International Ferro Metals Ltd (IFL.L) said on Monday it does not expect to report a first half pretax profit due to a sharp fall in ferrochrome prices and sees its full-year profit materially below market expectations.
The profit warning for the full year to end June 2009 is based on the weakness of current demand for ferrochrome, an essential ingredient in stainless steel, even after the recent increase in Chinese consumption.
In the closing weeks of the six-month period to end December, the South African company said it experienced a rapid deterioration in ferrochrome pricing.
First-quarter 2009 European benchmark prices for ferrochrome dropped to $0.79 per pound from $1.85 a pound in the fourth quarter of 2008, it said.
The overall financial impact of these price reductions on the company's half year results is not expected to exceed $18 mln and includes a write down in inventory of about $4.2 million, it said.
(Reporting by Julie Crust; editing by Rosalba O'Brien)
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