Chrome and alloys specialist with mines and plant in South Africa
Profits dropped in 2018 due to weak ferrochrome price and technical problems at Mogale alloys plant
New management installed at Mogale
Originally named Ruukki, the Finnish company is mulling a swtich of domicile to the UK to help with share illiquidity
A buyback of shares listed in Finland is underway, encouraged by major shareholder LNS
How it's doing
In its annual report, Afarak Group Limited (LON:AFRK) told shareholders it has regrouped after a difficult year in 2018.
Guy Konsbruck, chief executive, wrote: “The unforeseen challenges in the South African assets were exacerbated by the lower average ferrochrome benchmark prices.
“These factors led to the group posting poor results when compared to the record performance for 2017."
There were particular problems with its Mogale plant, which was affected by technical problems, including stoppages and low-quality ore.
Corrective measures had been taken and a return to growth was the management’s objective, he added.
Production is also shifting towards high carbon ferrochrome, which will achieve higher margins, while mining operations are also being scaled back.
In addition to Mogale, Arafak also runs the Stellite, Mecklenburg and Vlakpoort mines.
As a result of the recent actions, Mogale’s performance stabilised in the fourth quarter but Afarak is cautious about predicting a sustained improvement in the tough conditions currently.
Revenues in 2018 were €194mln compared to €198.8mln in 2017, while the company reported an €18.6mln loss for the year, versus a €6.7mln profit.
What the boss says: Guy Konsbruck:
“We can always survive bad markets,” he says. "We have a unique product base when it comes to our alloys. We are one of the lowest cost miners of chrome, and we are still small enough that we can reduce our output if necessary.”
"Baseline for any given year is that the speciality business should deliver underlying profit (EBITDA) of around €10mln, and the South African business EBITDA of around €6.5mln."
Recovery in ferrochrome price
Remedial action at Mogale stays to improve performance
Completion of share buyback and switch of listing to London