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Underlying earnings at Brazil’s Ferbasa fell 55.7% year-on-year in the fourth quarter of 2014, as the ferro-alloys producer continued to carry out its stockpiling strategy amid a gloomy outlook for energy supply.
Adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) totalled 13.5 million Reais ($4.7 million) in the December quarter, the company said in its financial report.
This compares with 30.5 million Reais ($10.7 million) in the corresponding months of 2013.
Ferbasa’s net income stood at 14.2 million Reais ($4.99 million) in the September-December period, against 23.6 million Reais ($ 8.3 million) a year earlier.
Domestic sales fell 19.4% year-on-year in the fourth quarter of 2014 to 40,816 tonnes, while shipments decreased 59.2% in the same comparison to 6,216 tonnes.
“This reduction is in line with the company’s strategy of increasing the levels of finished products stocks to supply the market during the second half of 2015,” Ferbasa said in the report.
The company aims to accumulate a total of 105,000 tonnes of alloys until the end of June 2015 to guarantee the supply for its key clients in the seemingly likely case of not being able to renew an energy supply contract due to expire at the end of the second quarter.
By the end of 2014, Ferbasa already had in stocks a total of 66,157 tonnes of finished products.
Ferro-silicon 75% sales to the domestic market were the exception, growing 23.6% in the fourth quarter form the corresponding period of 2013.
“As for the ferro-silicon 75, Ferbasa has taken the opportunity created by the reduction of supply from other local producers and increased its sales in the domestic market,” the company added.
Brazil’s ferro-alloys and silicon metal production has been reduced to just a handful of companies in early 2015, including Ferbasa, amid the challenging scenario for energy supply. Full-year 2014 Ferbasa’s adjusted ebtida grew 20.2% in 2014 against the previous year, reaching 136.3 million Reais ($47.9 million), the company said.
Net income was up by 24.4% in 2014, to 91.7 million Reais ($32.2 million).
Ferbasa sold a total of 228,376 tonnes of ferro-alloys last year, a 12.2% decrease when compared with the volumes sold in 2013.
Despite that, revenues grew 3.6% in 2014 from the previous year to 828.2 million Reais ($290.9 million).
This reflects “the combination of a more selective sales strategy associated with the capture of higher margins in the ferro-silicon 75 market”, Ferbasa said.
The company expects ferro-silicon prices to continue their upward trend due both to supply reduction and the recovery of the US economy.
As for Brazil, ferro-silicon prices “will remain at current levels for as long as there is no rebalance between demand and supply, even if that would be via increased share of imports”, Ferbasa said.
Danielle Assalve danielle.assalve@metalbulletin.com Twitter: dassalve_mb