Market conditions dampen Afarak’s first-half profit
London-listed Afarak Group has reported a decrease in material processed for the first half of this year to 11 922 t, compared with the 12 855 t of material processed in the first half of last year.
The group’s earnings before interest, taxes, depreciation and amortisation decreased from €15.1-million in the prior comparable period to €4.2-million in the six months under review, while the margin also decreased from 15.8% to 5.9% over the same period.
Afarak generated a profit of €500 000 in the first half of this year, compared with a profit of €10.5-million in the first half of last year. Cash flow from operations totalled -€5.4-million, compared with positive cash flow generation of €8.3-million in the prior comparable period.
The group has speciality alloy operations in South Africa, Türkiye, Germany, London, Helsinki and Malta.
CEO Guy Konsbruck attributes the company’s weaker financial performance to very difficult business conditions, particularly low ferrochrome prices.
He explains that low-carbon ferrochrome prices were under pressure owing to the presence of massive inventory of Russian material and low-cost imports from India.
The efficiency of Afarak’s operations, however, provided some buffer to protect its profitability, he added.
Konsbruck says sanctions against Russian ferrochrome material will only be fully implemented by the end of this year, which should bode well for Afarak’s supply.
He foresees increased demand in the aeronautics and defence industries for the remainder of the year, as well as improvements in the group’s cost structure.
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