Afarak swings to loss as production softens significantly

11th Nov 2016 08:33

(ShareCast News) - Afarak Group posted its unaudited interim report for its third quarter to 30 September on Friday, with revenue decreasing 35.4% to €35.4bn.The company reported an EBITDA loss of €2.8m, down from earnings of €1.3m at the same time last year, with an EBITDA margin of -9.8%, compared with 2.8%.Losses from continuing operations for the period totalled €3.2m, widening from €1m losses last year.Cash flow from operations was an outflow of €5.5m, compared to inflows of €9.9m, with liquid funds at 30 September of €7m, significantly less than the €22.3m Afarak had a year earlier.The company's total processed material sold was down 11.7% to 18,023 tonnes, with production of processed material weakening by 4.4% to 18,489 tonnes.The total tonnage mined during the quarter decreased 64.2% to 45,487 tonnes."The company endured a very challenging quarter," said CEO Alistair Ruiters."It was extremely painful to deal with the loss of one of our colleagues, Nelson Maurison Msimango, who passed away following a fatal accident at our Mogale plant."We are continuing with our efforts to enhance health and safety procedures at our plants."Ruiters said markets remained subdued as prices for many of the company's products continued to slide, accompanied by tapered demand."With prices gravitating downwards, our sales volumes in the speciality alloy segment were hit hard."Our mining and production volumes were lower due to safety stoppages at our mines and due to the closure of Mogale Alloys plant following the fatality."Ruiters said in response, Afarak focused its efforts on prudent working capital management, the procurement of strategic raw materials at competitive prices and debt collection."Our sales of materials, particularly charge chrome, remained satisfactory despite the seasonality associated with weak demand in the third quarter."He said the company was now seeing a recovery in prices."Benchmark prices for charge chrome have accelerated and demand is gaining traction."This improved market sentiment together with our strong managerial and production capabilities should further support our efforts to generate value for our shareholders."