London, England — MININGREVIEW.COM — 24 February 2009 – Integrated ferrochrome producer International Ferro Metals Limited (IFM) – listed on the London Stock Exchange – says interim pre-tax losses have widened as prices for ferrochrome – an essential ingredient in the manufacture of stainless steel – declined, and adds that it has no plans to pay a dividend.
In a statement issued here, the company said pre-tax losses were R27 million, compared with R24 million in the year-earlier period. Reuters quotes Investec Securities as saying the results and the cost of sales were worse than it expected, with administrative expenses higher than anticipated.
The South African company’s production in the first fiscal quarter to September 2008 rose to a record before deteriorating market conditions forced it to power down its furnaces last November and focus on clearing inventory.
“Market conditions appear to have begun to stabilise, and with ferrochrome inventories declining and spot prices stabilising, large chrome ore stockpiles are a concern,” said IFM.
Revenue rose 43% from the year-ago period, but Numis Securities noted that of the 49 000 tonnes of ferrochrome sales recorded in the first half, 33 000 tonnes had not been priced at the end of December, and so no cash had been received.
IFM says it has now concluded these price talks, and expects to receive outstanding amounts by mid-March.
The company has deferred all major capital expenditure and is using the plant shutdown period to undertake a maintenance and upgrade programme that is on track for completion by 31 March.
The furnaces are expected to be available for production from 1 April, subject to market conditions, it said.
"The company’s furnaces remain idle, but the business is well equipped to deal with a sustained downturn in ferrochrome demand, thanks to the strength of its balance sheet," Numis said in a note. Ferrochrome prices have fallen around 60% since the June quarter of 2008.