GuruFocus -
- Total Revenue: Decreased marginally by 0.4% to ZAR4.7 billion.
- Ferrochrome Revenue: Decreased by 10% to ZAR3.4 billion.
- Chrome Ore Revenue: Increased by 30% due to higher volumes sold.
- PGMs Revenue: Increased significantly to ZAR131 million.
- Basic Earnings Per Share: ZAR0.288.
- Headline Earnings Per Share: ZAR0.282.
- EBITDA: 26% lower than the 2023 comparative figure.
- Profit After Tax: ZAR720 million, a 31% decrease period on period.
- Interim Dividend: ZAR0.20 per share, representing 71% of headline earnings.
- Ferrochrome Production: Decreased by 17% from 185 kt to 154 kt.
- PGMs Production: Increased with PGM ounces rising from 7,586 to 31,882 ounces.
- Cash Balance: Closing cash of ZAR1.7 billion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Global stainless-steel production increased by 9%, driving a 10% rise in ferrochrome demand.
- Improvement in electricity supply and logistics, reducing operational disruptions.
- Negotiated pricing agreements with Eskom provide pricing certainty for electricity costs.
- PGM production increased significantly, with feed volumes rising from 69 kt to 290 kt.
- Rand weakness against the US dollar provided a financial cushion, supporting revenue.
- Recorded one fatality and deterioration in the total recordable injury frequency rate.
- Ferrochrome and chrome ore production were lower, impacting overall performance.
- Ferrochrome prices remained under pressure, trading below $1 per pound.
- Total revenue decreased marginally by 0.4% to ZAR4.7 billion, with ferrochrome revenue down by 10%.
- EBITDA from the venture was 26% lower than the 2023 comparative figure, reflecting market challenges.
A: Zanele Matlala, CEO, explained that logistics had improved and were not a major issue during the reporting period. The main driver for chrome ore pricing was demand from China, which has been building more capacity. Prices are expected to start coming down, but it's uncertain if they will reach past levels.
Q: What is the status and cost of the Section 189 process for the Rustenburg smelter?
A: Zanele Matlala, CEO, stated that the consultation process has just begun, so they cannot yet estimate the cost. Japie Fullard, CEO of Glencore (LON:GLEN) Alloys, added that the process could take longer than the minimum 60 days due to various options being considered.
Q: How will the new electricity pricing agreement affect your operations?
A: Japie Fullard, CEO of Glencore Alloys, noted that the agreement provides a stable, inflation-linked pricing environment, eliminating the need for winter shutdowns and allowing for better maintenance scheduling. The agreement is for a substantial period, providing certainty in electricity pricing.
Q: Can you clarify the status of your smelters?
A: Zanele Matlala, CEO, clarified that Lydenburg is on care and maintenance, Rustenburg is idled and undergoing Section 189 consultations, while Wonderkop, Boshoek, and Lion smelters are operational.
Q: What is the impact of deferred tax liabilities on your financials?
A: Ditabe Chocho, Finance Director, explained that the deferred tax balance is a function of the tax base and capital expenditure. It will continue to grow as long as capital expenditure is made, indicating better cash generation compared to earnings.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.