What does Graphite Electrode Major GrafTech's Q3 2018 Results Reveal?
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U.S. based GrafTech International Limited has recently unveiled results for the third quarter ended September 30, 2018 and the company's GE sales have surged by 3% y-o-y basis at 45,000 tonnes. For the first nine months of 2018 (From Jan to Sep) the company's sales have been recorded at 133,000 tonnes against 129,000 tonnes during the corresponding period of the previous year 2017.
In terms of revenues from GrafTech's GE sales for Q3 CY18, the same is recorded at USD 455 million against USD 137 in Q3 CY17. For the first nine months of 2018, the same stood at USD 1,363 million against USD 358 million during Jan-Sep'17.
The company's weighted average realized price in Q3 CY18 stood at USD 9,744/MT against USD 2,903/MT in Q3 CY17. In the first nine months of 2018, the same stood at USD 9,932/MT against USD 2,547/MT in the corresponding period of previous year.
In terms of operating profits, GrafTech's EBDITA stood at USD 277 million in Q3 CY18 against USD 22 million in the corresponding quarter of the previous year. For the first nine months of 2018, the same stood at USD 879 million against USD 39 million in Jan-Sep'17.
GrafTech was financially benefited in Q3 CY18 due to increased sales volumes and weighted average realized prices. However, third party higher needle coke prices impacted the company's cost of sales.
GrafTech's Performance
| Particulars | Q3 CY17 | Q3 CY18 | Y-o-Y Change | Jan-Sep 2017 | Jan-Sep 2018 | Y-o-Y Change |
| Sales volume | 44,000 | 45,000 | 3% | 129,000 | 133,000 | 3% |
| Sales revenue | USD 137 Million | USD 455 Million | 232% | USD 358 Million | USD 1,363 Million | 281% |
| EBDITA | USD 22 Million | USD 277 Million | - | USD 39 Million | USD 879 Million | - |
| Weighted Avg Realised Price | USD 2903/MT | USD 9,744/MT | 235% | USD 2,547/MT | USD 9,932/MT | 290% |
Operational updates
GrafTech is one of the leading GE producers with its manufacturing plants based in U.S., Mexico and Europe. The company's U.S. plant with a capacity of 28,000 tonnes is being kept idle since 2016 whereas it is currently undergoing debottlenecking at its Mexico (capacity 55,000 tonnes) and European (capacity 142,000 tonnes) plants in order to increase the combined capacity of three plants by 35,000 tonnes by end of 2018.
As per the updates, the debottlenecking initiative of the company is on track and GrafTech's GE production capacity is set to increase from 167,000 tonnes (excluding idled plant in U.S.) to 202,000 tonnes by 2018 YE (year-end).
GrafTech has its wholly-owned subsidiary, Seadrift - engaged in the manufacturing of needle coke (a key raw material for GE). Company's quarterly report has mentioned that Seadrift's offers secure, low-cost supply of needle coke to GrafTech and Seadrift's production cost is well below third party needle coke prices. The company's key commercial strategy is to enter into long-term contracts.
