBITDA margin |
% |
10.2 |
2.0 |
16.8 |
5.1 |
3.6 |
EBIT margin |
% |
7.0 |
-2.2 |
13.8 |
1.0 |
-0.7 |
Earnings margin |
% |
2.0 |
-3.2 |
7.5 |
-0.5 |
-2.0 |
Personnel (end of period) |
|
923 |
769 |
923 |
769 |
813 |
MARKET SENTIMENT FOR THE THIRD QUARTER 2017
The price levels for ferrochrome and Chrome Ore
remain highly volatile. Although the third quarter reflects the
seasonal slowdown, we still expect improved performance in Q3 2017,
compared to a year earlier. We also believe that chrome ore prices
have bottomed out and expect stronger price levels for second half
year. Having said that, the seasonally slower market, decreased
ferrochrome prices and negative effects of exchange rate movements
are expected to contribute to a lower performance compared to the
second quarter results.
All in all, we expect a stable continuation of our business in 2017
and further benefits from our change management initiatives
throughout the company.
CEO GUY KONSBRUCK
"Afarak continued to achieve solid and robust
results in 2017. In quarter two, we achieved another positive
result with Group EBITDA reaching EUR 4.8 million, up from EUR 0.8
million a year earlier. Ferrochrome prices, though lower than
in quarter one, have had a positive impact on our results. This
result was in line with the market sentiment we expressed in
quarter one. Going forward, market volatility remains and the
benchmark price for quarter three has been further reduced. On the
other hand, we have been successfully reducing our COP in all
business units, and continue to focus on further improvements via
various programs.
Operationally, we have performed well across both
business segments. We have increased revenues considerably, due to
higher market prices than a year earlier. Management's
interventions, including the switch of furnaces to ferrochrome and
the resumption of open-cast mining, have also yielded results.
During the quarter, management also preserved working capital and
decided to temporarily halt production at our EWW plant in Germany,
to manage levels of inventory and do early maintenance. We
subsequently reduced our scheduled maintenance stop in July by one
full week. Euroalliages has initiated a case calling for
protectionist measures in favour of EWW in response to non-European
producers. This confirms the strategic role EWW has in Europe
as the sole ferrochrome producer.
Despite our operational advances, safety must be a
top priority in our work. I believe that we can improve our
performance in this area and the Company has increased its
investing in its South African operations to further enhance health
and safety. This is a key priority for the new Board that was
elected during our Annual General Meeting in May 2017.
In the second quarter, the Company paid a EUR 0.02
per share capital redemption, following the exceptional result
registered in quarter one. Although the second quarter was an
improvement on 2016, as anticipated, it did not match the record
results in Q1. We also recorded a negative cash flow in the
quarter, as we managed our production for further improvements in
efficiency, with a consequential impact on working capital levels.
The Group is also planning a number of capital investments across
our business units and it is therefore not appropriate to propose
an additional extraordinary capital redemption at this time.
Moving forward, the price levels for ferrochrome
and Chrome Ore remain highly volatile. Although the third quarter
reflects the seasonal slowdown, we still expect improved
performance in Q3 2017, compared to a year earlier. We also believe
the chrome ore prices have bottomed out and expect stronger price
levels for second half year. Having said that, the seasonally
slower market, decreased ferrochrome prices and negative effects of
exchange rate movements are expected to contribute to a lower
performance compared to the second quarter results.
All in all, we expect a stable continuation of our
business in 2017 and further benefits from our change management
initiatives throughout the Company."
DISCLOSURE PROCEDURE
Afarak follows the disclosure procedure enabled by
Disclosure obligation of the issuer (7/2013) published by the
Finnish Financial Supervision Authority, and hereby publishes its
Q1/2017 interim report enclosed to this stock exchange release. The
Interim Report is attached to this release and is also available on
the Company's website at www.afarak.com.
INVESTOR CONFERENCE CALL
Management will host an investor conference call
in English on Friday 11th August 2017
at 12.00 Finnish time, 10.00 UK time. Please dial-in at least 10
minutes beforehand, quoting the reference: 1634154.
Finnish number +358 (0) 9 7479 0361
UK number +44 (0) 330 336 9105
Participants can also download the Quarter 2
Investor Call Presentation from the Presentation page on the
Investors Section on the Afarak website
(http://www.afarak.com/en/investors/presentations/).
FINANCIAL REPORTING IN 2017
The Interim Report for Q3 will be published on
Friday 17th November,
2017 and the closed period will be between 17th
October and 17th November
2017.
AFARAK GROUP PLC
Guy Konsbruck
CEO
For additional information, please contact:
Afarak Group Plc
Guy Konsbruck, CEO, +356 2122
1566, guy.konsbruck@afarak.com
Jean Paul Fabri, PR Manager, +356 2122 1566,
jp.fabri@afarak.com
Financial reports and other investor information
are available on the Company's
website: www.afarak.com.
Afarak Group is a specialist alloy producer
focused on delivering sustainable
Growth with a Speciality Alloys business in southern Europe and a
FerroAlloys
business in South Africa. The Company is listed on NASDAQ Helsinki
(AFAGR) and
the Main Market of the London Stock Exchange (AFRK).
Distribution:
NASDAQ Helsinki
London Stock Exchange
Main media
www.afarak.com
Afarak Q2 Release EN
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Afarak Group via Globenewswire
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