Afarak Group SE on Friday said it increased capital expenditure in anticipation of rising demand while reporting significantly weaker first-half performance.

The Helsinki-based producer of specialist alloys said pretax profit fell to £1.9 million in the first half that ended June 30 from £12.1 million the previous year.

Earnings before interest, tax, deprecation, and amortisation was £4.2 million, down 72% from £15.1 million.

Revenue declined 25% to £71.4 million from £95.3 million, and operating expenses fell 16% to £68.6 million from £81.2 million.

Mining increased 15% to 187,958 from 162,971 tonnes, while processed material sold decreased 7.3% to 11,922 from 12,855 tonnes.

The positive Ebitda ‘is no small achievement in a very difficult business environment’, said Chief Executive Officer Guy Konsbruck.

‘Higher realized chrome ore prices helped counterbalancing low carbon ferrochrome prices that remained under pressure, mainly due to the presence of massive inventory of Russian material and low-cost imports, especially from India,’ he said.

‘The efficiency of our operations provided some buffer to protect our profitability. Afarak has been for many years now the only Western producer of low-carbon ferro-chrome, a critical material for the production of the aerospace, defence, automotive, green energies, and various other industries.’

Looking ahead, sanctions on Russia and increased demand in aeronautics and defence should have a positive impact on the supply and demand balances for the ferro-chrome business.

‘Domestic price levels in China seem to have bottomed out as well. We expect further improvements in our cost structure during the second half-year and continue to develop new revenue streams in Europe. The market for low carbon ferro-chrome will be continuously competitive throughout the year,’ Afarak said.

The chrome ore market is expected to remain strong with the company finalising investment decisions to increase output of concentrates in South Africa.

Capital expenditure in the half-year increased 86% to €2.6 million from €1.4 million.

Afarak shares were untraded at 20.00 pence each in London on Friday morning.

Copyright 2024 Alliance News Ltd. All Rights Reserved.