Northern, Central Iron Ore post weak 1Q12 financials
12 July 2012
Northern Iron Ore (SGOK UK) and Central Iron Ore (CGOK UK) reported yoy decreases in financials in 1Q12. Northern Iron Ore posted revenue of USD 392 mln (-11% yoy), EBITDA of USD 210 mln (-27% yoy) and net income of USD 139 mln (-22%) in 1Q12. Central Iron Ore recorded revenue of USD 147 mln (-21% yoy), EBITDA of USD 70 mln (-39% yoy) and net income of USD 41 mln (-43%) for the period.
Roman Topolyuk: The financial performance of both Metinvest subsidiaries was a negative surprise, since, firstly, the enterprises demonstrated production growth in 1Q12. Northern Iron Ore increased pellet output 12% yoy in 1Q12 to 2.7 mmt, while Central Iron Ore’s rose by 15% yoy to 0.6 mmt. Secondly, prices for iron ore concentrate and pellets were higher yoy in 1Q12. Consequently, we expected both companies to have posted at least flat yoy financials. Our projections of Northern and Central Iron Ore’s EBITDAs in 2012 of USD 1,044 mln and USD 401 mln, respectively, seem to be overstated by at least 20% and 30%. Nevertheless, both miners should still generate high margins – Northern Iron Ore’s net margin was 35% and Central’s was 28% in 1Q12, which sets the stage for a repeat of their traditionally high dividend payouts from net income earned in 2012.
