JOHANNESBURG (miningweekly.com) – Despite a decline in commodity prices, lower demand and persistent low global economic growth, which resulted in deteriorating trading conditions, bulk commodities trader Metmar still achieved positive cash generation of R18.7-million for the financial year ended February 28.
“Sinter tolling and the growth of soft commodities provided diversification and contribution to turnover, reducing the adverse effect of commodity trading challenges,” the JSE-listed company said in a statement on Friday.
It added that cash generation was, however, significantly lower than the R41.9-million recorded in 2014.
Sales volumes increased by 15% and the US dollar/rand exchange rate weakened by 10%, but these were not sufficient to counter a 7% fall in revenue to R1.95-billion.
Trading margins also reduced to 3.8%, owing to a decline in US dollar-based commodity prices, while rand-based costs increased in line with inflation.
The company which specialised in ferrous and nonferrous metals, minerals, ferro-alloys, carbon, plastics, rubber and chemical products, said its operating expenses of R134.8-million included one-off care-and-maintenance costs.
It also reported a R32.6-million loss before interest income and expenses, income taxes, depreciation and amortisation, compared with earnings before interest income and expense, income taxes, depreciation and amortisation of R40.4-million the year before.
This, it noted, resulted from reduced turnover, a decline in gross margins from 6.4% to 4.3% and inflation-equivalent increases in operating expenses.
Net impairments, which included a receivables write-down of R42.4-million, an inventory write-down of R2.7-million and a reversal of impairment in investment in associate companies of R29.6-million decreased to R16.2-million, compared with R155.4-million the year before.
Metmar pointed out that its overall financial performance for the year under review had been impacted by net finance costs of R64.1-million, which increased owing to high trade finance facility use driven primarily by delays in the start-up of the Kalagadi tolling project.
Meanwhile, as a result of loss from associate companies being better contained, Metmar achieved a R147.1-million after-tax loss and a R145.9-million attributable loss for the year. Its headline loss, however, widened to R174.1-million, compared with R47-million in 2014.