23rd Feb 2015 09:21
LONDON (Alliance News) - International Ferro Metals Ltd Monday posted a swing to a pretax loss for its first half due to lower production volumes and higher production costs, but said it expects its second half to show "a substantial improvement and be cash generative".
The integrated ferrochrome producer posted a pretax loss of ZAR176 million for the half year to end-December 2014, swinging from a pretax profit of ZAR31 million in the previous year, as a rise in revenue to ZAR1.02 billion from ZAR1.00 billion was offset by higher administrative expenses as a result of production interruptions.
Ferrochrome production for the half year was 98,016 tonnes compared to 116,469 tonnes in the year before, and 111,791 tonnes in the previous half year. This was a result of planned routine maintenance shut-downs, the stoppage of two of its furnaces in South Africa last November, and trials to assess the viability of using silicon carbide as an alternative reductant in the smelting process, International Ferro Metals said.
Last November, two of the ferrochrome furnaces were suspended by South African authorities after an incident in which two employees were exposed to carbon monoxide gas. International Ferro Metals said that the loss attributable to the stoppage is still being assessed.
Sales volumes were 101,700 tonnes compared to 109,623 tonnes a year before. Despite this, sales revenue rose due to ZAR66 million generated from ore sales, compared to ZAR14 million a year before.
Ferrochrome production cost for the first half was ZAR8.15 per pound. The company expects to see production cost decrease as its operations stabilise and production volumes rise.
The company said its operations are already showing improved operating rates in the beginning of the second half, with revised ore feed to the furnaces and improved quality supply of key reductants contributing to an improved performance.
Shares in International Ferro Metals are trading down 6.9% at 3.91 pence Monday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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