LONDON Nyrstar NV recorded a 92-million ($121-million) loss in the first half of the year as weaker base and precious metal prices, operational outages and restructuring charges weighed on results.
The loss was bigger than the 63-million loss in the second half of last year and a 32-million loss in the first six months of 2012.
Weaker base metal prices were partially offset by a strategic options hedge opened in the first half, the Zurich-based company said July 25, while it also hedged a portion of its gold and silver production to offset potentially lower prices in the second half.
The groups metal processing unit generated earnings before interest, taxes, depreciation and amortization (Ebitda) of 74 million ($98 million) in the first half, up 32 percent from a year ago as the one-off termination fee for its offtake agreement with Glencore offset a loss of revenue during planned maintenance work.
Group smelting operations produced 519,000 tonnes of zinc in the first half, down 5 percent from the previous six months, but lead production rose 18 percent to 86,000 tonnes.
Mined production of zinc concentrate, copper concentrate, gold and silver were down 9 percent, 3 percent, 52 percent and 17 percent, respectively.
The mining units first-half Ebitda of 33 million ($39.7 million) was down 55 percent as weaker metal prices and operational issues at the Campo Morado Mine in Mexico weighed on profitability and output.
The groups net results also were negatively affected by charges related to a cost-cutting program and the restructuring of the company into three business segments: mining, metals processing, and marketing, sourcing and sales.
Former commercial smelting group manager Mike Giunti left the company earlier this month as part of the restructuring, while chief operating officer Greg McMillan stepped down last month.
Roland Junck, chief executive officer, said the company is confident that the restructuring and cost-cutting drive will enable it to improve its operational performance and increase margins through the marketing, sourcing and sales unit.
"We have previously spoken of the likelihood of continued short-term volatility in commodity markets, with conditions in (the first half) evidence of this, and if this continues into (the second half) our earnings will continue to be adversely affected," Junck said. "Having said that, we remain confident in the medium and long-term fundamentals of zinc and other related commodity markets."
A version of this article was first published by AMM sister publication Metal Bulletin.