Afarak Group Plc Resilient Performance Despite Challenging Business Conditions

 
TIDMAFAGR 
 
 
   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, [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_Q1_2018_EN: http://hugin.info/143997/R/2192083/848676.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

May 11, 2018 10:13 ET (14:13 GMT)

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