Ferrexpo 2011 financials beat consensus

Ferrexpo (FXPO LN) reported record high financial results for 2011 this morning, increasing revenue by 38% yoy to USD 1,788 mln, EBITDA by 37% yoy to USD 801 mln, and net income by 35% to USD 575 mln. Ferrexpo had a strong leverage position as of end-2011 – negative net debt of USD 80 mln and a debt–to-equity ratio on interest bearing debt of as much as 0.7x.

Roman Topolyuk: Ferrexpo’s revenue and EBITDA for 2011, which were respectively 7% and 5% higher than consensus, might be a short-term catalyst for the stock. With strong yoy earnings growth, Ferrexpo not only defended its high selling price in 2H11, contrary to our expectations, but increased it 1% hoh to USD 173/t of pellets sold. This was possible because in 4Q11 the company applied the average price of the previous quarter and did not take into account the sharp decline in iron ore spot prices in October 2011, which was a positive surprise. Ferrexpo’s C1 cash cost grew 28% to USD 50.7/t of pellets, generally in line with our projections.