LONDON (Alliance News) - Afarak Group PLC Friday said it now expects its full year earnings before interest and tax to "significantly improve" compared to 2014, compared to its previous statement that said it would only "improve", as it reported a large rise in pretax profit in the first half of the year.
The miner operating in Europe, Africa and the US reported a EUR8.1 million pretax profit in the first half of 2015, a substantial rise from the EUR2.4 million made a year earlier as revenue experienced a 3.6% lift to EUR93.8 million from EUR90.5 million.
Earnings before interest, tax, depreciation and amortisation rose to EUR12.3 million in the first half from EUR6.4 million a year earlier whilst Ebit increased to EUR8.8 million from EUR2.4 million.
In the second quarter ended June 30, the company produced 27.5% more ferrochrome, totalling 27,586 tonnes compared to the 21,854 tonnes produced a year earlier. Processed material sold in the quarter also rose by 33.4% to 30,556 tonnes from 22,901 tonnes.
"Both the Speciality Alloys and FerroAlloys segment performed well during the second quarter with sales volumes for standard grade material being higher than last year," said Afarak.
Afarak also upgraded its full year outlook due to the expectation that global growth in stainless steel production will lead to an increase in demand for chrome products in the remainder of the year.
That extra demand will struggle to met by the chrome industry according to the company, which in turn will lead to higher prices for chrome products.
At the Mogale Alloys project in South Africa, part of the FerroAlloys division, the company started production of medium carbon ferrochrome during the fourth quarter of 2014 and on Friday said it will make a "positive contribution" to profit margins in 2015.
In addition, the strengthening of the US dollar is also expected to improve the financial performance of the Company as compared to 2014. All of the company's producing operations are based in South Africa.
However, the company said the Speciality Alloy division is expected to continue to see an increase in raw materials costs.
"In 2015, Afarak's revenue is expected to remain at the same levels of 2014 and Ebit is expected to significantly improve as compared to 2014," said the company.
Previously, Afarak said Ebit would only "improve" in 2015 compared to 2014.
"I would like to conclude by highlighting that we continued the positive trend started this year with a significantly higher profit from prior years. This result is a clear indication that our business, even when the market is weak, performs well and manages to achieve sustainable profits," said Chief executive Alistair Ruiters.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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Afarak Group (AFRK)