06 August 2025

Ferrexpo plc (LSE: FXPO), a producer and exporter of premium iron ore products to the global steel industry, is pleased to report interim results for the six months ended 30 June 2025 (“the period” or “first half” or “first six months” or “1H 2025”).

Commenting on the results, Lucio Genovese, Interim Executive Chair, said:

“The first six months of 2025 have been a tale of two halves. We started the year on a strong footing, with the best quarterly production since the full-scale invasion of Ukraine in February 2022. This momentum, was, however, significantly curtailed in the second quarter as we were forced to downscale our activities due to the decision by the Ukrainian tax authorities’ to suspend the refund of VAT to our Ukrainian subsidiaries. This is reflected in a 40% drop in production in the second quarter compared to the first quarter.

We moved quickly to lower our costs. It is regrettable that at present we have had to place approximately 40% of our workforce on reduced working hours or furlough. We have also implemented programmes to optimise stripping rates, repairs and maintenance, and cut non-essential spending across the business. The effects of these measures are difficult to absorb, yet they have been necessary and lessened the severe and negative impact of the suspension of VAT refunds. We have been able to lower our costs as much as possible in order to be competitive in a weak iron ore price environment.

During the first half, we were able to respond to strong demand from Chinese customers for our high-grade low-alumina iron ore concentrate. As a result, during the first six months of 2025, concentrate represented 36% of our production mix, three times more than in the same period a year ago. Once again, we have shown that the flexibility we have built into our business has enabled us to be more responsive to short-term changes in iron ore markets and take advantage of opportunities that present themselves. I anticipate that we will be able to continue benefiting, as we shift away from being a pellet only producer to a producer of different high-grade iron ore products, including a variety of concentrate and pellet feed as well as pellets.

Since the full-scale invasion of Ukraine in February 2022, Ferrexpo has continued to operate and export its products despite the immense challenges posed by the war. By remaining operational we have been able to remain relevant – maintaining a workforce, continuing to supply our customers, and supporting our local communities and Ukraine as a whole. Our calculations indicate that since February 2022 to the end of the reporting period, we have paid more than US$180 million in salaries and US$340 million in taxes, while investing more than US$400 million in capital expenditure, and procuring more than US$1.9 billion in goods and services from within Ukraine.

However, these contributions are at risk. Since the start of 2025, the Ukrainian tax authorities have suspended VAT refunds to our Ukrainian subsidiaries, resulting in lower liquidity and forcing us to downscale production to one pellet line. The tax authority’s decision has also forced us to make deep cost cuts, including placing more than a third of our workforce on furlough or reduced working hours, resulting in knock on effects for families and the local community.

If we had been able to continue producing at the same levels as in the first quarter throughout the remainder of 2025, we calculate that we would have paid US$8 million more to our employees, US$23 million more in taxes, and US$150 million more for goods and services to our Ukrainian suppliers. This means that a broader US$180 million will instead be lost in economic contributions to Ukraine.

It is with great sadness that during the first six months of 2025 one more colleague was killed in action, whilst in early July we received notice that a further colleague was killed, bringing the total to 48.Our thoughts are with them and their families during this extremely difficult period. During the first half of this year, 58 more colleagues were mobilised to serve in the Armed Forces of Ukraine, whereas 26 colleagues were demobilised. This means that at the end of June a total of 738 colleagues were serving, more than at any time since the start of the full-scale invasion.”

Production and financial summary

  • Total commercial production for the first six months of 3.4 million tonnes, a 7% increase compared to the previous six months to 31 December 2024, and a 9% decrease compared to the first six months of 2024.
  • Production mix comprised 64% pellets and 36% concentrates for the first six months, compared to 88% pellets and 12% concentrates in the same period last year, demonstrating an ability to be flexible depending on market demand for different high grade iron ore products.
  • Total sales for the first six months of 2025 of 3.8 million tonnes (marginally lower compared to the same period last year) of which 60% was exported through Ukrainian Black Sea ports, 35% by rail and 5% by river barge.
  • Revenues decreased by 17% to US$453 million (1H 2024: US$549 million) due to lower realised prices and marginally lower sales volumes.
  • C1 Cash Cost of Production (“C1 costs”) decreased to US$77.1 per tonne in the half year (1H 2024: US$78.8 per tonne), due to reduced mining activities, the effects from lower fuel prices, lower maintenance and a reduction in personnel costs.
  • Underlying EBITDA decreased by 95% to US$4 million (1H 2024: US$79 million), reflecting the net effects of lower sales volumes and realised prices and higher production costs.
  • Impairment loss of US$154 million.
  • Loss after tax of US$196 million (1H 2024: profit US$55 million).
  • The Group ended the period with a Net Cash position of US$50 million (31 December 2024: US$101 million), comprising US$52 million of cash and cash equivalents, and minimal financial debt of US$2 million.
  • US$28 million capital investment for the period (1H 2024: US$55 million), comprising 55% in sustaining and 45% development capital.
  • Formal written notifications of decisions not to refund VAT from the Ukrainian tax authorities are being received on a monthly basis, typically two months after the reporting month. From January to April 2025, the amount of VAT refunds refused is US$31.1 million and for the period until the end of June, the cumulative amount is $38.3 million.
  • Due to the ongoing suspension of VAT refunds and the resulting reduction in financial liquidity, the Group has been forced to downscale operations to one pelletising line.
  • The Group has worked extensively to lower its costs to remain financially viable. This includes reducing working time for employees, cuts in the procurement of goods services and a suspension of all non-essential CapEx, overheads and Corporate & Social Responsibility (“CSR”) spending.

Commenting on the financial results, Nikolay Kladiev, CFO, said:

“The refusal of the Ukrainian tax authorities to refund the VAT owed to us since the start of 2025 has had a major impact on the operational and financial performance of the Group. At the end of March, we received the first notification that the VAT for the month of January would not be refunded, and as of the date of these interim results we have subsequently received similar notifications for the months up to April. Although we have made representations to the relevant authorities in Ukraine to resume refunds, the severe future effects are already clear. If one assumes that the refunds for June are also denied, the total unpaid refunds for the first six months of 2025 will be US$38.3 million.

In our results, we book the VAT as a receivable because it is money owed to us. Consequently, adding this to the net cash position of US$50 million as at 30 June, it is clear to see that the Group performed with resilience during the first half of the year, given factors outside of our control such as weaker iron ore prices and higher input costs. This resilience is, in part, due to the cost cutting measures that we have implemented, including decisions to cut non-essential capital expenditure which are easily made, though placing part of our workforce on furlough or reduced hours are decisions that we do not take lightly, and so I am grateful to colleagues for their understanding and commitment.

As Lucio details in his statement, the broader economic impact of denying the VAT refunds is significantly greater than the VAT amounts being withheld and this will only shrink Ukrainian industry and the fiscal and economic contributions that we collectively provide.

Looking to our results for the first half in more detail, although sales volumes were relatively flat reflecting the strong first quarter, revenues decreased 17% to US$453 million, reflecting lower realised market prices and concentrate taking up a bigger portion of the product mix. The deep cost-cutting measures that we implemented helped to drive down our costs on a unit basis, buoyed by improvements in freight rates. As we guided when we released our annual results, the Group recorded a non-cash impairment loss, totalling US$154 million. The impairment relates to the suspension of VAT refunds and the impact on the Group’s long-term model to reflect the lower expected cash flow generation which, in turn, has a negative impact on the carrying value of the Group’s assets in the future. Adjusting for the impairment, the underlying EBITDA for the period was US$3.9 million, which, in the face of so many challenges, is a resilient outcome. During the period, we significantly reduced our CapEx programmes, with investments decreasing to US$28 million, compared to US$55 million in the same period in 2024. The significantly lower operating cash flow generation could, however, only be partially offset by this and as a result, the closing balance of cash and cash equivalents decreased from US$101 million at the end of 2024 to US$52 million as at 30 June 2025.”

Link to full PDF version of this release: click here.

For further information, please contact:

Ferrexpo:
Nick Bias
[email protected]
+44 207 389 8305/+44 (0)7733 177 831

Tavistock:
Jos Simson / Gareth Tredway
[email protected]
+44 207 920 3150 / +44 (0)7785 974 264

About Ferrexpo:
About Ferrexpo: Ferrexpo is a Swiss headquartered iron ore company with assets in Ukraine and a listing in the equity shares commercial companies category on the London Stock Exchange (ticker FXPO) and a constituent of the FTSE All-Share index. The Group produces high grade iron ore products, which are premium products for the global steel industry and enable reduced carbon emissions and increased productivity for steelmakers when converted into steel, compared to more commonly traded forms of iron ore. Ferrexpo’s operations have been supplying the global steel industry for over 50 years. Before Russia’s full-scale invasion of Ukraine in February 2022, the Group was the world’s third largest exporter of pellets. The Group has a global customer base comprising of premium steel mills around the world. For further information, please visit www.ferrexpo.com.

Notes:
Please note that numbers may not add up due to rounding. In reporting financial performance, financial position and cash flows, reference is made to Alternative Performance Measures (“APMs”) that are not defined or specified under International Financial Reporting Standards (“IFRSs”). APMs are not uniformly defined by all companies, including those in the Group’s industry. Accordingly, the APMs used by the Group may not be comparable with similarly titled measures and disclosures made by other companies. APMs should be considered in addition to, and not as a substitute for or as superior to, measures of financial performance, financial position or cash flows reported in accordance with IFRSs. Ferrexpo refers to the following APMs in the Group’s Interim Results: C1 Cash cost of production, Underlying EBITDA, Net cash/(debt), Capital investment, and Total Liquidity. Full definitions of the Company’s APMs can be found in the Annual Report & Accounts.