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Full-Year Results for the Period Ended March 2010

05 August 2010

Today Foskor announces its full-year earnings for the financial year ended March 2010.

Key highlights include:

  • Revenue of R3.5 billion, despite sharp pull back in demand
  • Operating profit of R345 million, better than the expected break-even
  • Pyroxenite Expansion Projects on track and within Budget
  • Three new mining licences attained; and
  • Satisfactory progress on BEE transaction.


Foskor's Chief Executive Officer (CEO) and President, Mr Alfred Pitse, commented:
"We were aware of the hardening trading conditions at the start of the financial year, and although we were prepared to face the worst, we still remained optimistic that the recession would be short-lived and that profits would normalize quickly. The operating profit of R345 million is better than the initial break-even position we had initially expected.

Foskor, like all other global resource companies did not escape unscathed from the global recession that ensued from the financial crisis. The company's bottom line was affected by the contraction in commodity prices, the sharp and drastic pull-back in demand and the continuous appreciation of the rand against the USA dollar.

Furthermore, delays in attaining three new mining licences caused a 12% shortfall in the production of phosphate rock concentrate at the mine in Phalaborwa. The South Pyroxenite Pit (new mine) guarantees ore reserves for the next 70 years and positions Foskor to adequately supply the shortfall in the domestic market. I am confident that 2010/11 output will quickly be ramped back up the normal level of 2.5 million tons of phosphate rock concentrate and reach the target of 3 million tons by 2013/14."

Mr Theuns Koekemoer, Foskor's Chief Financial Officer added:
"In July 2009, the Manyoro Consortium, the Ba-Phalaborwa and uMhlatuze communities, and employees of Foskor and Foskor Zirconia were named as the company's BEE partners. The after-tax loss of R58.5 million is largely attributable to the share-based payment expense incurred as a result of the BEE transaction."

Mr Pitse added:
"Foskor's competitive advantage in the domestic market lies in the fact that we are the only vertically integrated phosphate producer in South Africa. The company's distribution networks are growing through our market diversification strategy, while the Strategy and New Business Development Division focuses on product diversification. In time, the combination of the product and market diversification strategies will balance Foskor's portfolio, steady sales volumes and protect cash flow during economic downturns.

Looking forward, clarity and market direction are coming to the fore. Although the rand remains volatile against the dollar, commodities seem to have bottomed-out and are returning to normal levels at the same time as demand is reviving. As the after-effects of the financial crisis wear off and renewed access to finance becomes available, many farmers are eager to stimulate their businesses. The global need for food, feed and fuel will continue to support Foskor's bottom line."



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