Afarak Group PLC (LON:AFRK) has released financial results for the first quarter which confirmed the negative impacts amid weak ferrochrome markets.
The company noted the lower ferrochrome prices and lower sales volumes. It reported €41.3mln of revenue, down 17% from €50.2mln in the comparative quarter of last year.
First quarter underlying earnings (EBITDA) came in at a €4.8mln loss versus a €0.7mln loss a year earlier and it reported a €7.5mln loss, expanded from €1.9mln. There was a €4.1mln outflow of cash in the period. It ended the quarter with €10.1mln of cash and equivalents.
“The operational challenges in our South African operations seen in 2018, persisted into the new year,” said chief executive Guy Konsbruck.
READ: Afarak issues profit warning for first quarter of 2019
He added: “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.”
Konsbruck continued: “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.”
He also highlighted that chrome benchmark prices improved by 7.1% to US$1.20 per pound.
“This increase is expected to improve results for quarter two, compared to the first quarter,” Konsbruck said. “Apart from improved prices, the company is also expected to experience higher sales volumes throughout the second quarter.”