2014-11-10 08:00:00 CET
2014-11-10 08:01:01 CET
REGULATED INFORMATION
Afarak Group Plc - Interim report (Q1 and Q3)
AFARAK GROUP PLC'S INTERIM REPORT FOR 1 JULY - 30 SEPTEMBER 2014
07:00 London, 09:00 Helsinki, 10 November 2014 - Afarak Group Plc ("Afarak" or"the Company") (LSE: AFRK, OMX: AFAGR) Interim Report
AFARAK GROUP PLC'S INTERIM REPORT FOR 1 JULY - 30 SEPTEMBER 2014
Q3 HIGHLIGHTS (July-September 2014):
- Revenue increased by 32.1% to EUR 40.6 (Q3/2013: 30.7) million
- Processed material sold increased by 131.9% to 26,347 (Q3/2013: 11,359) tonnes
- EBITDA was EUR 2.1 (Q3/2013: 2.9) million and the EBITDA margin was 5.1%
(Q3/2013: 9.4%)
- EBIT was EUR 0.5 (Q3/2013: -3.1) million and the EBIT margin was 1.3%
(Q3/2013: 2.2%)
- Profit for the period totalled EUR -0.7 (Q3/2013: -1.9) million
- Ferrochrome production decreased by 21.4% to 20,163 (Q3/2013: 25,574) tonnes
- Tonnage mined decreased by 59.2% to 50,005 (Q3/2013: 122,573) tonnes
- Cash flow from operations was EUR 1.2 (Q3/2013: -1.8) million and liquid funds
at 30 September were
EUR 21.4 (30 September 2013: 13.1) (30 June 2014:17) million
- The Group updates its outlook for 2014
+-----+ +--------+ +------+
KEY FIGURES (EUR million) |Q3/14| Q3/13 Change|Q1-Q3/14|Q1-Q3/13 Change| FY/13|
---------------------------+-----+-------------+--------+---------------+------+
Revenue | 40.6| 30.7 32.1%| 131.1| 93.8 39.8%| 135.5|
---------------------------+-----+-------------+--------+---------------+------+
EBITDA | 2.1| 2.9 -28.3%| 8.4| 13.3 -36.3%| 14.0|
| | | | | |
EBITDA margin | 5.1%| 9.4% | 6.4%| 14.1% | 10.4%|
---------------------------+-----+-------------+--------+---------------+------+
EBIT | 0.5| -3.1 | 2.9| -5.1 | -8.0|
| | | | | |
EBIT margin | 1.3%|-10.2% | 2.2%| -5.5% | -5.9%|
---------------------------+-----+-------------+--------+---------------+------+
Earnings before taxes | -1.3| -2.8 | 1.7| -8.1 | -11.2|
| | | | | |
Earnings margin |-3.3%| -9.1% | 1.3%| -8.6% | -8.2%|
---------------------------+-----+-------------+--------+---------------+------+
Profit | -0.7| -1.9 | 0.8| -3.7 | -4.4|
| | | | | |
Earnings per share, basic,|-0.00| -0.01 | 0.00| -0.02 | -0.02|
EUR | | | | | |
---------------------------+-----+-------------+--------+---------------+------+
Commenting on the third quarter results, Danko Koncar, CEO, said:"The volumes of ferrochrome processed decreased by 21.4% when compared to the
same period last year as both EWW and Mogale Alloys had scheduled maintenance
during this quarter. The tonnage mined continued to be negatively affected by
the temporary suspension of the Mecklenburg mine and the lockout at the Turkish
mines.
The Group's revenue during this quarter remained strong with an increase of
32.1% when compared with the same period last year as a result of sales
stockpiles. Ferrochrome prices remained weak during this quarter and remain
below the high levels seen last year. The weak US dollar during the majority of
this quarter has also continued to impact conversion of revenue and results from
operations as has the increase in cost of production, due to higher raw material
costs in the Speciality Alloys segment and higher energy cost in the Ferroalloys
segment due to the South African winter energy tariffs.
The ferrochrome market remains difficult to predict with no signs of recovery in
prices during this period. In the longer term we believe that ferrochrome
prices, particularly the speciality and super alloys segment, have potential to
recover to higher levels which we would expect to result in improved margins. We
continue to evaluate initiatives with the objective of strengthening our
position and providing new growth opportunities. Our focus remains on generating
cash and increasing profits.
Finally, I'm pleased to announce that despite a lower EBITDA we managed to
achieve positive EBIT for the third consecutive quarter."
2014 OUTLOOK
Afarak expects its financial performance to be better than 2013 but EBITDA is
expected to be lower. The global economic outlook continues showing signs of
recovery with western industrial nations issuing positive economic
indicators. Demand for commodities is also showing recovery with increase in
demand for speciality alloys in the United States. The ferroalloy market is
expected to continue the positive trend of 2013 during which consumption reached
record levels. To date, however, pricing has not responded to the increased
demand. The Group continues to be prepared for significant price fluctuations
and will continue to adapt its production levels accordingly. At Mogale Alloys,
part of the FerroAlloys division, the Company expects to start production of
medium carbon ferrochrome during the fourth quarter of 2014, which is expected
to have a positive impact on our profit margins. In the Speciality Alloys
division we are expecting to see an increase in our raw materials cost due to
current market conditions. As a result the full year revenue and EBIT are
expected to be higher but EBITDA lower as compared to 2013.
Fluctuations of exchange rates between the Euro, the South African Rand, the
Turkish Lira and the US Dollar can significantly impact the Company's financial
performance.
The previous outlook, published in the second quarter interim results on 14
August 2014, was:
Afarak still expects its financial performance to be better than 2013 but EBITDA
will be lower as Q3 2014 is expected to be weaker as compared to Q3 2013. The
global economic outlook continues showing signs of recovery with western
industrial nations issuing positive economic indicators. Demand for commodities
is also showing recovery with increase in demand for speciality alloys in the
United States. The ferroalloy market is expected to continue the positive trend
of 2013 during which consumption reached record levels. To date, however,
pricing has not responded to the increased demand. The Group continues to be
prepared for significant price fluctuations and will continue to adapt its
production levels accordingly. At Mogale Alloys, part of the FerroAlloys
division, the Company expects to start production of medium carbon ferrochrome
during the fourth quarter of 2014, which is expected to have a positive impact
on our profit margins. In the Speciality Alloys division we are expecting to see
an increase in our raw materials cost due to current market conditions. As a
result the full year revenue and EBIT are expected to be higher but EBITDA lower
as compared to 2013.
Fluctuations of exchange rates between the Euro, the South African Rand, the
Turkish Lira and the US Dollar can significantly impact the Company's financial
performance.
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 Q3/2014 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.afarakgroup.com.
AFARAK GROUP PLC
Danko Koncar
CEO
For additional information, please contact:
Afarak Group Plc
Danko Koncar, CEO, +44 (0)20 7376 1175, danko.koncar@afarak.com
Financial reports and other investor information are available on the Company's
website: www.afarakgroup.com.
Afarak Group is a chrome mining and minerals producer focused on delivering
sustainable growth with a Speciality Alloys business in southern Europe and a
FerroAlloys business in southern Africa. The Company is listed on NASDAQ OMX
Helsinki (AFAGR) and the Main Market of the London Stock Exchange (AFRK).
www.afarakgroup.com
Distribution:
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