Afarak Group Plc Strong Result In 2017 As Full-YEAR Ebitda More Than Tripled To Eur 18.0 Million

 
TIDMAFAGR 
 
 
   07:00 London, 09:00 Helsinki, 22 February 2018 - Afarak Group Plc 
("Afarak" or "the 
 
   Company") (LSE: AFRK, NASDAQ: AFAGR) 
 
   STRONG RESULT IN 2017 AS FULL-YEAR EBITDA MORE THAN TRIPLED TO EUR 18.0 
MILLION 
 
   HIGHLIGHTS IN THE FOURTH QUARTER OF 2017 
 
   Afarak's fourth-quarter EBITDA amounted to EUR 2.6 million, compared to 
the historically high EUR 4.3 million a year earlier. Despite strong 
revenue growth on the back of the improved market conditions, 
profitability was affected by mostly non-operational factors. 
 
 
   -- Revenue increased strongly by 14.0% to EUR 50.6 (Q4/2016: 44.4) million, 
      driven by our improved production levels 
 
   -- Processed material sold increased by 6.1% to 25,371 (Q4/2016: 23,906) 
      tonnes supported by stronger market demand and higher prices 
 
   -- Tonnage mined increased significantly to 154,646 (Q4/2016: 114,898) 
      tonnes, due to increased ore sales activity to China 
 
   -- Capital expenditure for the fourth quarter of 2017 totalled EUR 3.4 (0.7) 
      million 
 
   -- EBITDA stood at EUR 2.6 (Q4/2016: 4.3) million, with the EBITDA margin of 
      5.2% (Q4/2016: 9.6%) and was negatively impacted by mostly 
      non-operational factors 
 
   -- EBIT was EUR 1.2 (Q4/2016: 2.7) million, with the EBIT margin at 2.3% 
      (Q4/2016: 6.1%) 
 
 
   HIGHLIGHTS FOR THE FULL YEAR OF 2017 
 
   2017 was a record year for Afarak. EBITDA more than tripled to EUR 18.0 
million, from EUR 5.5 million in 2016. Management's focus on 
productivity and efficiency gains throughout the Group, especially in 
South Africa, supported by stronger market conditions, resulted in 
significant operational and financial gains for the year 
 
 
   -- Revenue increased by 29.5% to EUR 198.8 (FY/2016: 153.6) million, 
      reflecting both higher production and sales volumes as well as prices 
 
   -- Processed material sold increased by 4.6% to 101,598 (FY/2016: 97,095) 
      tonnes 
 
   -- Tonnage mined nearly doubled to 503,914 (FY/2016: 262,266) tonnes, 
      primarily due to the increased activity and operational efficiency in 
      South Africa 
 
   -- The Company increased its investment substantially, particularly in South 
      Africa, with capital expenditure for the full year 2017 standing at EUR 
      6.9 (2.8) million. This trend is expected to continue over the next two 
      years. 
 
   -- EBITDA stood at EUR 18.0 (FY/2016: 5.5) million and the EBITDA margin 
      was        9.0% (FY/2016: 3.6%) 
 
   -- EBIT was EUR 11.4 (FY/2016: -1.0) million, with the EBIT margin at 5.7% 
      (FY/2016: -0.7%) 
 
 
   Key Group figures 
 
 
 
 
                                                  Q4/17  Q4/16  FY2017  FY2016 
Revenue                              EUR million   50.6   44.4   198.8   153.6 
EBITDA                               EUR million    2.6    4.3    18.0     5.5 
EBIT                                 EUR million    1.2    2.7    11.4    -1.0 
Earnings before taxes                EUR million    1.8    1.5     4.2    -3.1 
Profit from continuing operations    EUR million    3.5    1.7     5.2    -2.8 
Profit from discontinued operations  EUR million    0.0    0.4     1.5     1.9 
Profit                               EUR million    3.5    2.0     6.7    -0.9 
Earnings per share                           EUR   0.01   0.01    0.02    0.00 
EBITDA margin                                  %    5.2    9.6     9.0     3.6 
EBIT margin                                    %    2.3    6.1     5.7    -0.7 
Earnings margin                                %    3.5    3.4     2.1    -2.0 
Personnel (end of period)                         1,017    813   1,017     813 
 
 
   MARKET SENTIMENT FOR THE FIRST QUARTER 2018 
 
   The charge chrome benchmark price dropped from USD 1.39/lb in the fourth 
quarter 2017, to USD 1.18/lb for the first quarter 2018. The current 
benchmark is significantly lower than the exceptionally high price 
registered during the corresponding quarter in 2017. Additionally, 
increased raw materials; graphite electrodes and ferrosilicon; and a 
weakening of the US dollar combined with a strengthening of the South 
African Rand are expected to have a significantly negative impact on 
profitability. Recent developments, both in chrome ore and ferrochrome 
prices, have been more positive again. 
 
   CEO GUY KONSBRUCK 
 
   "2017 was a milestone for Afarak both financially and operationally. 
With respect to health and safety, we continued implementing various 
measures and investments across the Group and it is a satisfaction to 
note that we successfully reduced the number of lost days due to injury. 
In addition, no fatalities were reported across our operations. We 
remain committed to continue improving our safety track record across 
the Group. 
 
   Afarak's full-year EBITDA increased more than three-fold, from EUR 5.5 
million to EUR 18.0 million with sales of EUR 198.8 million. While the 
robust performance was supported by improved market conditions, 
including higher ferrochrome prices, I am particularly proud of our 
persistent focus on enhancing the Company's position as a 
vertically-integrated producer and on its transformation to a more 
resilient and adaptable organisation. Through various initiatives, the 
Company weathered the challenges and more importantly, reaped the 
benefits of the market upswing. 
 
   In the speciality alloys segment, Afarak registered a very strong 
performance on the back of increased production, strong market demand 
and improved prices. The ferroalloys segment in South Africa, also 
performed well. In addition, the mines continued to register positive 
performance, increasing efficiency and productivity. The resumption of 
opencast mining at Mecklenburg played a key role in the results of the 
Group. Throughout 2017, Afarak also took initiatives to extend the 
opencast mining at Stellite by increasing the high wall. Work has also 
started on introducing additional cycles of beneficiation and the 
expansion of the product mix through the introduction of higher 
value-add products. These projects are still in the initial stages of 
development and the first production results could be expected during 
2018. 
 
   The acquisition of the Zeerust Chrome Mine will further extend Afarak's 
production capacity towards the second half of the year and will make it 
the only South African producer of high carbon ferrochrome. 
 
   On behalf of management, I would like to thank all the teams across our 
operations for their important contribution to registering these 
results. The adaptability and flexibility of the Group reflects the work 
ethic of our employees who rise to the challenges. I am confident that 
our actions and interventions to enhance the Company's operations and 
structures continue to pay off. 
 
   The Company continued to care about community initiatives, particularly 
in South Africa. Afarak supports the daily life of various communities 
close to our assets and we are committed to continue to improve their 
quality of life. Apart from education and social projects, we are also 
supporting local entrepreneurship, enhancing water supply and local 
infrastructure development, as well as continuing our environmental 
rehabilitation activity. 
 
   We are installing a 2.8 MW heat recovery unit in Mogale. This energy 
saving investment will contribute towards a proportional reduction of 
our CO2 emissions and a respective increase of our productivity. We look 
forward to extending our investment in other sustainability and 
community initiatives. 
 
   Moving forward, the markets remain volatile. The decrease in the first 
quarter benchmark is expected to impinge on our results. During the 
coming year, management continues to consolidate Afarak's positive 
performance, while focusing on capital investments, production capacity 
growth, specialised products development and market expansion. We are 
currently finalising a review of our resources & reserves statement that 
will be published in due course. 
 
   During 2018, the Board, as instructed by shareholders, will be preparing 
a plan for delisting from the Helsinki Stock Exchange. This will develop 
the need to increase market liquidity in London and management is 
working to attract new institutional and industrial investors who 
believe in the long-term growth prospects of the Company." 
 
   INVESTOR PRESENTATION 
 
   Management will host an investor presentation on Thursday 1(st) March, 
2018 at 10.30 am Finnish time at Union Square Auditorium (Floor K1) 
Unioninkatu 22, 00130 Helsinki, Finland. 
 
   FINANCIAL REPORTING IN 2018 
 
   The Interim Report for Q1 will be published on Friday 11(th) May, 2018 
and the closed period will be between 11(th) April and 11(th) May 2018. 
 
   AFARAK GROUP PLC 
 
   Guy Konsbruck 
 
   CEO 
 
   For additional information, please contact: 
 
   Afarak Group Plc 
 
   Guy Konsbruck, CEO, [phone], [e-mail] 
 
   Jean Paul Fabri, [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 
 
   Annual release 2017: http://hugin.info/143997/R/2171189/836598.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

February 23, 2018 02:10 ET (07:10 GMT)

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