Merafe Resources (MRF) H1 2024 earnings summary

Executive summary

• Weaker financial performance due to a challenging operating environment, with lower ferrochrome and chrome ore production, persistent cost pressures, and operational headwinds.

• Safety performance deteriorated, with one fatality and a higher TRIFR reported.

• Improvements in electricity supply and logistics, with a new inflation-linked Eskom pricing agreement implemented.

• Rustenburg smelter was not restarted post-winter shutdown; Section 189 consultation process initiated, potentially leading to care and maintenance.

• Market uncertainty persists, but global stainless steel and ferrochrome demand increased, mainly driven by China.

Financial highlights

• Revenue decreased by 0.4% year-over-year to R4,744 million.

• Headline earnings per share were 28.2 cents; basic earnings per share 28.8 cents.

• Interim dividend of 20 cents per share declared, representing 71% of headline earnings.

• EBITDA declined 27% to R1,131 million.

• Profit after tax was R720 million, a 31% decrease period on period.

Outlook and guidance

• Second half of 2024 expected to be softer due to weaker market outlook and downward pressure on chrome ore and ferrochrome prices.

• Focus remains on operational efficiency, cash preservation, cost control, and capital allocation.

• Production guidance is 60–70% of installed capacity, similar to previous year.

• Electricity pricing now more stable and inflation-linked due to new Eskom agreement.

• All smelters except Lydenburg and Rustenburg planned to be operational in H2 2024.