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Ferrexpo declares DPS of USc 6.6, 1H19 EBITDA jumps 59%

Ferrexpo declares DPS of USc 6.6, 1H19 EBITDA jumps 59%

2 August 2019

Ukraine’s largest iron ore pellet exporter Ferrexpo (FXPO
LN) reported its 1H19 financial results on Aug. 2. Revenue increased 27.6% yoy
to USD 787 mln, while EBITDA surged 59.0% yoy to USD 372 mln. Operating cash
flow before working capital jumped 55.9% yoy to USD 382 mln, while net cash
from operating activities gained 63.4% yoy to USD 256 mln. CapEx doubled yoy to
USD 114 mln.

 

Ferrexpo’s net debt amounted to USD 282 mln at the end
of 1H19, a 23.4% drop for the period. The net debt-to-EBITDA ratio dropped to
0.44x at the end of 1H19, down from 0.74x at the end of 2018.

 

Ferrexpo’s C1 cash production cost rose 10.6% yoy to
USD 46.0/t. The company disclosed that the hryvnia’s 13% yoy appreciation in
real terms contributed to a rise in the C1 production cost, and that USD 1.4/t
of the increase was due to higher stripping volumes and USD 0.8/t – due to
maintenance cost increases.

 

Ferrexpo also announced that its directors have
declared a USD 0.066 per share interim dividend, to be paid on Sept. 3. The record
date for this dividend is Aug. 16, and the ex-dividend date is Aug. 15.

 

The company provided no news on its independent review
into the Blooming Land affair,
saying that the review committee is seeking to conclude its review as soon as
possible.

 

Dmytro Khoroshun: Ferrexpo’s strong EBITDA was at the top of the range we expected, and reflected the extremely favorable product
prices as a result of booming Chinese steel production and the January Vale
mine disaster in Brazil. So far into 2H19, iron ore prices are further up from
the average 1H19 level, and it looks like Ferrexpo’s 2H19 financial performance
could be as strong as in 1H19. This is despite the expected cost increases due
to the likely rises in natural gas and electricity prices later in 2019.

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