29th Sep 2014 11:29
LONDON (Alliance News) - International Ferro Metals Ltd Monday said it swung to a profit in its last financial year thanks to higher volumes and an improved exchange rate between the South African rand and US dollar.
The ferrochrome producer reported a net profit of ZAR43.2 million for the year to June 30, compared with a loss of ZAR128.7 million a year earlier, helped by a 21% increase in ferrochrome sales to 222,320 tonnes. Net production rose to 228,260 tonnes, from 183,718 tonnes. It said production and sales were a record for the company.
The South-Africa-based company, which is competing with Chinese ferrochrome producers, continued to diversify its customer base during the year, with India now a regular destination for its ferrochrome and Korea added as a key customer.
"Over the year, IFL continued to control costs and develop new lower cost initiatives, and has optimised the prices we receive by directing sales to specific regions. This has resulted in a return to profitability for the year," Chief Executive Chris Jordaan said in a statement.
The ferrochrome price dropped to an average of USD1.16 per pound this year, from an average of USD1.19 last year, as the market remained in slight over supply. However the price deterioration was offset by a lower dollar/rand exchange rate that resulted in a net improvement in the rand price.
The company has been focusing on reducing its costs to stay competitive with the Chinese ferrochrome producers, and said it had achieved 70% of its targeted cost reductions during the financial year. Still, production costs rose due to short supply of lower-cost UG2 chrome concentrate from Anglo Platinum after the platinum producer was hit by strike action, and as its co-generation plant, which supplies some of the energy for its facilities, underperformed. It said supply of UG2 has restarted and will have a positive impact on ore costs in the current financial year, while it has employed a consulting firm to look at improving the output of the electricity generation plant.
International Ferro Metals' net borrowings decreased to ZAR338 million at June 30, from ZAR362 million a year earlier. However, due to higher expected short term costs, net borrowings are expected to increase to about ZAR440 million by end-September before steadily decreasing over the remainder of the year.
The company has decided not to pay a dividend for the 2014 fiscal year.
Its shares were up 8.0% at 6.99 pence in London Monday.
By Steve McGrath; [email protected]; @stevemcgrath1
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