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IFM hit record H1 production as earnings lift

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24th February 2014

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

  

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JOHANNESBURG (miningweekly.com) – London-listed International Ferro Metals (IFM) has delivered record ferrochrome production during the first half of the year, with earnings rising into the black.

The integrated ferrochrome producer achieved a record half-year production of 116 469 t, up 5.8% on the previous production record, which was set during the comparative period last year.

Output for the preceding half-year reached 73 626 t, mostly owing to State-owned power utility Eskom’s electricity buy-back agreement during that period.

However, the company remained confident that it would improve the current production levels as stability at its operations now allowed for further optimisation, IFM CEO Chris Jordaan said in a statement on Monday.

The higher production volumes led to increased sales, reaching 109 623 t during the six months under review – an increase of 4% on the comparative period last year and 38% on the preceding half-year.

“Sales were up as we strengthened our presence in India and entered new Asian markets. Sales were evenly distributed over our broad global customer base, which spans the US, Europe and Asia. IFM has worked hard to develop this over the last two years,” Jordaan explained.

During the six months to December, sales revenue increased to R1-billion, a 22% rise on the R824-million achieved during the six months to December 2012.

“IFM has continued to improve its operational and financial performance, and is pleased to announce a pretax profit of R31-million,” Jordaan commented.

The turnaround, from a loss of R5-million, during the six months to June 2013, and a loss of R121-million in the interim period to December 2012, was driven by strong cost reduction, higher production and sales volumes, and a stronger rand pricing environment.

IFM posted a headline profit per share of 6c during the first half of the year, compared with a headline loss per share of 14c during the first half of 2012.

Earnings per share entered the black with a positive 5.9c apiece, after reporting a loss of 13.6c and 9.3c during the corresponding period last year and the six months to June 2013 respectively.

This was despite ferrochrome prices – at about $1.12/lb – registering lower than the preceding six months price of $1.20/lb and $1.18/lb in the comparative period, the company pointed out.

Earnings before interest, tax, depreciation and amortisation increased to R112-million in the first half of the year, against a loss of R46-million in the first half of last year and a profit of R71-million in the preceding interim period to June 2013.

Ferrochrome production cost for the period was R6.44/lb, compared with R6.48/lb during the six months to December 2012, despite domestic inflation of 5.8% and an average 8.5% increase in the electricity price.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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