Basic Materials
October 30, 2018 / 8:20 AM / Updated 16 minutes ago
UPDATE 1-Belgium's Nyrstar reports a sharp drop in Q3 profits as zinc price falls
Oct 30 (Reuters) - Belgium’s Nyrstar NV posted a 74 percent plunge in third-quarter core profit on Tuesday, hurt by lower zinc treatment charges and a lower average zinc price, rising energy prices and mine operating charges, and a weaker dollar.
Underlying earnings before interest, tax, amortization and depreciation (EBITDA) came in at 13 million euros ($14.8 million) on revenues of 1.0 billion euros, the zinc and lead producer said.
“Over the course of the third quarter, Nyrstar was exposed to adverse market conditions (which led to) poor financial results for the group,” chief executive Hilmar Rode said in a statement.
These “adverse market conditions” led Nyrstar to issue a profit warning last month, saying its second-half underlying EBITDA will be materially lower than the first half while leaving the forecasts for production, capex and positive free cash flow unchanged.
It confirmed the free cash flow outlook on Tuesday.
For the nine-month period, underlying EBITDA dropped 17 percent from a year earlier to 134 million euros.
The results for the third quarter were hit by a drop in the average zinc price, down 22 percent compared to the average for the first half of the year. The nine-month drop was partially offset by an overall higher average zinc price and increased zinc production, Nyrstar said.
The company’s zinc metal production increased 9 percent over the July-September period, while zinc in concentrate production rose 8 percent.
Nyrstar, a highly-leveraged company, has recently raised market doubts about its debt levels as analysts have issued negative outlooks for the company, with Moody’s cutting rating, citing concerns about its liquidity and ability to refinance 350 million euro worth of bonds maturing next year.
The company, whose biggest shareholder is Swiss-based global commodities trader Trafigura, said end-September net debt excluding zinc metal prepay and perpetual securities decreased 61 million euros from the end of June. ($1 = 0.8789 euros) (Reporting by Piotr Lipinski in Gdynia; Editing by Subhranshu Sahu and Darren Schuettler)