A higher chrome benchmark price and increased sales volumes are expected to result in an improvement in London-listed Afarak Group’s financial performance for the second quarter, after the company posted a €7.5-million loss for the first quarter.
The company attributed the first-quarter loss to weaker ferrochrome prices and lower sales volumes, as well as to “specific segment conditions”.
Revenue for the quarter contracted by 17.7% year-on-year to €41.3-million, while sales of processed material decreased by 4.4% to 22 252 t.
Output decreased by 21.9% to 108 905 t.
Afarak reported a €4.8-million loss before interest, taxes, depreciation and amortisation for the quarter.
CEO Guy Konsbruck said “the operational challenges in our South African operations seen in 2018, persisted into the new year”.
He added that the second lowest benchmark price in the past nine quarters had impacted on sales volumes and revenues.
“The specialty segment performed well, although market prices for low carbon ferrochrome have weakened and the sales volumes have contracted,” Konsbruck noted, adding that the company had adapted its production output to market demand to maintain efficient inventory management.
He stated that the company was focussed on improving the efficiencies and operational performance in South Africa.
“Following the implementation of a turnaround strategy, positive results started being achieved in our South African mines towards the end of the first quarter,” he noted.
Meanwhile, the chrome benchmark price for the second quarter had increased by 7.1% to $1.20/lb.
Konsbruck further commented that the acquisition of its joint venture partner’s share of Synergy Africa would positively impact on its results for the second quarter.
“Synergy Africa will have a positive one-time impact on the results of the second quarter. We must, however, emphasise that the business environment in South Africa, with the scarce availability and the high cost of energy, will constitute a major obstacle to a good performance in our Mogale smelter,” he cautioned.