MCP settlement offsets stock impairment for 5N Plus

5N Plus recorded net earnings of $34.3 million in the second quarter as a $45.1 million payout from its successful lawsuit against former shareholders of MCP offset a $10.2 million writedown on its physical inventory.

5N Plus recorded net earnings of $34.3 million in the second quarter as a $45.1 million payout from its successful lawsuit against former shareholders of MCP offset a $10.2 million writedown on its physical inventory.

The “decisive” settlement puts an end to a “very difficult period” for the company’s employees and stakeholders, Jacques L’Ecuyer, president of the Montreal-based minor metals processor, said on Wednesday July 31.

The group launched arbitration proceedings against the former shareholders in November 2012, claiming that they had overstated the value of MCP, which 5N Plus bought for $327 million in February 2011.

The settlement of the case in June netted a $45.2 million gain for 5N Plus, helping the company to offset the inventory writedown, lower revenues and smaller margins recorded during the period.

During the period, conditions in the minor metals markets it is active in – which include bismuth, selenium, indium, gallium, germanium and tellurium – were characterised by aggressive competition for sales and depressed underlying commodity prices, 5N Plus said.

“In our Electronic Materials business unit, both the solar and LED markets are adversely affected with overcapacity and aggressive pricing strategies, which are compressing margins throughout the value chain. In our Eco-Friendly Materials business unit, decreases in bismuth and selenium prices negatively impacted margins in the quarter,” L’Ecuyer said on Tuesday.

To counter those effects, 5N Plus is focusing on improving efficiency, cutting costs and exploring downstream opportunities through acquisitions and expansions.

In June, the company announced that it is investing in a new gallium plant in South Korea, one of the fastest-growing markets for electronics manufacturing.

The following month 5N Plus moved downstream in the North American minor and precious metal powders sector, with the acquisition of Ontario-based AM&M Advanced Machine and Materials.

“We are confident that such initiatives and our focus on cost reductions and efficiency improvements will ensure the long-term profitability of our company and an increase in shareholder value,” L’Ecuyer said.

Mark Burton 
mburton@metalbulletin.com
Twitter: @mburtonmb

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