Afarak Group (AFAGR) Q2 2024 earnings summary

Executive summary

• Revenue declined 25.1% year-over-year to €71.4 million in H1 2024, mainly due to lower demand and reduced average selling prices for Low Carbon Ferrochrome, partially offset by higher chrome ore prices and increased mining activity in South Africa.

• EBITDA dropped to €4.2 million from €15.1 million, with margin falling to 5.9% from 15.8% year-over-year; profit for the period was €0.5 million, down from €10.5 million.

• Cash flow from operations was negative at €-5.4 million, compared to €8.3 million in H1 2023; cash and cash equivalents at period end were €10.1 million.

• The company remains the only Western producer of low carbon ferrochrome, a critical material for several industries.

Financial highlights

• Revenue: €71.4 million (H1 2024), down from €95.4 million (H1 2023).

• EBITDA: €4.2 million (H1 2024) vs €15.1 million (H1 2023); EBIT: €3.1 million vs €14.4 million.

• Net profit: €0.5 million (H1 2024) vs €10.5 million (H1 2023); EPS: €0.00 vs €0.04.

• Operating cash flow: €-5.4 million (H1 2024) vs €8.3 million (H1 2023).

• Equity ratio: 63.9% (H1 2024) vs 67.1% (H1 2023); gearing: -5.1% vs -14.8%.

Outlook and guidance

• Sanctions on Russian material to be fully implemented by end-2024, with expected positive demand impact in aeronautics and defense.

• Cost structure improvements and new revenue streams in Europe anticipated in H2 2024; low carbon ferrochrome market to remain competitive.

• Chrome ore market expected to stay strong, with investments enabling increased output in South Africa.