Metal-Tech expects full-year revenue to be in line with market expectations but warns its margins are lower and its financial expenses higher than expected.
The specialty metals group says it continued to experience low demand in the second half of 2009, due to the slowdown in end markets such as automotive drilling, aviation, cutting tools, construction and engineering.
Metal prices remained low during the period and the company’s Mongolian plant would not start operation until conditions were more favourable.
Metal-Tech remained in negotiations with its Mongolian partner to secure suitable terms for the resumption of supply in raw materials.
‘Notwithstanding the continued suspension of its Mongolian operations, management expects full-year revenues to be broadly in line with market expectations, the company having been able to replace expected molybdenum revenue with increased tungsten sales, albeit at lower margins.
‘Falling metal prices, along with the company’s continued success at reducing inventory levels have also resulted in lower than market anticipated margins.’
Net cash balance at 24 November was $9.2m, down from $11m at 23 July. This was sufficient to meet current financing costs and expected operating expenses.
Financial expenses were expected to exceed market expectations for the year to 31 December, mainly as a result of exchange-rate movements and higher interest rates.