Afarak Group Plc Strong Result In 2017 As Full-YEAR Ebitda More Than Tripled To Eur 18.0 Million
February 23 2018 - 1:10AM
UK Regulatory
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, +356 2122 1566, guy.konsbruck@afarak.com
Jean Paul Fabri, +356 9940 8746, 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
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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