Though International Ferro Metals (IFL) performed creditably from an operational perspective, the group recorded another, albeit reduced, headline loss at the half-year stage as prices for ferrochrome remained in the doldrums.
A contraction in global steelmaking and high inventories fed through into a cash loss of ZAR 45.5m (£4m) for IFL, against a loss of ZAR 73.5m for the 2011 interims. Ferrochrome spot prices hit a three-year low in December, but the effect of this slump will be mitigated by an electricity buyback agreement that IFL - along with several miners - has signed with state utility Eskom that involves closing down one of its furnaces in return for compensation at a "financially beneficial rate".
IFL reported record interim ferrochrome production of 110,092 tonnes - a 28 per cent rise. The Sky Chrome mine ramped up average monthly ore production to 70,000 tonnes. That's enough to make up for the Lesedi open-cast closure, though a review on Lesedi's underground viability is under way. IFL also completed 46 per cent of targeted group cost savings, with management confident that the remainder will be implemented by the end of 2013. Net borrowings increased to ZAR 436m against ZAR 308m at the end of June, and they're likely to expand again in the current quarter before falling back.
RFC Ambrian forecasts full-year adjusted pre-tax profit of £0.5m, rising to £20m in the 12 months to June 2014.
| INTERNATIONAL FERRO (IFL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 11.25p | MARKET VALUE: | £62.3m | |
| TOUCH: | 11-11.5p | 12-MONTH HIGH: | 20p | LOW: 9.5p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | ZAR 4.09 | NET DEBT: | 19% | |
| Half-year to 31 Dec | Turnover (ZARbn) | Pre-tax profit (ZARm) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 0.85 | -139 | -16.4 | nil |
| 2012 | 0.82 | -121 | -13.6 | nil |
| % change | -3 | - | - | - |
£1 = ZAR 13.4411 | ||||
