Merafe Resources Limited · JSE:MRF
Merafe Resources — H1 2015 Earnings Presentation
29 slides from Merafe Resources's earnings presentation, 2015
Slide 1: Results Presentation
Results Presentation For the six months ended 30 June 2015 Presented by Zanele Matlala (CEO) and Kajal Bissessor (FD)
Slide 2: Legal notice/disclaimer
Legal notice/disclaimer This presentation is published solely for informational purposes and does not constitute investment, legal, tax or other advice nor is it to be relied upon in making an investment decision. Information contained herein has been taken from sources considered by Merafe Resource
Slide 3: Key agenda
Key agenda 01. Key features 02. Operational review 03. Market review 04. Financial review 05. Outlook Annexures Merafe Resources Ltd | Results presentation for the six months ended 30 June 2015 3
Slide 4: Key features
01 Key features 4
Slide 5: Key features
Key features Power and ore consumption efficiencies* OPERATIONAL MARKET • TRIFR of 4.40 • 2.0% decrease in global stainless steel • Ferrochrome production of 195kt production • Above inflation increases in cost of • 0.8% decrease in global ferrochrome demand goods sold per tonne of ferrochrome • 2.4
Slide 6: Operational review
02 Operational review 6
Slide 7: Operational review
Operational review – Increase of 16% in ferrochrome production • Project Lion II • No strikes in H1 2015 – TRIFR of 4.40 – Wage negotiations • Western mines – agreement reached in 2014 • Rest of operations – not concluded yet Merafe Resources Ltd | Results presentation for the six months ended 30 Ju
Slide 8: Operational review (continued)
Operational review (continued) – Community unrest at Eastern Mines (post balance sheet) • Impact negligible – Electricity • Supply • Pricing – Above inflation increases in cost of goods sold per tonne of ferrochrome Merafe Resources Ltd | Results presentation for the six months ended 30 June 2015 8
Slide 9: Market review
03 Market review 9
Slide 10: Global market review (H1 2015 / H1 2014)
Global market review (H1 2015 / H1 2014) GLOBAL STAINLESS STEEL GLOBAL FERROCHROME GLOBAL FERROCHROME PRODUCTION DEMAND PRODUCTION 2.0% decrease to 21.0mt 0.8% decrease to 5.8mt 2.4% decrease to 5.6mt 10% NAFTA 2.1% NAFTA 0.5% South Africa 11% Japan 4.2% EU 2.0% EU 0.8% China 2.5% China 12.4% China
Slide 11: Ferrochrome market review
Ferrochrome market review European benchmark ferrochrome prices 2014 Usc/lb 2015 Usc/lb Change Q1 118 108 (8%) Q2 122 108 (11%) Q3 119 108 (9%) Concerns about Average 119.7 108.0 (10%) Chinese growth – net prices down Average Rand/Dollar exchange rate 2014 H1 2015 H1 Change 10.7 11.9 +11% Merafe Res
Slide 12: Chrome ore imports into China
Chrome ore imports into China 2013 2014 Change 2014 (1-6) 2015 (1-6) Change in ‘000 t in % in ‘000 t in % South Africa 6,736 5,748 -14.7 3,068 3,540 15.4 Turkey 1,988 1,280 -35.6 733 432 -41.1 Oman 687 489 -28.8 264 231 -12.7 Iran 428 494 15.6 276 238 -13.6 Albania 677 555 -18.1 286 203 -29.0 Pakist
Slide 13: Financial review
04 Financial review 13
Slide 14: Key financial features
Key financial features 12% 22% 44% REVENUE EBITDA HEPS EBITDA in R'm 431 336 263 206 210 2011 H1 2012 H1 2013 H1 2014 H1 2015 H1 Merafe Resources Ltd | Results presentation for the six months ended 30 June 2015 14
Slide 15: Revenue up by 12%
Revenue up by 12% 12% 10% 11% 11% 21% Average European Average Ferrochrome Ferrochrome Chrome ore benchmark Rand/US$ sales tonnes revenue revenue ferrochrome exchange rate price 2015 H1: 191kt 2015 H1: 108USc/lb 2015 H1: 11.9 2015 H1: R1 976m 2015 H1: R247m 2014 H1: 171kt 2014 H1: 120USc/lb 2014 H1:
Slide 16: Cost of goods sold increases above inflation
Cost of goods sold increases above inflation (per tonne of ferrochrome) Lion II start up costs Electricity increases Labour increases Merafe Resources Ltd | Results presentation for the six months ended 30 June 2015 16
Slide 17: EBITDA reconciliation to profit
EBITDA reconciliation to profit 400 355 350 (19) 300 250 R’m 200 (121) (37) 150 124 (38) (16) 100 50 0 Merafe's 20.5% of Corporate costs Depreciation Net financing costs Current tax expense Deferred tax expense Profit EBITDA from the Venture Merafe Resources Ltd | Results presentation for the six mo
Slide 18: 2015 H1 / 2014 H1 variance
2015 H1 / 2014 H1 variance Variance % Ferrochrome sales volumes 12 Increase in sales Chrome ore sales volumes 13 volumes and Net ferrochrome price (11) weakening of the Rand was partially Chrome ore prices (3) offset by lower net prices Exchange rate 11 Revenue 12 2014 included restructuring costs /
Slide 19: Balance sheet
Balance sheet As at As at 30 June 2015 31 December 2014 Reviewed R’000 Audited R’000 Total non-current assets 3 248 125 3 252 680 Property, plant and equipment 3 232 708 3 239 162 Deferred tax assets 15 417 13 518 Total current assets 2 110 745 2 148 467 Inventories 1 352 618 1 435 799 Trade and oth
Slide 20: Balance sheet (continued)
Balance sheet (continued) As at As at 30 June 2015 31 December 2014 Reviewed R’000 Audited R’000 Total non-current liabilities 1 369 900 1 366 153 Loans and borrowings 521 958 549 909 Provision for close down and restoration costs 137 716 129 029 Share based payment liability 5 441 - Deferred tax 70
Slide 21: Debt and facilities
Debt and facilities Net overdraft movement R’m 251 (8) (4) (23) (20) (70) (104) (162) Net overdraft at 31 Cash flows from Expansionary capex Sustaining capex Dividends paid Decrease in Others Net overdraft at 30 Dec 2014 operating activities borrowings June 2015 Utilised facilities Headroom 30 Jun 3
Slide 22: Outlook
05 Outlook 22
Slide 23: Conclusion
Conclusion • Remain profitable despite challenging times • Continue to reap benefits of capital investments made • No significant expansionary capex going forward o Reduce debt and increase dividends in short to medium term Merafe Resources Ltd | Results presentation for the six months ended 30 June
Slide 24: Questions
Questions Merafe Resources Ltd | Results presentation for the six months ended 30 June 2015 24
Slide 25: Annexures
Annexures 25
Slide 26: Ferrochrome prices
Ferrochrome prices 1.50 1.50 Europe USA Charge Cr HC Spot Prices & China Tender Price 1.40 6-8%C, 60%Cr 6-8%C, 60-65% Cr Benchmark (EU) 1.40 Charge Cr Price (quarterly) in US$ / lb 1.30 1.30 (monthly) in US $ / Ib 1.20 1.20 1.10 1.10 1.00 1.00 0.90 0.90 0.80 0.80 China Spot China Tender 0.70 50%Cr (
Slide 27: Ferrochrome Producer Ranking 2015
Production, in ´000 t 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 Glencore / Merafe Samancor Cr 35% Kazchrome Outokumpu © Heinz H. Pariser Hernic Xinganglian EHUI Metallurgy 23% >200 kt Mintal Group ASA Metals Tianyi Metallurgy IMFA IFML Ferbasa Zimasco Merafe Resources Ltd | Results presentatio
Slide 28: Ferrochrome Currencies' Exchange Rate Fluctuation
Ferrochrome Currencies’ Exchange Rate Fluctuation 240 220 RUR Exchange Rate Index, 2008 = 100 200 TRL Depreciation 180 (local Curency per U BRR 160 KZT 140 ALL INR 120 ZAR EUR 100 Appreciation SEK 80 RMB © Heinz H. Pariser 60 2010 2011 2012 2013 2014 2015 Y-t-D Merafe Resources Ltd | Results present
Slide 29: THANK YOU
THANK YOU