Recently, Afarak, a company known for processing metal ores, reported an increase in the quantity of metals mined. However, there was a decrease in the sales of refined special metals.
The company announced its financial results for the second half of the previous year this past Friday. During this period, Afarak made an operating profit of EUR 0.6 million and generated a turnover of EUR 58.3 million.
Comparatively, during the same period in the previous year, the company reported an operating profit of EUR 28.2 million and a turnover of EUR 106.6 million. At that time, Afarak’s profit status was exceptionally strong due to high selling prices of its products. The company’s metal alloys are utilized in a variety of special applications including aviation, medicine, and energy.
In terms of earnings per share, the company reported zero in the first half of the year, while during the comparable period, it was EUR 0.09.
According to Afarak, sales of refined special metal alloys fell by 23.5 percent in the second half of the year compared to the same period in the previous year. Conversely, the amount of mined tons increased by 86.2 percent.
Looking ahead to 2024, the company anticipates that revenue streams from India and China may decrease due to high logistics costs and stricter internal requirements.
Given these factors, Afarak expects a somewhat friendlier market outlook for at least the first quarter of 2024. The company also believes that interest rates should decrease during 2024.
However, due to the weak state of the stainless steel industry, primarily in Europe, Afarak expects the margin pressure to continue at least through the first half of 2024.
In an attempt to better serve its shareholders, Afarak’s board has presented a new dividend policy to the general meeting. Going forward, the group will review its dividends to shareholders either through capital return or dividend. The objective is that the dividend ratio of each financial year is at least 10 percent of the EBITDA of the Afarak Group for the entire year.
Reflecting on the year 2023, the company’s CEO, Guy Konsbruck, stated in the results bulletin that the year was marked by a very slow market and serious price pressure caused by imported material from Russia, as well as strong pressure from other materials imported from India and China.
Konsbruck further added that high interest rates and freight costs also affected Afarak’s margins. Despite these challenges, the company remained profitable and cash-positive.
Looking ahead, Konsbruck expressed optimism about the ferroalloy segment, which continued to perform well and improved the group’s profitability. He expects positive development in this segment in 2024.
However, the company is still dealing with complications related to its ownership. Principal owner Danko Concar is under obligation to make a purchase offer for the entire company under the threat of a fine, and there have been disagreements between Finnish owners and foreign management.
