In the group's results statement, Afrarak chief executive Guy Konsbruck pointed out that the company had reduced its overall earnings (EBITDA) loss by 78%.
The company noted that COVID-19 had triggered a significant decrease in demand and market prices both in the FerroAlloys and Speciality Alloys segment, to which the company responded by reducing production.
“In the beginning of the first half of 2020 we were on the right track of recovery where we have seen stronger performance in the Speciality Alloys segment and recovery in the FerroAlloys segment,” Konsbruck said in the statement.
“Unfortunately the global economic downturn originated by COVID-19 halted this and showed to be the most challenging business environment that I have ever experienced in my professional career. Having said this, we have still managed to show good signs of recovery when compared to H1 2019. Our specialty segment remained profitable,” he added.
Afarak is now advancing other mining assets and said it hopes to be producing platinum group metals (PGM) by the end of the year, meanwhile, its Serbian mining assets and magnesite plant are being prepared for commercial production.
Konsbruck noted that the company’s efforts to pursue new capital and the ‘noise’ related to prior corporate disputes which, according to the chief executive, “does not encourage banks and other financial institutions.”
“Management continues to explore further options, including fundraising via shareholders. We will keep all shareholders appraised of further developments,” he added.
“It is difficult to predict how the markets will evolve in the second half-year 2020, but we are in a position to swiftly resume 100% production capacity, in case the global industrial activity recovers.”
Financial results for the first half saw Afarak's revenue decrease by 45.7% to €44.9mln, down from €82.8mln in the first half of 2019, while its underlying earnings (EBITDA) loss was marked at €2.8mln compared to €12.9mln in the corresponding period last year. The company made a €4.7mln impairment to long term assets related to the Mogale business.
It reported a €16.1mln loss for the period, versus a €29.2mln loss the year before, and cash flow from operations marked a €2.2mln outflow improvement from a €5.2mln outflow in the first half of 2019.
Afarak told investors that the second half is expected to continue on a weak tone until a vaccine for COVID-19 is found. The group added that it may need to raise further funds to meet its liquidity needs during the upcoming period.