Ferrexpo in the first half of the year increased its net profit by 2 times y/y

Ferrexpo, an iron ore company with assets in Ukraine, listed on the London Stock Exchange, has doubled its net profit in January-June 2024 year-on-year – to $55 million, according to the company’s report.

“Ferrexpo continues to demonstrate resilience, preserving jobs in a time of war with production and export growth. From a corporate perspective, we are adapting to the complexities of a long war. With access to Ukrainian seaports restored, we were quickly able to bring suspended production capacity back on line and achieved our best results since the start of the full-scale invasion. For the rest of the year, we will focus on optimizing current production levels and look forward to improving domestic power supply,” commented Lucio Genovese, Ferrexpo’s CEO.

The company’s 6-month revenue totaled $549 million, an increase of 64% over January-June 2023 results. Higher sales volumes contributed to the increase, although prices were lower than in H1 2023. In particular, product sales increased by 85% y/y – to 3.8 million tons, of which 1.8 million tons were exported via Ukrainian seaports. At the same time, the average realized price amounted to $117.3/t compared to $118.3/t a year earlier (-1% y/y).

Interim Underlying EBITDA for the period increased by 24% YoY to $79 mln – Production costs increased to $79 mln (+11% y/y) mainly due to higher power prices, increased mining operations, maintenance and repairs, partially offset by the positive impact of currency devaluation and cost saving initiatives.

“Over the 6 months, our company has demonstrated its resilience from a financial perspective. Significant production resumption led to a 64% increase in revenues. However, production costs increased against the backdrop of scaling up mining and maintenance, as well as a significant jump in electricity prices at the end of the half-year,” said Mykola Kladiev, Ferrexpo’s Chief Financial Officer

On June 1, 2024, the CMU Resolution No. 661 amended the “Regulation on the peculiarities of electricity imports under the legal regime of martial law in Ukraine”, which obliges Ukrainian producers to buy at least 80% of electricity in the EU at the European price in order to avoid forced restriction of electricity supply. Previously, the mandatory share of imports amounted to 30%.

“At the moment we are getting electricity from our European neighbors, but the cost is higher and quite volatile. In June, it added about $11/t to our production costs compared to May, and we expect this figure to increase until the end of summer, until the domestic nuclear power industry returns to work after repairs in the fall,” Kladiev added.

As GMK Center reported earlier, Ferrexpo increased its pellet production by 76% in the first half of 2024 compared to the second half of 2023 – to 3.297 million tons.

During the period, the company produced 2.836 million tons of premium pellets from its own concentrate (iron content 65%), up 55% compared to July-December 2023. Another 298.46 thousand tons of pellets (65% iron content) were produced from third-party concentrate (+498% compared to H2 2023). We also produced 162.64 thousand tons of DR pellets (not produced in July-December 2023).

Ferrexpo is an iron ore company with assets in Ukraine, listed on the London Stock Exchange. It produces and exports high-quality iron ore pellets for steel production. Its production assets are Poltava and Yeristovskiy Mining (100% owned). The company is also developing the Belanovo Mining.