Prosperity Minerals Holdings said it anticipates full year results to be below market expectations, as a result of difficult operating conditions for the iron ore trading business.
The company cited a 19% increase in the iron ore contract price for the iron ore year commencing April 1, rather than the expected rise of 10-15%, as one of its difficulties, reported Dow Jones International News.
Prosperity also said a lower spot price for iron ore, significant increases in freight costs during July and August, and severe weather during the period negatively impacted the iron ore trading business. The company said it is optimisting that trading conditions will improve in the second half of the year.
The company’s cement operations at Yingde Dragon Mountain and Prosperity Conch are operating satisfactorily despite the unusually severe weather, including Typhoon Bilis, which has adversely affected the construction industry.
The company expects the performance of the cement businesses, including a municipal tax refund, to be broadly in line with market expectations for the year ending Mar. 31, 2007. Due to the exceptional circumstances the company has decided to adopt a policy of quarterly reporting, commencing after the company’s interim results. The company also intends to accelerate the payment of a dividend, to be declared at the time of the interim results.
The Company’s two founding shareholders, including Mr David Wong the Chairman and CEO, who together hold 39.8% of the issued share capital, have undertaken to waive their entitlement to an interim dividend. In addition, the company is exploring a possible share buy-back and Wong has informed the Board that he intends to buy shares in the market in order to emphasise his confidence in the business.