Afarak Group Plc Regulatory News (AFRK)

17 May 2019 10:10

ADVERSE BUSINESS CONDITIONS IMPACT PERFORMANCE

10:00 London, 12:00 Helsinki, May 17, 2019 - Afarak Group Plc ("Afarak" or "the Company")

ADVERSE BUSINESS CONDITIONS IMPACT PERFORMANCE

		Q1/19	Q1/18	2018
Revenue	EUR million	41.3	50.2	194.0
EBITDA	EUR million	-4.8	-0.7	-1.0
EBIT	EUR million	-6.6	-2.4	-14.1
Earnings before taxes	EUR million	-7.2	-2.5	-18.5
Profit from continuing operations	EUR million	-7.5	-1.9	-18.6
Profit from discontinued operations	EUR million	0.0	0.0	0.0
Profit	EUR million	-7.5	-1.9	-18.6
Earnings per share	EUR	-0.03	0.01	-0.07
EBITDA margin	%	-11.6	-1.4	-0.5
EBIT margin	%	-16.1	-4.7	-7.3
Earnings margin	%	-17.5	-5.0	-9.6
Personnel at the end of the period		1,052	1,015	1,061

HIGHLIGHTS IN THE FIRST QUARTER OF 2019

Weaker ferrochrome prices and lower sales volumes coupled by specific segment conditions, led Afarak to register a weaker performance than a year earlier; Revenue for the quarter contracted by 17.7% to EUR 41.3 (Q1/2018: 50.2) million on account of lower prices and sales volumes compared to a year earlier;Processed material sold decreased by 4.4% to 22,252 (Q1/2018: 23,284) tonnes;Tonnage mined decreased by 21.9% to 108,905 (Q1/2018: 139,478) tonnes;EBITDA was EUR -4.8 (Q1/2018: -0.7) million and the EBITDA margin was -11.6% (Q1/2018: -1.4%);EBIT was EUR -6.6 (Q1/2018: -2.4) million and the EBIT margin was -16.1% (Q1/2018:-4.7%);Profit for the period from continuing operations totalled EUR -7.5 (Q1/2018: -1.9) million;Cash flow from operations was EUR -4.1 (Q1/2018: 1.2) million;Net interest-bearing debt after deducting liquid funds amounted to EUR 11.9 (31 March 2018: 3.3) (31 December 2018: 12.3) million;Cash and cash equivalents at 31 March totalled EUR 10.5 (31 March 2018: 10.5) (31 December 2018: 12.1) million.

MARKET SENTIMENT FOR THE SECOND QUARTER 2019

The charge chrome benchmark price for quarter two rose by 7.1% to USD1.20 per pound. This increase is expected to improve results for quarter two, compared to the first quarter. Apart from improved prices, the Company is also expected to experience higher sales volumes throughout the second quarter. The acquisition of the joint venture partner’s share of Synergy Africa will positively impact results of the second quarter as a result of change in control. However, conditions in the FerroAlloys segment remain challenging.

CEO GUY KONSBRUCK

“The operational challenges in our South African operations seen in 2018, persisted into the new year. With the second lowest benchmark price in the past nine quarters, sales volumes and revenues were impacted during the first three months of the year.

The specialty segment performed well, although market prices for low carbon ferrochrome have weakened and the sales volumes have contracted. The company has adapted the production output to the market demand in order to keep efficient inventory management in place.

The Executive Management Team together with the operational units are focusing their efforts on improving the 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. In addition, cash management was a key priority for the Company during the quarter. Despite the results, prudent working capital management have allowed the Company to keep cash flow stable.

The charge chrome benchmark price for quarter two rose by 7.1% to USD1.20 per pound. This increase is expected to improve results for quarter two, compared to the first quarter. Apart from improved prices, the Company is also expected to experience higher sales volumes throughout the second quarter. The acquisition of the rest of the joint venture Synergy Africa will have a positive one-time impact on the results of the second quarter. We must however emphasize 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.

Despite this tough environment the Company is focused on improving its operational and financial performance.”

The Board of DirectorsAfarak Group

For additional information, please contact:

Guy Konsbruck, CEO, +356 2122 1566, guy.konsbruck@afarak.comJean Paul Fabri, PR Manager, +356 2122 1566, jp.fabri@afarak.com

Financial reports and other investor information are available on the Company's website: www.afarak.com.

Afarak Group is a specialist alloy producer focused on delivering sustainable growth with a Speciality Alloys business in southern Europe and a FerroAlloys business in South Africa. The Company is listed on NASDAQ Helsinki (AFAGR) and the Main Market of the London Stock Exchange (AFRK).

Distribution:NASDAQ HelsinkiLondon Stock ExchangeMain media

www.afarak.com

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Afarak_Q1 2019_EN