Small-cap metal alloys supplier Insimbi expects to swing into a headline loss when it reports its interim results, which it says is in part due to low economic growth in the country.
The company announced on Tuesday that it expected headline earnings per share (HEPS) to fall by more than 100% for the six months to end-August.
This will result in Insimbi reporting an interim headline loss per share of 1.1c-1.3c, from headline earnings per share of 15.43c previously. The group is set to release its interim results on October 18.
Insimbi said the earnings slump was primarily due to SA’s low economic activity, which has put a dampener on the volumes of commodities traded — with further pressure coming from higher-for-longer interest rates and persistent inflation.
It also blamed volatile prices and exchange rates this year, while the ban on exporting scrap metals continued to weigh on its operations, it said.
Volatility in commodity prices and exchange rates also resulted in inconsistent margins and lower revenue for the period under review and saw the group recording a foreign exchange loss of R6.6m, while retrenchment costs and legal fees resulted in an additional R8.6m in non-recurring costs.
Furthermore, a series of disposals and repurchases led to Insimbi incurring an additional non-recurring loss of R10.4m in the six months. All of these resulted in a loss per share higher than that of its headline loss per share.
Insimbi, a key player in SA’s scrap metal industry, has seen its operational performance dragged down by SA’s ban on ferrous and copper scrap metal exports, which has been in place since November 2022. Last year the group reported a 95% drop in cash generated from operations for the six months to end-August 2023 followed by a 5% decrease in revenue for the past financial year.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.