15:00 London, 17:00 Helsinki, May 11, 2018 - Afarak Group Plc ("Afarak" or "the Company")
RESILIENT PERFORMANCE DESPITE CHALLENGING BUSINESS CONDITIONS
HIGHLIGHTS IN THE FIRST QUARTER OF 2018
- Compared to a year earlier, benchmark price fell by 30% leading revenues to decline by 11.5% to EUR 50.2 (Q1/2017: 56.7) million.
- Processed material sold decreased by 16.6% to 23,284 (Q1/2017: 27,916) tons
- Tonnage mined increased by 63.4% to 139,478 (Q1/2017: 85,352) tons.
- Unfavourable exchange rate movements and a significant increase in raw material costs, negatively impacted profitability.
- EBITDA was EUR -0.7 (Q1/2017: 12.7) million and the EBITDA margin was -1.4% (Q1/2017: 22.4%).
- EBIT was EUR -2.4 (Q1/2017: 11.1) million and the EBIT margin was -4.7% (Q1/2017: 19.6%).
- Profit for the period from continuing operations totalled EUR -1.9 (Q1/2017: 4.2) million, with cash flow from operations standing at EUR 1.2 (Q1/2017: 8.5) million and liquid funds at 31 March were EUR 10.5 (31 March 2017: 16.2) (31 December 2017: 10.7) million. Capital expenditure for the first quarter of 2018 totalled EUR 1.8 (0.6) million
Key Group figures
| Q1/18 | Q1/17 | Q4/17 | 2017 | ||
| Revenue | EUR million | 50.2 | 56.7 | 50.6 | 198.8 |
| EBITDA | EUR million | -0.7 | 12.7 | 2.6 | 18.0 |
| EBIT | EUR million | -2.4 | 11.1 | 1.2 | 11.4 |
| Earnings before taxes | EUR million | -2.5 | 6.9 | 1.8 | 4.2 |
| Profit from continuing operations | EUR million | -1.9 | 4.2 | 3.5 | 5.2 |
| Profit from discontinued operations | EUR million | 0.0 | 0.0 | 0.0 | 1.5 |
| Profit | EUR million | -1.9 | 4.2 | 3.5 | 6.7 |
| Earnings per share | EUR | -0.01 | 0.01 | 0.01 | 0.02 |
| EBITDA margin | % | -1.4 | 22.4 | 5.2 | 9.0 |
| EBIT margin | % | -4.7 | 19.6 | 2.3 | 5.7 |
| Earnings margin | % | -5.0 | 12.1 | 3.5 | 2.1 |
| Personnel at the end of the period | 1,015 | 906 | 1,017 | 1,017 |
MARKET SENTIMENT FOR THE SECOND QUARTER 2018
The charge chrome benchmark price for quarter two rose by 20% to USD1.42 per pound. This increase is expected to improve results for quarter two, compared to the first quarter. Apart from improved prices, the Company is also expected to experience higher sales volumes throughout the second quarter. For reference, the exceptionally high benchmark of Q2 2017 was USD1.54 per pound. Despite the higher benchmark, market prices for the sales of Chrome Ore have come under pressure during the month of April, confirming the challenging market conditions.
CEO GUY KONSBRUCK
"Afarak managed to minimise the impact of a number of external factors that impinged on the sector and company during the first three months of the year.
The charge chrome benchmark price for quarter one 2018 was 30% lower than a year earlier and 15% less than quarter four 2017. This decline led to lower revenues and profitability levels. Furthermore, cost pressures also impacted on profitability as raw materials such as graphite electrodes and ferrosilicon all increased significantly. Profitability was further impacted by a weakening of the US dollar and a strengthening of the South African Rand. In addition, several technical issues, including breakdowns and temporary stoppages of processing equipment in our South African mining operations, caused lower production outputs from the previous quarter, ultimately affecting raw material supply to Mogale, as well as revenues from sales of chrome ore to the market.
Efforts were made to minimise overheads, hedge the foreign exchange exposures and, where appropriate, postpone the sales of materials. During the quarter, the Company continued to prove its resilience to weak market conditions primarily through its cost consciousness and through its lean and effective management structure.
The benchmark price for quarter two has rebounded and with expected higher sales volumes, various operational investments are set to materialise. Mining in Vlakpoort is set to commence in quarter two whilst in Mogale, Afarak will also start producing foundry grade ore."
The Board of Directors
Afarak Group
For additional information, please contact:
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
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