Why Iofina plc Has Tumbled Today

Although we don’t believe in timing the market or panicking over every stock fluctuation, understanding how a business is performing, competing and changing is vital to sensible investment.

What: The share price of Iofina (LSE: IOF) — a specialist in the exploration and production of iodine and iodine speciality chemical derivatives — is currently down 16% in trading so far today, following the publication of  a production update for August, in which the company revealed that, owing to a combination of factors, production of  crystallized iodine dropped 3.7% compared with July, down to 23.6 tonnes from 24.5 tonnes.

The company also said that it had reviewed its production forecasts for 2014 and that, despite still anticipating a 2-fold year-on-year production increase, its overall output of crystallized iodine for 2104 will come below current market forecasts and managements target, at between 325 and 350 tonnes. 

So What: The factors combining to reduce production of crystallised iodine were continued fracking, unanticipated design changes at IOsorb plants 5 and 6, and longer than forecast completion of a Salt Water Disposal site upgrade by an operator, which resulted in plant downtime.  

What Now: The company has said that production began to normalise in the past week, and that all six of its IOsorb plants are now in operation. It says that production for September is expected to be between 25 and 30 tonnes, and to further increase after that.

Iofine also said that, despite  the iodine markets continuing to remain challenging, it has seen strong demand for its iodide derivatives, and the company’s revenues through to September are anticipated to surpass the total sales for the whole of 2013. 

Commenting the update, President and CEO Dr. Tom Becker said: 

“Whilst iodine production year to date has been below our expectations, we are encouraged that iodine production moving forward will show a favourable trend as these new short term items are rectified.  We are focused on increasing the output of our current IOsorb plants which will reduce our cost per kilo.“

With today’s tumble, Iofina’s share price is now down 54% for the year to date, compared with a fall of 10.6% in the AIM All-Share index.  And Iofina is trailing its index badly over five years, too, with a fall of 45.6%, versus the AIM All-Share’s 17.4% rise.