Photo by: Duane Daws
JOHANNESBURG (miningweekly.com) – London-listed International Ferro Metals (IFM) returned to profitability in the financial year ended June 30, as its response to operational and broader market challenges led to better control over costs and optimised prices.
The group delivered a pretax profit of R41-million for the financial year, a turnaround from the R126-million loss in the prior year, owing to higher volumes and an improved rand:dollar exchange rate.
Earnings per share jumped to 7.9c for the year under review, compared with a loss of 23c a share in the year to June 2013.
Earnings before interest, taxes, depreciation and amortisation increased from R26-million last year to R202-million in the year under review.
IFM also reduced its net borrowings from R362-million as at June 2013, to R338-million.
“Over the year, IFM continued to control costs and develop new lower-cost initiatives, and has optimised the prices we receive by directing sales to specific regions,” explained CEO Chris Jordaan.
“This year marked an important turnaround for the company as it returned to profitability, despite depressed ferrochrome prices, [which reached $1.16/lb, down from $1.19/lb in the previous year],” he added.
Despite the strike action in the platinum sector earlier this year and a lack of upper group two supply from Anglo American Platinum between February and June 2014, IFM achieved record ferrochrome production and sales for the year.
The group sold 222 320 t of ferrochrome for the full year, a 21% rise on the 184 390 t sold in 2013, while output reached 228 260 t in the year under review.
IFM had also diversified its customer base, particularly to India and Korea, with a sales mix of 60:40 between the West and the East, resulting in improved price realisation.
Further, the company’s strategy of positioning itself lower on the global cost curve allowed it to “compete effectively” with international suppliers, including China.
“The interim goal of achieving lower costs than the Chinese ferrochrome producers, which have emerged over the last few years as South Africa's main competitor, has been achieved [through discipline and astute technical measures],” Jordaan said, adding that efforts were under way to “bring costs lower still”.
The company did not declare a dividend for the financial year.