Ukrainian miner Ferrexpo (FXPO) managed to ride out turbulent iron ore prices in the first half of 2013 to keep cash operating profits roughly flat year on year at $244m (£160m).
It helped that the Swiss-headquartered miner delivered record production of iron ore pellets totalling 5.3m tonnes, an 11 per cent increase year on year, driven by the ramp-up of production from the new Yeristovo mine. However, this was offset by a 6 per cent reduction in average iron ore prices received. The benchmark iron ore price fell from a peak of $160 per tonne in February to $110 per tonne in May, before recovering to $130 at the end of July.
Crucially, cash operating costs rose just 2 per cent year on year to $61.8 per tonne. That was much better than this time last year, when costs rose 25 per cent year on year. Moreover, cash costs are expected to decrease slightly to $60 a tonne in the second half or less as Yeristovo ramps up production.
Ferrexpo also maintained its interim dividend despite analyst expectations to the contrary. That’s because the company’s balance sheet remains fairly strong. Net debt of $566m is up slightly but 65 per cent of it is overdue VAT and prepaid corporate profit tax.
Broker Investec forecasts full-year adjusted pre-tax profits of $312m and EPS of 43.5¢, falling to $249m and 34.8¢ in 2014 (2012: $267m and 37.4¢).
FERREXPO (FXPO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 170p | MARKET VALUE: | £1.0bn | |
| TOUCH: | 169-170p | 12-MONTH HIGH: | 289p | LOW: 130p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 271¢ | NET DEBT: | 35% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | 731 | 171 | 25.0 | 3.30 |
| 2013 | 775 | 150 | 21.5 | 3.30 |
| % change | +6 | -12 | -14 | - |
Ex-div:14 Aug Payment:20 Sep £1=$1.53 | ||||
