Assore H1 headline earnings slump 46.5%
JOHANNESBURG (miningweekly.com) – Mining holding company Assore on Wednesday reported that its headline earnings for the six months to December 31, 2012, decreased by 46.5% to R1.1-billion from R2.06-billion in the six months ended December 2011.
This was chiefly the result of decreased earnings from its 50%-owned manganese ore and alloy company Assmang, coupled with reduced commissions earned on lower turnover within the group.
Assore’s revenue trended downward to R5.98-billion from R6.84-billion in the first half of the previous year.
Meanwhile, Assmang’s headline earnings declined by 46.3% to R2.12-billion on the back of lower iron-ore selling prices, which were 35.9% lower than the previous period.
In addition, labour issues and production difficulties resulted in higher unit production costs at Assmang’s manganese division, which negatively impacted on its contribution to headline earnings.
“Market conditions for the group’s commodities were more volatile compared with the previous corresponding period. These conditions, which were characterised by weaker Asian demand and continuing sovereign debt issues in Europe, continued to hamper a recovery in global economic growth,” the company said on Wednesday.
This was evidenced in the lower iron-ore prices, and continued downward pricing pressure on alloy products.
The impact of the lower iron-ore selling prices was partly offset by a weaker rand/dollar exchange rate, increased export volumes of iron-ore and chrome-ore and firmer prices for manganese ore.
Sales volumes of iron-ore and chrome ore were higher for the current period owing to the availability of increased rail capacity over the period and following the reduction of charge chrome production at Assmang’s Machadodorp works, which created additional volumes of export chrome-ore.
Meanwhile, the bulk of the group’s capital expenditure was consumed by Assmang, which spent over R2.3-billion on capital items, compared to R2.1-billion in the corresponding period.
Looking ahead, the company said it expected to see an increase in Chinese appetite for commodities, but a decline in demand from the European steel industry.
“Recent increases in iron-ore prices have been maintained and it is anticipated that prices for the remainder of the financial year will stabilise at levels higher than those for the first half of the financial year,” the company said.
Shortages of certain grades of manganese ore continued to support higher prices for some of the group’s manganese products.
Assore declare an interim dividend of R2.50 a share for the period.
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