Merafe Resources (MRF) H2 2024 earnings summary

Executive summary

• Revenue declined by 9% year-over-year to ZAR 8.4 billion, reflecting lower ferrochrome prices and volumes in a challenging market environment.

• Operational performance was solid, with marginally higher ferrochrome and increased PGM production, but cost pressures persisted.

• Safety performance improved, though one fatality occurred at Wonderkop Smelter in January 2024.

• Business review of smelting operations initiated due to sustained losses at current ferrochrome prices.

• Significant progress on renewable energy projects, including financial close on the Sonvanger Solar PV Power Plant and a 100MW offsite solar project agreement.

Financial highlights

• Ferrochrome revenue fell 14% to ZAR 5.9 billion, with a 6% price drop and 9% volume decline; chrome ore revenue rose 2% to ZAR 2.26 billion.

• PGM revenue more than doubled to ZAR 267 million, despite a 16% drop in average basket price.

• EBITDA declined 27% year-over-year; profit after tax was ZAR 667 million, down from ZAR 1.8 billion.

• Basic EPS was ZAR 0.267; headline EPS was ZAR 0.429.

• Final dividend declared at ZAR 0.08 per share, totaling 65% of headline earnings.

Outlook and guidance

• Market uncertainty and volatility expected to persist, with stainless steel growth likely to be met by Chinese supply.

• Smelter operations under review, with potential for reduced ferrochrome production and increased chrome ore exports.

• Focus on cash preservation, production optimisation, and ESG initiatives.