Despite a sharp fall in 2012 earnings, Ferrexpo (FXPO) decided to reward shareholders with a 6.6¢ special dividend in recognition of the opening of its Yeristovo mine. The deterioration in the group's headline figures was primarily attributable to a 24 per cent drop in iron ore prices, although Ferrexpo did mitigate the impact of this fall by reducing its seaborne freight costs.
This was achieved through the increased utilisation of capsize vessels, which Ferrexpo also believes had a beneficial affect on margins, although a gross return of 51.2 per cent (from 63.7 per cent in 2011) would seem to suggest otherwise. Sales volumes of iron ore pellets were broadly static at 9.7m tonnes, while production from Ferrexpo's own ore bodies was up 4 per cent on 2011. With Yeristovo online, production should hit 12m tonnes in 2014. Steep price rises for power, gas and spare parts fed through into cash costs of $59.6m (£40m) - a rise of 18 per cent. On average, Ferrexpo received $128 for each tonne for its iron ore pellets, against $168 in 2011. The combination of all these factors halved cash profits to $402m.
Net cash-flow contracted by 77 per cent during 2012, while net debt surged to $423m ($80m in 2011) on the back of the Yeristovo development, although Ferrexpo is owed $302m VAT recoveries by the Ukrainian authorities.
Deutsche Bank expects 2013 EPS of 52¢ a share (36.6¢ in 2011)
| FERREXPO (FXPO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 230p | MARKET VALUE: | £1.35bn | |
| TOUCH: | 230-231p | 12-MONTH HIGH: | 344p | LOW: 139p |
| DIVIDEND YIELD: | 1.9%* | PE RATIO: | 9 | |
| NET ASSET VALUE: | 263¢* | NET DEBT: | 27% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2008 | 1.12 | 376 | 48.6 | 6.50 |
| 2009 | 0.65 | 81.0 | 12.1 | 6.60 |
| 2010 | 1.30 | 498 | 72.3 | 6.60 |
| 2011 | 1.79 | 691 | 97.1 | 6.60 |
| 2012 | 1.42 | 262 | 36.6 | 6.60* |
| % change | -21 | -62 | -62 | - |
Ex-div: 1 May Payment: 31 May *Excludes 6.6¢ special dividend, payable on 28 March £1=$1.49 | ||||
