DIFFICULT QUARTER FOR AFARAKIndustry seasonal effects, coupled with some internal adversities, primarily in the FerroAlloys segment, continues to make 2018 a difficult year for the Company.    Q3/18Q3/17Q2/18Q1-Q3/18Q1-Q3/172017 RevenueEUR million42...
09:30 London, (informazione.it - comunicati stampa - industria)



Industry seasonal effects, coupled with some internal adversities, primarily in the FerroAlloys segment, continues to make 2018 a difficult year for the Company.

    Q3/18 Q3/17 Q2/18 Q1-Q3/18 Q1-Q3/17 2017
Revenue EUR million 42.6 44.2 54.3 147.0 148.2 198.8
EBITDA EUR million -2.5 -2.2 1.2 -2.0 15.4 18.0
EBIT EUR million -4.3 -4.2 -0.4 -7.1 10.2 11.4
Earnings before taxes EUR million -4.0 -5.4 -3.3 -9.8 2.5 4.2
Profit from continuing operations EUR million -2.8 -3.9 -2.7 -7.4 1.7 5.2
Profit from discontinued operations EUR million 0.0 0.0 0.0 0.0 1.5 1.5
Profit EUR million -2.8 -3.9 -2.7 -7.4 3.2 6.7
Earnings per share EUR -0.01 -0.01 -0.01 -0.03 -0.01 0.02
EBITDA margin % -5.9 -4.9 2.2 -1.4 10.4 9.0
EBIT margin % -10.0 -9.4 -0.8 -4.8 6.9 5.7
Earnings margin % -9.4 -12.1 -6.2 -6.7 1.7 2.1
Personnel (end of period)   1,051 912 1,032 1,051 912 1,017


  • The benchmark price for ferrochrome, during quarter three 2018, fell further from its level in the previous quarter, leading to lower revenues, when compared to both a year earlier and the previous quarter;
  • Processed material sold decreased by 7.3%, to 25,521 (Q3/2017: 27,538) tonnes and revenues decreased by 3.6%, to EUR 42.6 (Q3/2017: 44.2) million;
  • Tonnage mined decreased by 1.5%, to 150,951 (Q3/2017: 153,286) tonnes;
  • The Group's EBITDA stood at EUR -2.5 (Q3/2017:-2.2) million and the EBITDA margin was -5.9% (Q3/2017: -4.9%);
  • EBIT was EUR -4.3 (Q3/2017: -4.2) million, with the EBIT margin at -10.0% (Q3/2017:          -9.4%);
  • Profit for the period from continuing operations totalled EUR -2.8 (Q3/2017: -3.9) million;
  • Cash flow from operations stood at EUR 2.3 (Q3/2017: -0.4) million. Net interest-bearing debt increased to EUR 9.9 (Q3/2017: -2.1) (30 June 2018: 10.5) million;
  • Cash and cash equivalents at 30 September totalled EUR 5.8 (30 September 2017: 13.6) (30 June 2018: 5.5) million.


  • Revenue in the Speciality Alloys segment increased by 11.4%, to EUR 72.6 (Q1-Q3/2017: EUR 65.2) million;
  • Revenue in the FerroAlloys segment decreased by 8.3%, to EUR 73.8 (Q1-Q3/2017: EUR 80.5) million;
  • Profitability was impacted by the negative performance of the FerroAlloys segment, affected by the fact that Mogale's P3 furnace was not operating since August, due to the transformer failure; 
  • EBITDA for quarter one to quarter three of 2018 contracted, compared to the historically high result posted in the equivalent period in 2017, to EUR -2.0 (15.4) million. The share of joint venture profit for the period amounted to EUR -1.8 (4.4) million;
  • Profit from continuing operations for quarter one to quarter three stood at EUR -7.4 (1.7) million.


The downward trend in the benchmark price for ferrochrome is set to continue in the fourth quarter of 2018. In fact, the benchmark has been settled at USD 124 c/lb., which is lower than both the previous quarter and the price for quarter four 2017.


“In line with expectations, the seasonal effects of quarter three impacted Afarak's performance. With plants in Europe shutting down, due to summer recess, and plants in South Africa also closing for maintenance in order to avoid higher winter electricity tariffs, quarter three is always bound to be a difficult one. These effects were compounded by a suppressed benchmark price, compared to the previous quarter, albeit higher than the one registered a year earlier.

The significant challenges faced by the FerroAlloys segment in South Africa offset positive results registered by the Speciality segment. Higher electricity costs were compounded by lower mining activity, primarily due to lower quality ore from Mecklenburg, and a forced close of the P3 furnace, due to unexpected repairs. This interplay of factors, together with lower sales prices, led to the segment registering a significant loss, which impacted heavily on the Group's results.

The Speciality Alloys business segment fully met our expectations. The mines in Turkey continued to perform well and the additional plant investments have led to an increase in productivity and outputs. Processing levels at our EWW plant in Germany continued to increase. We also enjoyed increased demand for our products. Currency exposures, particularly the strengthening of the US Dollar, positively affected our profitability, when compared to a year earlier.

On behalf of management, I would like to thank all the teams working in our different mines and plants for their commitment and loyalty to the company. Local teams remain focused on optimising solutions and initiatives for the company to move forward, despite the challenging environment. I believe that the resilient performance registered by the Company is due to the effort of each and every employee. We continued to invest in our assets in order to ensure sustainable returns going forward.
Management is also committed to continue investing in the sustainability of our operations. We continue placing our employees at the centre of our operations and we continue to register improvements in our safety record. Our commitment to local communities remains unchanged, and we are proud of our involvement in South Africa where we are making a tangible difference in the lives of our employees and host communities.

Moving forward, the market environment remains highly challenging. The benchmark price for ferrochrome declined further to USD 124 c/lb., which is lower than both the price reached a year ago, as well as a quarter earlier. Concurrently, several measures taken by the Company are expected to come on-stream. The Mecklenburg mine is expected to deliver more tonnages as the open-cast pit has been extended until the end of March 2019, with a resultant deferral in going underground. Mecklenburg, despite being a challenging mine, remains an important supplier to Mogale. The PGM plant at Stellite is now complete and has started operating, with the revenue from this new product class expected to make a full contribution in 2019. Vlaakport continued to operate and contribute positively. The Zeerust mine is currently being prepared for a start of operations during the final quarter as, following the grant of Section 11, the final transfer of control was completed in November. The situation at Mogale is expected to improve and following emergency works at the P3 furnace, production is expected to resume during the final quarter. Finally, a new production cycle is set to commence at Magnohrome in 2019, as repair works in the rotary kiln have been finalized and preparations have started for ramping up mining of the magnesite ore.

Despite the volatile market environment, Afarak continues on its path of restructuring and consolidation. During the past two years the management has undertaken an ambitious work programme to make the Group more sustainable.”

The Board of Directors
Afarak Group

For additional information, please contact:
Guy Konsbruck, CEO, +356 2122 1566, guy.konsbruck@afarak.com
Jean Paul Fabri, +356 2122 1566, jp.fabri@afarak.com

Financial reports and other investor information are available on the Company's website: www.afarak.com.

Afarak Group is a specialist alloy producer focused on delivering sustainable growth with a Speciality Alloys business in southern Europe and a FerroAlloys business in South Africa. The Company is listed on NASDAQ Helsinki (AFAGR) and the Main Market of the London Stock Exchange (AFRK).

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