Ferrexpo ups 1H12 pellet output from own ore 3.8% yoy

Ferrexpo (FXPO LN) reported total pellet output of 4.7 mmt in 1H12, down 1.3% yoy, according to an operations update this morning. The yoy decrease was at the expense of purchased concentrate processing, while pellet production from its own ore grew 3.8% yoy to 4.6 mmt in 1H12. In quarterly terms, total production grew 4.1% qoq to 2.4 mmt in 2Q12 and production from its own ore was up 2.1% qoq to 2.3 mmt.

Roman Topolyuk: We view Ferrexpo’s 1H12 production results as positive since the increase in Ferrexpo’s pellet production from its own ore trumps the production cut in low-profitable processing in terms of EBITDA. Thus, if the company can maintain this level of production until yearend, implying 9.5 mmt of pellets produced in 2012 (-4% yoy), this segment will be a positive driver for its financials.