Ferroglobe Craters 61% After Posting Awful Earnings and Revenue


Ferroglobe PLC (NASDAQ: GSM) 

Ferroglobe PLC stock plunged more than 61% in the regular hours of trading on Tuesday, hitting a low of $1.95 on the Nasdaq. The massive drop came after the silicon metal supplier posted lower-than-imagined results on Monday for its fiscal third-quarter that came to a close on September 30.

Deteriorating market conditions for all of its products during the quarter were greatly to blame for the disappointing results. Chief Executive Pedro Larrea said the company will take swift actions aimed at optimizing its position.

Ferroglobe plans to curtail production in its manganese-based and silicon-metal alloys businesses to boost free cash flow and control costs.

GSM Earnings & Outlook

Ferroglobe reported a net loss of $1.2 million, or $0.01 per share, compared with $3.3 million, or $0.02 per share, in the third-quarter of the previous year. Earnings, adjusted for one-time items were $0.00 per share, missing analyst estimates of $0.13 per share.

The company generated revenue of $526.8 million, up from $451.6 million year over year. Analysts had called for revenue of $555.1 million, according to data compiled by FactSet. Average selling prices of all products sank by 5% to 7% from its fiscal 2018 second quarter.

Ferroglobe CEO Comments

Pedro Larrea said, “Following strong growth in our business over several sequential quarters, market conditions in our main products deteriorated through Q3. However, Ferroglobe is still showing solid results overall for the first nine months of 2018, with adjusted EBITDA up 69% year-over-year to $220.9 million, leverage remaining below 2.0x and a comfortable liquidity position.”

Mr. Larrea added, “In response to the evolving markets for our key products, Ferroglobe has taken swift action to optimize our position across our global production base. In this regard, we are curtailing production in our silicon metal and manganese-based alloys businesses in order to take advantage of our diversified portfolio by optimizing production among our most cost effective plants and geographies.”

Ferroglobe PLC Profile

Ferroglobe PLC, formerly VeloNewco Limited, is engaged in silicon and specialty metals industry. The Company produces silicon metal and silicon- and manganese-based alloy, which serves customers in the chemical, aluminum, solar, steel and ductile iron foundry industries.

It operates through two segments: Electrometallurgy and Energy. It Electrometallurgy segment includes its coal and quartz mining operations and its silicon metal and ferroalloy production, whereas the Energy segment consists of its hydroelectric power operations.

It currently operates approximately 20 production smelting facilities in the field of electrometallurgy: approximately five in Spain, over five in the United States of America, over six in France, over three in South Africa, one in Venezuela, one in Poland, one in Canada, one in Argentina and one in China.

It diversifies its production base across approximately five continents, such as Africa, Asia, Europe, North America and South America. – Reuters