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Afarak boss pleased with performance of speciality alloys division so far this year

Revenues at that unit are up more than 11% so far this year, but Afarak struggled overall in the third quarter, which is always a tricky period for the sector
afarak chrome plant
Weak ferrochrome prices aren’t helping matters at the moment

Chrome producer Afarak Group plc (LON:AFRK) has seen a double-digit rise in revenue in its speciality alloys division so far in 2018.

In the first nine months of the year, revenue jumped 11.4% to €72.6mln (30 Sep 17: €65.2mln).

“The Speciality Alloys business segment fully met our expectations,” said chief executive Guy Konsbruck.

“The mines in Turkey continued to perform well and the additional plant investments have led to an increase in productivity and outputs. Processing levels at our EWW plant in Germany continued to increase.”

WATCH: Afarak Group Plc well positioned to exploit opportunities in 2019

But weak ferrochrome prices and the closure of some European and South African processing plants over summer held back overall performance in the third quarter.

Revenue dipped to €42.6mln in the three months to the end of September (Q3 17: €44.2mln), while

Processed material sold in the three months ended September 30 decreased by 7.3% to 25,500 tonnes (Q3 17: 27,500 tonnes), leading to a 3.6% fall in revenue to €42.6mln (Q3 17: €44.2mln).

Q3 always tricky

Underlying losses (LBIT) widened slightly to €4.3mln (Q3 17: €4.2mln), with profitability impacted by the shutdown of a furnace at Afarak’s Mogale processing plant in August.

Falling ferrochrome prices didn’t help matters, with the benchmark dipping to US$124 c/lb, which the company noted was lower than the previous quarter and the price for Q4 2017.

“In line with expectations, the seasonal effects of quarter three impacted Afarak’s performance,” said chief executive Guy Konsbrick.

“With plants in Europe shutting down, due to summer recess, and plants in South Africa also closing for maintenance in order to avoid higher winter electricity tariffs, quarter three is always bound to be a difficult one.”

Shares were flat at 77.5p on Friday morning.

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