Afarak Group Plc Afarak Group: Interim Report Q2/2017

 
TIDMAFAGR 
 
 
   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 
11(th) 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 [phone] 
 
   UK number [phone] 
 
   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 17(th) November, 
2017 and the closed period will be between 17(th) October and 17(th) 
November 2017. 
 
   AFARAK GROUP PLC 
 
   Guy Konsbruck 
 
   CEO 
 
   For additional information, please contact: 
 
   Afarak Group Plc 
 
   Guy Konsbruck, CEO, [phone], [e-mail] 
 
   Jean Paul Fabri, PR Manager, [phone], [e-mail] 
 
   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: http://hugin.info/143997/R/2126800/812087.pdf 
 
   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 
 
 
  http://www.afarakgroup.com 
 

(END) Dow Jones Newswires

August 11, 2017 02:00 ET (06:00 GMT)

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