Earnings call transcript: Rana Gruber AS Q1 2025 shows strong EBITDA growth

Rana Gruber AS reported robust financial results for Q1 2025, with significant improvements in EBITDA and adjusted earnings per share (EPS). The company achieved a revenue of NOK 401 million and an adjusted EPS of NOK 2.12, reflecting a positive year-over-year trend. According to InvestingPro analysis highlights two key strengths: the company's significant dividend payments to shareholders and its ability to maintain low price volatility. Ongoing investments in sustainable mining and electric technology remain a priority. InvestingPro subscribers have access to 4 additional exclusive insights about Rana Gruber's financial health and market position.

Executive Commentary

Gunnar Moo, CEO of Rana Gruber AS, emphasized the company's commitment to cost discipline and sustainable practices. "We continue to deliver within the cash cost range we have communicated between US50 dollars and US55 dollars," he stated. Moo also highlighted the importance of safety and innovation, noting, "Our most valuable asset is our people, and their safety should always be our top priority."

Risks and Challenges

• Maintenance costs and waste removal are impacting cash costs.
• Macroeconomic uncertainty has led to a temporary reduction in dividend payout.
• The discontinuation of Colorana production may affect future revenue streams.
• The timing of achieving a fully electric mine remains uncertain.

Q&A

During the earnings call, analysts inquired about the company's electric mine potential and dividend policy. The management reiterated its commitment to sustainable mining and indicated that shareholder meetings will primarily be virtual, with a physical meeting planned for November.

Full transcript - Rana Gruber AS (RANA) Q1 2025:

Gunnar Moo, CEO, Eranlaguerbe: Welcome to this presentation of Results for the First Quarter of twenty twenty five. My name is Gunnar Moo, and I am the CEO at Eranlaguerbe. With me today is our CFO, Alan Heijen. We will now take you through our operational and financial performance, and you are welcome to send us questions during our presentation by using the Q and A feature. Questions will be answered at the end of the session.

Despite volatile markets, iron ore prices have remained quite stable throughout the quarter. This stability has supported our results, leading to a quarterly revenue of NOK401 million. Our revenue was also supported by strong production volumes, which lands on 473,000 tonnes. This is the second quarter since we announced our cash cost target. This quarter, we landed at USD 55 per ton, which is at the higher end of our range.

While our cash cost performance in the previous quarter demonstrated exceptionally strong response to external factors, we acknowledge that quarterly results may fluctuate somewhat. Nevertheless, our clear goal remains to consistently deliver in the lower range of our communicated target over time. Radalla Gubel continues to return capital to our shareholders, while the Board of Directors resolving to declare a quarterly dividend of NOK 1.27 per share for the first quarter. The dividend represents 60% of adjusted net profit, reduced from 70% to strengthen the balance sheet and prepare for continued macroeconomic uncertainty, while supporting investments that ensure long term competitiveness. Our most valuable asset is our people, and their safety should always be our top priority.

Get The News You Want

Read market moving news with a personalized feed of stocks you care about.

Get The App

In the first quarter, we had one small injury resulting in absences from work. These incidents provide important lessons that we continuously strive to implement in our operations. In our annual report for 2024, we published our sustainability report. Sustainable mining is important for our customers and all our stakeholders. This reflects our dedication to responsible mining practices and continuous improvement in environmental and social performance.

The first quarter continued the positive trend from 2024 with strong production figures for both hematite and magnetite. As observed at the end of twenty twenty four, magnetite volumes have increased, and we expect them to rise even further towards the end of the year when the Stensenchen facility becomes operational. As mentioned last quarter, we plan to discontinue our Colorana production by the end of the year. Preparations are well underway, and we remain on track to complete this process as planned. Now I will hand over to our CFO, Arren Hayen, who will present the financials.

Alan Heijen, CFO, Eranlaguerbe: Thank you. Good night and good morning, everyone. Starting off with the revenue side of the P and L. As you can see on the graph on the right, first quarter revenues increased from the first quarter of twenty twenty four and ended, as Gneis mentioned, in at $4.00 1,000,000. The main reason for the uplift is linked to price effects as well as lower shipping costs this year and a higher magnetite sale.

Compared to last quarter, however, the revenues fell slightly. This is mainly related to a different shipping volume, as you can see on the graph on the left hand side. From the graph in the middle, you can see that the realized prices for both MainTite and Hematite has been relatively stable for the last quarters. And as mentioned, we still expect MainTite sales to increase throughout the year due to the strategic uplifts that we have done in production volumes on this project. Switching over to the cost side.

As previously announced, we established a cost target of staying between $50 to $55 per ton of iron ore produced. For the first quarter, we met our cost target ending at NOK $5.75 per ton or approximately $55 This is in the higher part of our range. And beyond the strengthening of the NOK, the underlying cost structure was impacted by several planned maintenance initiatives. In the first quarter, We had a higher volume of waste rock removal in the open pits than the previous quarter, and we had a lot of seasonal work related to annual reports, increasing the cost per tonne from previous quarter. However, we are still in line with our target range, and we are also in line with the first quarter from last year.

Going forward, we do expect seasonal variations in part of our cost structures, but we still remain confident in delivering on our target throughout the year. Busy slide, but some comments on some of the figures shown here. EBITDA increased $280,000,000 from NOK 56,000,000 last year, mainly due to the increase in revenue. In the first quarter, the pretax profit was adjusted with negative 66,400,000.0 related to unrealized changes in the company's hedging portfolio, resulting in an adjusted net profit of NOK 78,500,000.0, up from NOK 68,200,000.0 last year. As noted in the last quarterly presentation, please note that there has been a change in the APM related to how we adjust the hedging portfolio on freight and foreign exchange.

Details regarding this can be found in both this and the previous quarterly report, so please see that one. This then gives us an adjusted EPS of NOK2.12 compared to NOK1.84 last year. And by following our dividend policy, the Board decided to pay up NOK1.27 billion in dividends per quarter for the first quarter of twenty twenty five. Moving on to cash flow. The total net cash flow from operations in the first quarter amounted to positive 174,000,000.

Included in this is a tax payment of NOK 44,000,000. CapEx for the period was NOK 43,000,000, NOK 30 5 million of this was development CapEx related projects, mainly the new mine level, but also smaller investments in the processing plant. And remaining $8,000,000 was related to scheduled investments in machines, building improvements, I think that is classified as maintenance CapEx. For financial activities, 67,000,000 was payout of dividends for the fourth quarter and $17,000,000 was payment of principal portions of our lease liabilities. All in all, this gives us a positive change in cash of $47,000,000 for the first quarter of twenty twenty five.

And as always, let's end the financial review by shortly looking at our financial position. We still hold a solid financial position and no bigger change on the balance sheet since last quarter. After the dividend distributions for the fourth quarter of twenty twenty four, our equity ratio was 60%, where part of the uplift is related to the strengthening of the unrealized hedging portfolio that we have. Leasing debt was reduced to $293,000,000 within the quarter. And by the end of the first quarter, the total cash holdings in the company was NOK 92,000,000.

That concludes the financial sections, and I'll leave the back word to you. Good night. Sorry.

Gunnar Moo, CEO, Eranlaguerbe: Thank you, Arne. We continue to make progress towards our ambitions, steadily improving our business to meet the evolving demands of the steel industry. While we are focused on developing our operations for the future, we remain committed to maintaining cost discipline. We continue to deliver within the cash cost range we have communicated between US50 dollars and US55 dollars Our strong balance sheet, solid partnerships and skilled teams gives us the ability to navigate volatile markets with confidence. We are on track to deliver iron ore concentrate with a 65% grade EFI and to increase magnetite production.

I'm also pleased to highlight that we have now achieved 17 consecutive quarters of dividend payments. With that, we conclude this presentation and we now open the floor for the Q and A session. Thank you so far.

Moderator/Operator: Thank you, Arlen and Gunai. We have received two questions, and we can first one will go to you, Gunai. Do you think you will be the first full electric mine worldwide?

Gunnar Moo, CEO, Eranlaguerbe: That is, still our goal. Whether we will succeed in being the first in the world is little bit difficult to predict because it's very linked to the delivering of machines that can compete with traditional machines. But we will we think that this will be the same situation for everyone. So, let's see. We will we are in the race.

Moderator/Operator: Perfect. I think Alan could take the the next one. Do you think in the future you'll make a nonvirtual shareholder meeting?

Alan Heijen, CFO, Eranlaguerbe: Yes. We we do. We typically the setup that we have run so far is that we have three virtual meetings, in Murana throughout the year, but then the November meeting where we present, the q '3 numbers, we typically hold that in Oslo as a physical meeting combined with the Capital Markets Day that we have.

Moderator/Operator: Perfect. And, that was all the questions from the q and a feature, but I have also received one at email. And I think you and I could elaborate a bit on that one, and that's the dividend policy. We're now moving on to 60% from last quarter. We had 17.

What's your thought about the future?

Gunnar Moo, CEO, Eranlaguerbe: Well, our target is always 70%, between 5070%, but the target of 70%. The reason for going for 60% this quarter is linked to macroeconomic uncertainty. If that stables, which there are hope that will happen, the target is 70, and in normal situation, it would have been 70. But macroeconomic situation is the reason for 60 this time.

Moderator/Operator: Thank you. I think that was all for today. So, I will, thank you all for listening in today, and, we'll be be back in August, our second quarter results.

Gunnar Moo, CEO, Eranlaguerbe: Thank you, Arimon.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.