Although the share price of International Ferro Metals (IFL) drifted lower through much of this year, the trend reversed in August when the South African ferrochrome producer achieved record production from the ramp-up of its Sky Chrome project. The market also reacted positively to IFL’s latest full-year results, which confirmed a return to headline profits - ZAR67m (£5m) - during the second half, together with substantial progress on the cost front.
Demand and prices for ferrochrome products remain weak, but this is expected to pick-up midway through 2013, by which time the scale benefits of IFL’s ramp-up should translate into rising profits and a gradual share price recovery. Operating margins have moved back into positive territory and hit 8 per cent in the six months to end June 2012, a dramatic turnaround from the negative 3 per cent margin in the financial year to June 2011, as IFL made strides in reducing costs. On a rand-adjusted basis, production costs decreased by 4.9 per cent year-on-year, representing 40 per cent of the targeted reduction.
Based on pre-tax profits of ZAR242m, analysts at Numis Securities anticipates 2013 EPS of ZAR 0.40, or about 3p.
| INTERNATIONAL FERRO METALS (IFL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 15p | MARKET VALUE: | £83m | |
| TOUCH: | 14.5-15p | 12-MONTH HIGH: | 23p | LOW: 12.5p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | ZAR 4.22 | NET DEBT: | 13% | |
| Year to 30 Jun | Turnover (ZARbn) | Pre-tax profit (ZARm) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2008 | 1.92 | 630 | 114 | 1.0 |
| 2009 | 0.78 | -456 | -66 | nil |
| 2010 | 1.43 | -157 | -15 | nil |
| 2011 | 1.58 | -214 | -24 | nil |
| 2012 | 1.50 | -72 | -9 | nil |
| % change | -5 | - | - | - |
£1 = ZAR 13.3921 | ||||
