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Ferrexpo reports full year results for 2017 and a 95% increase in profit

Published by
Global Mining Review,


Swiss iron ore company Ferrexpo plc has announced its financial results for the year ended 31 December 2017.

Non-executive Chairman of Ferrexpo, Steve Lucas, said: “An excellent set of results demonstrating strong demand for Ferrexpo’s high quality iron ore pellets from the world’s leading steel mills.”

“The Group’s quality upgrade programme, completed in 2015, allowed Ferrexpo to fully capture the increase in market premiums for higher quality iron ore, with its 65% Fe pellet product […] In 2018, Ferrexpo expects further rationalisation of steel capacity in China which should support global steel margins, and in turn encourage a continued focus on iron making productivity. These dynamics, together with a continued focus by Chinese authorities on the environment and a reduction of air emissions, should provide a favourable setting for iron ore pellets.”

Health and Safety

  • The company deeply regrets to report one work related fatality in 2017 (2016: two).
  • Group Lost Time Injury Frequency Rate 1.17 x in line with 2016.

Market Environment

  • Strong market environment for high grade iron ore products including pellets.
  • Rise in pellet premiums reflected market conditions.

Financial

  • Revenue up 21% to US$1.2 billion (2016: US$986 million) reflecting higher iron ore prices and pellet premiums.
  • Underlying EBITDAA up 47% to US$551 million (2016: US$375 million) on higher revenues offset by higher costs and lower production.
  • Profit before tax up 95% US$450M (2016: US$231 million).
  • Net cash flows from operating activities US$353 million (2016: US$332M) reflected higher EBITDA less working capital normalisation.
  • Net debt reduced 32% to US$403 million as of 31 December 2017 (31 December 2016: US$589 million).
  • Net debt to EBITDAA 0.73 x as of 31 December 2017 (as of 31 December 2016: 1.57 x).
  • Group liquidity A US$312M as of 31 December 2017 (31 December 2016: US$145 million).
  • Final ordinary dividend of 3.3 US cents per share proposed (2016: 3.3 US cents) and special dividend of 6.6 US cents per share (2016: 3.3 US cents).
  • Total interim and final dividend for 2017 of 16.5 US cents (total interim and final 2016: 6.6 US cents).

Operational

  • Production of 10.4 million t (2016: 11.2 million t) reflected pellet line refurbishment and a general increase in maintenance levels.
  • 65% iron pellets represented 95% of total production (2016: 94%).
  • C1 cash cost of production of US$32.3/t (2016: US$27.7/t) reflected higher commodity prices, increased mining and maintenance activity and lower production volumes.
  • Iron ore stockpile increased by 11.4 million t during the year to 49 million t.

Outlook

  • Ferrexpo expects to benefit from higher pellet premiums in 2018, reflecting agreements with customers and strong demand for high quality pellets.
  • 2018 production volumes to reflect a 65-day pellet line shutdown in 2Q18. 1H18 production is expected to be in line with 1H17. Production in 2H18 is expected to be ahead of 2H17.

Read the article online at: https://www.globalminingreview.com/finance-business/22032018/ferrexpo-reports-full-year-results-for-2017-and-a-95-increase-in-profit-compared-with-2016/

 

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