The results came in quite substantially above the company-compiled consensus at result level
Growth was particularly strong in the Steel division and Metal Forming on both higher prices and volumes
The aerospace segment’s performance is still subdued
The outlook for the current year makes our forecasts conservative
We will revise our numbers upwards
Companies: voestalpine (VOE:VIE)voestalpine AG (VOE:WBO)
The 20/21 fiscal year ends up with a very decent profitability level
The group has also managed to reduce the net debt level quite substantially
The outlook for FY21/22 is positive, supported by still firm steel prices
We will fine-tune our numbers and valuation on this rather sound release
Nine months results were in line with market forecasts
The group raised its EBITDA guidance to the upper end of the previous range
The momentum concerns most segments and backs the group’s more positive tone
We will revise our forecasts and, most of all, the valuation of the group to reflect better the current momentum in the group’s businesses
Companies: voestalpine AG
Carbon Steel, High Performance Metals and Metal Engineering all generated higher prices than in the previous two quarters and the increase rate was higher than before. However, all three divisions saw their Q3 volumes fall by between 0.4% and 16% compared to last year. This was one of the reasons for collapsing earnings. In addition, impairment charges of €345m burdened the group’s EBIT.
We had expected voestalpine to deliver EBITDA of around €1.35bn this year and EBIT of around €560m. Based on management’s new guidance, EBITDA will amount to some €1.2bn and EBIT will be just above the break-even line.
While carbon steel prices increased through to Q4 18/19, they fell by 2.5% in Q1 and by 3.3% in Q2 of the current fiscal year. Simultaneously, the price increases in High Performance Metals and Metal Engineering moderated from Q1 to Q2. In view of this, all divisions suffered lower profit margins.
Shipment and prices (on both the output and input sides) are driving the steel producers’ profits. Whereas Voestalpine’s output prices were reasonably good, all of its divisions suffered volume setbacks. In addition, input prices were up. While consolidated sales fell by 3.8% to €3.34bn, CGS increased by 0.2% or €5m. Consequently, the gross margin fell by 3.2pp to 19.6%.
Voestalpine released profit warnings in October 2018 and again in January this year as demand had moderated. In addition, its carbon steel prices, which were up by double-digits in the first two quarters and above €1,000 per ton until late last year, were still up by 5% in the last quarter, but the absolute number was in the vicinity of ‘only’ €980. All of this contributed to the profit fall.
In fact, as some of these costs (see below) were not tax deductible, Voestalpine suffered a net loss of €56m after minorities in the last quarter.
The group’s revenue increased by 5% to €9.95bn in the 9M18 and EBITDA fell by 22% to just above €1.1bn. Our projections had been €9.85bn and €1.16bn, respectively. As a result of a much higher than anticipated tax rate, net earnings fell by 53% to €247m whereas we had anticipated €325m.
Voestalpine’s experience in the USA has been rather disappointing. Costs of the Texan direct iron ore reduction plant were considerably higher (more than €900m instead of €550m) and the ramp-up took longer than initially expected. Management now blames ramp-up difficulties at an automotive component plant in Georgia, resulting in a new profit warning. Finally, the company has been regularly raided by cartel authorities (tracks in the past and now heavy plates) in recent years and the costs are b
Voestalpine was able to increase its prices faster in the last quarter than in Q1 18/19, but the delivery volume of Carbon Steel fell. This resulted in a Q2 consolidated revenue increase of 5% to €3.21bn, whereas EBITDA was down by 24% to €347m and net earnings by 48% to €84m. We had expected a slightly lower revenue number but clearly higher profits.
Voestalpine generates some €1.3bn of its revenue in the USA. This represents about 10% of the group’s worldwide revenue. According to management, about two thirds of this is produced locally.
The company and its clients have asked the US authorities for duty exemptions on a total of some 4,300 products. They have received 2,640 answers and 2,360 have been positive, i.e. these products are exempted from the extra duty charge of 25%. As a result of this, about 3% of the group’s consolidated reven
The standstill of a blast furnace because of a general overhaul had put some pressure on Q1 shipments and profits. This will continue in the current quarter but management is confident that this negative impact will end in October when the blast furnace goes back into production. In spite of this, the group’s profit numbers were very reasonable indeed.
Much higher carbon steel prices have allowed the group to generate operating earnings (i.e. in EBITDA terms) that are second only to the 9M profit generated in 2008/09.
The group’s revenue increased by 17% to €6.30bn, whereas EBITDA and EBIT were up by 37% to €969m and 58% to €584m, respectively. Net profit after minorities increased by 64% to €369m. We had expected revenue of €6.24bn, EBITDA of €930m, and net earnings of €351m.
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Companies: Sylvania Platinum Ltd.
Phoenix copper today provides an update on its ground geophysical survey over the Red Star prospect near its Empire copper project in Idaho. The Red Star skarn mineralisation (lead and silver ± copper, zinc) is associated with magnetite; the survey just undertaken was to better understand the distribution and orientation of magnetite to find potential mineralisation and to inform the location and direction of a further drilling programme.
Companies: Phoenix Copper Ltd. (United Kingdom)
We see the UK Government’s Net Zero Strategy as being overall helpful but not especially definitive. Amongst our coverage group, Drax Group (DRX LN) and Velocys (VLS LN) benefit from the Humberside CCS cluster prioritisation and Velocys from SAF support. The amount of renewables is likely to boost the need for flexibility solutions where Drax, Gore Street (GSF LN) and SIMEC Atlantis (SAE LN) can benefit. Hydrogen companies ITM (ITM LN) and Powerhouse Energy (PHE LN) are likely to find support. T
Companies: ADN DRX GSF ITM NESF PHE SAE SIT STRLNG TLG VLS
Companies: Shanta Gold Limited
Today’s IPO of Tungsten West (TUN-LON) unlocks a valuable, long term revenue stream for Hargreaves. This comprises a £1m per annum fee (first payment next month) as well as a mining services contract once the mine recommences production. The resulting EPS upgrades are 6% and 7% in FY22 and FY23 respectively, followed by 9% in FY24 with the first partial contribution from the mining services contract. This continues Hargreaves’ impressive recent run of forecast upgrades and reinforces our convict
Companies: Hargreaves Services plc
We are initiating coverage of VAST Resources (VAST), which has wholly-owned Baita Plai and Manaila polymetallic mines plus an interest in two exploration projects, all located in Romania. At this stage, Baita Plai is the main driver for our valuation as it is currently being ramped up to 14kt per month. As such, we expect Baita Plai’s Cu eq output to reach c 2.4ktpa in FY23F followed by 3.3ktpa in FY24F. This, coupled with Manaila’s potential re-start of an additional 3ktpa of Cu eq over the sho
Companies: Vast Resources plc
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Devolver Digital to join AIM, an award-winning digital video games publisher and developer in the indie games space. Recently awarded indie 'Publisher of the Year 2021' by GamesIndustry.biz. Offer TBA. Due early Nov.
Life Science REIT to join AIM raising up to £100m. This will be the first London listed real estate investment trust (REIT) focused on UK life science properties providing investors with exposure
Companies: SYS1 ARE SO4 SNG TMG TMT OHG IDE KIBO MRL
Shanta Gold (AIM: SHG) has, this morning, announced its production and operational results for the quarter ended 30th September 2021 – see Fig 1. Operationally this was a slightly weaker than expected quarter but very promising from the corporate side with a new five-year plan announced, an 0.10cps interim dividend announced and a resource update at the West Kenya Project (WKP).
QoQ production was flat at 14,194 oz and AISC rose to $1,480/oz caused by a temporary drop in grade as well as hig
Oil posted the longest stretch of weekly advances since 2015 as OPEC+ producers only modestly supply the market and as US crude supplies shrink.
Crude futures rose 1.5% Friday in New York, up for a ninth straight week. President Joe Biden said Thursday night that Americans should expect high gasoline prices to continue into next year because of supply being withheld by OPEC and other foreign oil producers. Stockpiles at the biggest US storage hub are draining to levels last seen when crude pr
Companies: FO 88E DEC EME GTC TRIN UOG WEN
Trifast has released a good interim trading update ahead of its interim results due on 23 November. Overall trading has been in line with management expectations at “both revenue and profit levels” since the AGM update in July although this belies the strength of the Group's top line performance in our view. We remain buyers.
Companies: Trifast plc
Rio’s investors day was focused on two of the most critical mining industry thematics in today’s times, i.e. green and growth. The announced measures couldn’t have materialised at a better time, given the (recent) woes pertaining to governance and the iron ore market sell-off. Remember, considering Rio’s enviable balance sheet strength, it has the flexibility to pursue the targeted plans with rigorously and, at the same time, maintain ‘relative’ shareholder reward attractiveness. Hence, we reite
Companies: Rio Tinto plc
Tungsten West (TUN.L) has joined AIM. Tungsten West is the 100% owner and operator of the historical Hemerdon tungsten and tin mine located near Plymouth in southern Devon. Hemerdon represents the world's third largest tungsten mineral resource, with a JORC (2012) compliant Mineral Resource Estimate of approximately 325Mt at 0.12 WO3. Capital raised on Admission: £39m. Anticipated Mkt Cap: £106.2m.
Future Metals NL (ASX:FME, FME.L) (formerly named Red Emperor Resources NL) had joined AIM
Companies: SOLI RBD ALU ATQT BBI CWR DRV ORCP WATR
i3 Energy indicated that Q3 2021 production amounted to 13,740 boe/d (WHIe: 13,742 boe/d) and that production in September amounted to 18,985 boe/d (WHIe: 18,834 boe/d). The company indicated that it now forecasts net operating income (“NOI” = revenue minus royalties, opex, transportation and processing) to be $US 65.7m for 2021 and $US 119.1m for the next twelve months starting 1 October 2021 – in line with our assessment that i3 Energy is on the cusp of generating more than $US 100m of cash fl
Companies: i3 Energy Plc
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ATOM headquartered in Leeds, focussed on the large-scale production of green hydrogen and ammonia intends to join AIM towards the end of the year. ATOME intends to be spun-out from AIM-listed President Energy Plc, an oil and gas company which has incubated and financially supported ATOME to date, by way of a dividend in specie and flotation.
Devolver Digital to join AIM, an award-winning digital video games pu
Companies: SAE HMI MNO MSMN NSCI OMG PCA
Botswana Diamonds (BOD LN) – £550,000 fund-raising
Castillo Copper (CCZ LN) – IP Survey identifies potential drill targets at Luanshya
KEFI Gold and Copper* (KEFI LN) – Security incident resolved
Kore Potash (KP2 LN) – Quarterly operations update
Petropavlovsk (POG LN) – Q3 update highlights recovering production at own mines with increasing POX Hub utilisation
Sibanye-Stillwater (SSW JSE) – In talks to buy Brazilian projects for $1bn
Strategic Minerals* (SML LN) – £400,000 fund-raising
Companies: BOD KEFI KP2 POG SML CCZ SSW