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Assore flags 507M rand impairment for FY'19 on manganese alloy oversupply

Assore Ltd. said it anticipates an impairment charge of 507 million South African rand for its fiscal 2019 while projecting increased earnings year over year due to better market conditions and a weaker rand.

The impairment charge is related to the company's indirect interest in Malaysia-based Sakura Ferroalloys SDN BHD as a result of a global oversupply of manganese alloy, according to an Aug. 21 release.

Assore initially flagged the oversupply in the first half of its fiscal year ended June 30, noting production cutbacks in the industry amid rising manganese ore costs, with the situation worsening in the second half. Its 50%-owned Assmang Pty. Ltd. holds a 54.36% stake in Sakura Ferroalloys.

The impairment is expected to be offset by improving market conditions for its key products compared to the previous fiscal year, with the company noting higher iron ore prices, steady manganese ore prices, and lower prices for chrome ore and manganese alloys.

Assore estimated an 11% to 19% year-over-year increase in full-year attributable earnings to a range of 5.69 billion rand to 6.07 billion rand, with attributable EPS of 55.16 rand to 58.85 rand.

It expects headline earnings to increase annually by 20% to 28% to a range of 6.12 billion rand to 6.53 billion rand, with headline EPS of 59.33 rand to 63.31 rand. Full results are scheduled to be released around Sept. 5.

For the first half of its fiscal year, Assore posted a net profit of 2.92 billion rand, increasing year over year from 2.45 billion rand.