H1 21/22 numbers were largely in line with market expectations.
All divisions performed well and, in particular, Steel and Metal Forming.
Higher energy costs were felt towards the end of Q2, with no impact on the group’s FY guidance.
We will revise our numbers marginally, with no major impact on our target price.
Companies: voestalpine (VOE:VIE)voestalpine AG (VOE:WBO)
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
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.
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Jubilee today announce the full year results for FY 2021 ending in June 21. It was a year of continued progress with revenues up 143% to £133m (from FY 2020), adjusted PBT up 324% to £52m and eps up 93% to 1.8p/sh – an extraordinary year – but still only the beginning of the progression in our view. Continued developments in South Africa have led to a fully flexible chrome and chrome tailings solution at Inyoni. Supply from a wide variety of sources (Run-Of-Mine, new tailings from own operati
Companies: Jubilee Metals Group PLC
Friday's market sell off saw some violent downward moves in many stocks with little initial differentiation between sectors or the key drivers of businesses, creating significant share price drops in a number of higher quality or uncorrelated names. We take a look at some stocks we believe have either seen an unwarranted sell-off, have seen weakness go under the radar or where there is now a more attractive opportunity.
Companies: ANX IBPO CYAN SOM EQT AFM
Phoenix copper today announces an update on its deep drilling program below the proposed Empire oxide open pit resource and into the deeper sulphide zone. Phoenix is roughly 1/4 the way through a 4,500m drilling programme and has once again shown that high-grade zones of copper, zinc and lead sulphide mineralisation exist, nearly always associated with gold and/or silver and often with elevated concentrations of tungsten and molybdenum.
Companies: Phoenix Copper Ltd. (United Kingdom)
Savannah today announces that it is amicably terminating its JV arrangement with Rio Tinto over the Mutamba Minerals Sands project in Mozambique. Savannah has been paid $9.5m (which translates into 0.4p/sh) in cash to relinquish the 20% it has earned in the project and will cease all activity in country. All staff will transfer to Rio Tinto.
Companies: Savannah Resources Plc
Across a broader market sell off EQTEC have shown resilience and is trading at 1.55p, above its placing in May, up 25% from one month ago.
Companies: EQTEC PLC
No joiners today
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What’s cooking in the IPO kitchen?
Trinistar Liverpool S.a r.L announces its potential listing of a newly formed single asset company which will own the Capital Building in Liverpool on the IPSX. Upon admission the Company would become a real estate investment trust (REIT). The Capital Building occupies close to a 3.5 acre freehold site in the centre of Liverpool’s business district; the building comprises c425,000 square feet of predominantly of
Companies: ADBE ADBE SYM ARC AVCT CMCL CLIN DCTA FRAN OSI
SolGold (“SOLG”) has published the first partial assay results from its drilling programme at the Varela target on the Rio Amarillo concession, 35km from the flagship Cascabel project. Hole 1 has been assayed to a depth of 1,052m, revealing an intercept of 72m @ 2.16 g/t Au from 639.7m, including 24m @ 5.77 g/t Au. More interestingly assay results are pending from 1,052m to 1,708.1m (EOH) where free gold and porphyry mineralisation have been identified. Intersections of porphyry style mineralisa
Companies: SolGold Plc
West Newton planning update
Companies: Union Jack Oil Plc
Initiating Coverage: Price Target 20p
Potential Beyond Tin
AfriTin Mining Limited (ATM) is one of only three listed tin producers in Western markets. It has a large (820km2) land package in Namibia comprising 5 prospective licenses of which the Uis mine is the most advanced and already in production. Near term growth is being delivered with an 80% increase in tin production between 2022 and 2024. However, this is only scratching the surface and there are more than conceptual plans being fo
Companies: AfriTin Mining Ltd.
Savannah Resources has sold its interest in the Mozambique mineral sands project (Mutamba) to JV partner Rio Tinto for $9.5m in cash. The payment has already been made to one of Savannah’s UK subsidiaries.
Given Barroso’s importance and capital requirements over the coming months, we view this as very good news. It allows management to dedicate all its time to Barroso and reduces future SAV equity dilution. Despite the strong lithium price and exceptional performance of ASX and TSX lithium sto
Savannah Resources is a hardrock lithium exploration and development company with a 100% interest in the Barroso Lithium Project in the Northern Portugal hosting 27mt at 1.06% Li2O for ~700kt LCE, the largest spodumene lithium resource in Western Europe. Project environmental permitting is currently in progress paving the way for the completion of the Feasibility Study and eventual project financing. The project benefits from the strategic location as Europe rapidly expands it Li-ion batteries a
Cornish Metals has now released the results of 10 drillholes at its continuing exploration programme at United Downs near Camborne. Including two holes drilled on the property by Cornish Lithium the drilling shows up to 5 mineralised structures with a total of twenty-two individual mineralised intercepts.
Even though the area has been mined intermittently between the early 1700s and the late 20th century, the drilling evidence bodes well for the delineation of additional mineral resources wh
Companies: Cornish Metals Inc.
Shanta Gold (AIM: SHG), the East Africa-focused gold producer has today announced a drilling update on its West Kenya Project (WKP) based on its Phase 2 drilling program which aims to infill 17 modelled zones across both Isulu and Bushiangala deposits up to 450-500m below surface. The Company has also reported drilling results from a regional exploration target, Ramula, where assays have been received from the first of 12 holes drilled, as part of the resource drill-out programme, totalling 451m
Companies: Shanta Gold Limited
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Canadian Overseas (COPL LN/XOP CN): Raising US$8 mm of new equity – Canadian Overseas has raised US$8 mm of new equity priced at 20p per share. The net proceeds of the placing are intended to be used for a bid for Cuda Energy LLC, or its assets, through a receivership process.
Southern Energy (SOUC LN): 3Q21 results – 3Q21 production in the USA was 12.3 mmcf/d with
Companies: ZEN SOU AOI XOP CHAR EQNR EQNR JSE LUPE RDSA SEPL SEN SOU
i(x) Net Zero, the investing company which focusses on Energy Transition and Sustainability in the Built Environment, announces its intention to join AIM. Following Admission, the Company intends to use the net proceeds of the proposed Fundraising to provide development and expansion capital to certain of its investee companies, for future investments in companies that fall primarily within its areas of interest in Energy Transition and Sustainability in the Built Environment and to provide work
Companies: TGN AFC COIN COIN HL/ OMI