Release Date: August 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rana Gruber ASA (STU:7XH, Financial) reported a significant increase in revenue for Q2 2024, reaching NOK548 million compared to NOK349 million in the same quarter last year.
- The company maintained a strong safety record with no production-related injuries during the extensive maintenance period.
- Rana Gruber ASA (STU:7XH) achieved record high sales volumes in the hematite segment with nearly nine shipments in the quarter.
- The company continues to pay dividends consistently, with the Board declaring a NOK2.23 per share dividend for the second quarter, marking 14 consecutive quarters of dividend payments.
- Magnetite production is on track to reach 150,000 tonnes per year, aligning with the company's strategic goals.
Negative Points
- The annual maintenance stop led to lower production and higher cash costs per tonne due to increased maintenance expenses.
- An unexpected failure of a conveyor belt in the underground mine resulted in additional costs beyond initial plans.
- The company faces challenges in reaching its 2025 environmental targets due to longer lead times and higher costs.
- The total net cash flow from operations was negative NOK27 million for the second quarter, impacted by a significant tax payment and reduction in payables.
- Rana Gruber ASA (STU:7XH) is facing potential headwinds from volatile iron ore prices and uncertainties related to sales in Europe.
Q & A Highlights
Q: Can you elaborate on the impact of the unexpected conveyor belt failure on your operations and costs?
A: Gunnar Moe, CEO: The failure of the conveyor belt in the underground mine led to higher costs than initially planned. This incident, combined with the annual maintenance stop, resulted in increased cash costs per tonne. However, we managed to maintain safety standards with no production-related injuries during this period.
Q: How did the maintenance stop affect your production and financial performance in the second quarter?
A: Erlend Hoyen, CFO: The extensive maintenance stop, one of the most significant since going public, led to reduced production, impacting our cash cost per tonne. Despite this, our revenue increased to NOK548 million, driven by higher prices and volumes, as well as favorable currency effects.
Q: What are the strategic implications of moving away from the 2025 target for greener iron ore production?
A: Gunnar Moe, CEO: Due to longer lead times and higher costs, achieving the 2025 target cost-effectively is challenging. We are shifting focus to a gradual reduction approach while maintaining our leadership in the green iron ore market.
Q: Can you provide more details on the dividend policy and recent dividend decisions?
A: Erlend Hoyen, CFO: We remain committed to our dividend policy of paying out 50% to 70% of net profit. For the second quarter, the Board decided on a dividend of NOK2.23 per share, marking the 14th consecutive quarter of dividends since becoming public.
Q: What are the expectations for magnetite production and its impact on future revenues?
A: Gunnar Moe, CEO: We are on track to produce at least 150,000 tonnes of magnetite per year. This aligns with our strategic goals and is expected to become a more significant factor in our revenue growth in the coming years.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
