Ferrexpo, the FTSE 250 iron ore pellet producer, today announces its results for the six months to 30 June 2012.
Michael Abrahams, Non-Executive Chairman, commented:
“Ferrexpo made a good start to 2012, in-line with the Group’s expectations against a backdrop of moderating iron ore prices. Operationally, the Group continues to perform well, with production from own ore 4% higher than 1H 2011. The Group continued its planned investment in its modernisation and expansion programme in the first half of 2012 and, with the expected additional output of ore from Ferrexpo Yeristovo Mining, is on target to increase annual production in 2014.
“During the period under review, the iron ore market has been volatile with market prices for iron ore down 20%. Ferrexpo, however, has continued to enjoy solid demand for its pellets with the average pellet price for the period down by only 12%. Lower pricing combined with higher raw material costs has reduced profits from the record level of 2011.
The Group continues on track with its growth projects and is well placed to benefit from its significant investment over the past five years. While the market outlook has deteriorated recently and remains variable, medium term iron ore pricing should remain underpinned by growth in developing markets. In line with its stated strategy, Ferrexpo will continue to exploit its substantial reserves to create sustainable value for shareholders.”
- Production at Ferrexpo Poltava Mining at full capacity representing:
– 4.7 million tonnes of pellets (1H 2011: 4.8 million tonnes)
– 2.1 million tonnes of 65% Fe pellets produced, in line with 1H 2011
- First ore achieved at Ferrexpo Yeristovo Mining, commercial mining due to start at the beginning of 2013
- 50% of Ferrexpo’s products were delivered to customers by logistics systems under its own control
- Lower market prices partially mitigated through reduced freight rates to seaborne markets and improved performance of own transport infrastructure
- As a result achieved iron ore prices outperformed the international iron ore price index
- Revenue of US$731 million (1H 2011 US$855 million), a decrease of 15%
- EBITDA of US$240 million (1H 2011: US$401 million), a decrease of 40%
- Diluted EPS decreased by 50% to 24.7 US cents (1H 2011: 49.7 US cents)
- Dividend of 3.3 US cents maintained (1H 2011: 3.3 US cents)
- Group capital expenditure of US$222 million (1H 2011: US$121 million)
- Strong balance sheet with cash balance of US$716 million as at 30 June 2012 (US$890 million as at 31 December 2011)
- Major debt facilities expire in 2016 with insignificant debt repayments in 2012 and 2013
- VAT repayments outstanding increased by US$50 million to US$222 million compared to 31 December 2011
- Net debt position of US$251 million as at 30 June 2012 (US$80 million as at 31 December 2011)