Gemfields Group Ltd (STU:5PH) (Q2 2024) Earnings Call Transcript Highlights: Revenue Resilience ...

GuruFocus Research
5 min read

In This Article:

  • Revenue: $128 million for H1 2024, down from H1 2023 but up from H2 2023.

  • Emerald Auctions: $52 million from two auctions.

  • Ruby Auction: $68.7 million from one auction.

  • Operating Expenses: Marginally down from H1 2023, significant decrease from H2 2023.

  • EBITDA: $50 million, with an EBITDA margin of 38.8%.

  • Free Cash Flow: $3.3 million, reflecting significant investments.

  • Net Debt: $44.4 million before auction receivables, net cash position of $21.1 million including receivables.

  • Faberge Revenue: $6.6 million in H1 2024.

  • CapEx: $70 million for MRM's second processing plant, with $40 million paid to date.

  • Debt Facilities: Overdraft facilities totaling $71 million, specific facilities for PP2 amounting to $55 million.

  • Net Debt Position: Expected to exceed $100 million during the next year.

  • Emerald Production: Increased capacity at Kagem's processing plant from 30 tonnes/hour to 50 tonnes/hour.

  • Ruby Production: Challenges in recovering premium rubies at Montepuez Ruby Mining.

  • Upcoming Auctions: Two remaining auctions scheduled for November and December 2024.

  • Faberge Developments: New salon in Piccadilly Arcade opening mid-November 2024, new boutique in Abu Dhabi opening in H2 2025.

Release Date: September 27, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Gemfields Group Ltd (STU:5PH) generated $128 million in revenue for the first half of 2024, showing resilience despite market challenges.

  • The Kagem emerald mine in Zambia and Montepuez ruby mine in Mozambique reported no lost time injuries (LTIs) in 2024, highlighting strong safety performance.

  • The processing plant upgrade at Kagem has increased capacity by 50%, leading to a significant boost in premium emerald production in August and September.

  • The second processing plant at Montepuez Ruby Mining is on schedule and on budget, expected to triple ore processing capacity by the first half of 2025.

  • Faberge, a subsidiary of Gemfields, has not required any funding from the group since late 2022 and continues to generate significant marketing leverage and press coverage for Gemfields' gemstones.

Negative Points

  • Production of premium gemstones at both Kagem and Montepuez was below expectations, impacting overall performance.

  • The commercial-quality emerald auction in September saw weaker-than-expected results, with only 61% of lots sold.

  • Gemfields Group Ltd (STU:5PH) is currently in a net debt position of $44.4 million, with expectations that net debt could exceed $100 million during the next year.

  • Operating expenses, particularly fuel and labor costs, have increased, adding pressure on margins.

  • The company has written down its 6.54% equity stake in Sedibelo to zero, citing dim medium-term prospects for the platinum group metals company.

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