Ferrexpo Reports Preliminary 2007 Financials

According to Ferrexpo (FXPO LN: HOLD) press release, the company’s top line totaled USD 698 mln (+28% yoy) in 2007. EBITDA surged 65% yoy to USD 246 mln (margin of 35.2%), and net income rose 128% yoy to USD 152 mln (margin of 21.7%). The company decided to pay out USD 0.032 per share in dividends, implying a total payout of USD 19.4 mln (12.8% of net income). Dividend yield is 0.46%. In the press release, the company also said that it is in the process of establishing a new entity together with French DTP Terassement S.A. and Worley Parsons Europe to operate Yeristovskoe and Belanovskoe iron ore deposits, separate from its main asset, Poltava Iron Ore (PGOK: SELL), in which Ferrexpo currently owns a 85.8% stake. Eugene Cherviachenko: Reported P&L numbers are in line with our forecasts. The company’s announcement follows our pessimistic scenario (see our industry report of March 14, 2008), according to which Ferrexpo will develop the aforementioned deposits, sidestepping Poltava. Therefore, Poltava Iron Ore will only increase its production to 10.5-11.0 mln mt of pellets per annum. We reiterate HOLD for Ferrexpo and SELL for Poltava Iron Ore.