20 Nov 2013 08:00
20 November 2013
International Ferro Metals Limited
("IFL" or the "Company")
Chairman's Address at the 2013 Annual General Meeting of Shareholders
I am pleased to report that after several years of losses, the Company expects to return to profitability this financial year. This expectation is conditioned by the assumption that the price for ferrochrome, combined with the Rand/U.S. dollar exchange rate, will not deteriorate materially from current levels. The Company's forecast for the ferrochrome market supports this assumption, but of course, it is not guaranteed.
Indeed, this return to profitability has begun with a favourable result for the first quarter - ended September 30. This is particularly heartening because it spanned two of the three winter months when the Eskom electricity tariffs reach a seasonal high. It was also at a time of full production, outside the voluntary shut down period (in return for financially attractive compensation) from February 15 to May 31 requested by Eskom. Financial health for the Company depends largely on maintaining a high level of production, a state which is continuing satisfactorily.
Conditions in the ferrochrome industry remain challenging, however, with some producers sustaining production only at the expense of losses. Chinese production capacity has continued to grow during the year under review; however indications are that producers there are suffering significant cost increases which have resulted in some shutdowns in actual production.
The most important reason why the Company's turnaround has been possible is not an improvement in the ferrochrome price, which in any case has not occurred (although a weaker Rand has helped), it is that our management has assiduously worked at getting our costs down. Outstanding success in this company-saving task, has put us in the bottom quartile of ferrochrome producers, measured by production costs. This places us in a competitive position not only vis-à-vis South African producers, but Chinese as well. Work on further cost reduction is continuing and should drive us even further down the cost curve.
On behalf of the Board, I would like to congratulate our management team, led by our CEO, Chris Jordaan, together with all our workers, without whose dedication this achievement would not have been possible. All have faced adversity with stalwart resolve and it has produced results.
As there is a close correlation between global GDP growth and the demand for ferrochrome, it is encouraging to observe that economic activity is increasing in most major economies of the world. The USA is in positive territory and China has passed its recent scare period to stabilize around the impressive official figure of 7% per annum, with private expectations indicating a figure of between 7% and 8%.
Against this more favourable macro-economic background, and with our successful cost cutting programme having further potential, the Company can look with confidence to the future.
- ENDS-
For further information please visit www.ifml.com or contact:
International Ferro Metals Limited Chris Jordaan, Chief Executive Officer | +27 (0) 82 653 1463 |
Brunswick Group Carole Cable / Fiona Micallef-Eynaud | +44 (0) 20 7404 5959 |
Numis Securities Limited James Black / John Prior / Stuart Skinner | +44 (0) 20 7260 1000 |
About International Ferro Metals:
International Ferro Metals produces ferrochrome, the essential ingredient in stainless steel, from its integrated chromite mine and ferrochrome processing operations in South Africa. International Ferro Metals is listed on the London Stock Exchange under the symbol IFL.
Forward Looking Statements
This announcement contains certain forward looking statements which by nature, contain risk and uncertainty because they relate to future events and depend on circumstances that occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements.