Release Date: February 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rana Gruber ASA (FRA:7XH, Financial) achieved a new production record for the second consecutive year, highlighting strong operational performance.
- The company reported a cash cost of $46 per ton for the fourth quarter, below their target range of $50 to $55, indicating effective cost management.
- Rana Gruber ASA has maintained a strong safety record with no injuries resulting in absences in the fourth quarter.
- The company achieved a top-tier rating in the TSM (Towards Sustainable Mining) reporting, reflecting its commitment to responsible mining practices.
- Rana Gruber ASA has consistently returned capital to shareholders, with a dividend payout of 1.80 NOK per share for the fourth quarter, maintaining a 70% distribution policy.
Negative Points
- Revenue for the fourth quarter was impacted by lower iron ore prices compared to the previous year.
- EBITDA decreased significantly to NOK147 million from NOK358.5 million last year, primarily due to reduced revenue.
- The company reported a decrease in adjusted net profit to NOK95.2 million from NOK215 million last year.
- The Colorana product line is approaching the end of its life cycle, necessitating increased investments for future production.
- The transition from hematite to increased magnetite production may lead to reduced hematite production, affecting product mix and revenue volatility.
Q & A Highlights
Q: What are your thoughts about the US tariffs and their potential impact?
A: Erlend Hoyen, CFO, mentioned that while the tariffs on steel and aluminum are difficult to predict, the activity in China is deemed more significant. The company is not overly concerned and believes the Norwegian government will manage trade relations with the EU effectively.
Q: Can you provide insights on the future cash cost expectations?
A: Erlend Hoyen, CFO, stated that the company is on the right path to reducing cash costs and is confident in maintaining them within the target range of $50 to $55 per ton. The reduction is attributed to internal optimizations and lower energy costs.
Q: How will the increase in magnetite production affect revenue volatility and hematite production?
A: Erlend Hoyen, CFO, explained that magnetite has a more stable pricing structure due to bilateral agreements and different market dynamics. The production capacity is approximately 1.8 million tons per year, with a one-to-one mix between increased magnetite and reduced hematite production.
Q: What are the expectations for shipments to China in 2025 compared to 2024?
A: Erlend Hoyen, CFO, indicated that the company expects to maintain a similar volume of shipments to China as in 2024, with three vessels sent last year. The first quarter of 2025 has already seen one vessel dispatched.
Q: How sensitive is the cash cost target to currency fluctuations, and should it be viewed in USD or NOK?
A: Erlend Hoyen, CFO, clarified that the USD target is linked to the revenue side, which is primarily in USD. However, most of the cash cost base is in Norwegian Krone, making internal NOK targets crucial for achieving the USD target.
Q: Will the revenue from the Colorana line be replaced after its closure?
A: Erlend Hoyen, CFO, noted that the Colorana line has been unprofitable, leading to its closure. The increased magnetite production is expected to compensate for the revenue loss from Colorana.
Q: What percentage of costs are in Norwegian Krone versus foreign currencies?
A: Erlend Hoyen, CFO, estimated that approximately 7% to 10% of costs are linked to foreign currencies, with the majority (90% to 93%) in Norwegian Krone on a short-term basis.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
