SGOK, CGOK 1H13 earnings improve despite falling iron ore prices
26 July 2013
Northern Iron Ore (SGOK UK) and Central Iron Ore (CGOK UK) significantly improved their financials in 1H13, defying global market trends in which prices had fallen for iron ore. Northern Ore reported a 6% yoy revenue increase to USD 847 mln, 5% yoy growth in EBITDA to USD 469 mln, and a 3% yoy increase in net income to USD 289 mln in 1H13. Central Ore posted even steeper revenue growth of 15% yoy to USD 343 mln, a 28% yoy jump in EBITDA to USD 164 mln and a 37% yoy surge in net profit, having a moderate 3% yoy increase in concentrate production.
Roman Topolyuk: The positive financial performance of Northern and Central Iron Ore came as a surprise. The results were influenced by selling price increases at both enterprises by 6-11% yoy, contrary to local and global downward market trends. In particular, iron ore concentrate prices decreased 15% yoy in 1H13 to USD 87/t on the local market, while pellets prices plunged 23% yoy to USD 97/t. Globally, spot prices for ore fines in China slid 2% yoy in 1H13 to USD 137/t. We expect to see the deterioration of profitability at Northern and Central Iron Ore to appear in their 3Q13 financials.
