5 July 2016
Supported by iron ore price index at slightly above USD 50 per per 1 ton level during last period of time, Ferrexpo has shown stable production volumes in latest quarter.
In Q2 total volume of production made 2.836M tons, which was by 1.7% lower vs. previous quarter. For the whole 1H 2016 pellets output comprised 5.7M tons (-1.6% vs. corresponding period of previous year). More than 99% of total production were pellets from own ore (vs. 94% in 1H 2015), 93% - premium 65% Fe pellets (vs. 87% in 1H 2015). Higher share of premium pellets allows Ferrexpo to have additional profit from pellets premium, which remains quite sizable now (about USD 25-30 per 1 ton).
With C1 cash cost at about USD 25-28 per 1 ton, C3 freight cost at about USD 10-12 per 1 ton, we expect that annualized EBITDA of Ferrexpo will be at above USD 300M (earlier, basing on average iron ore price index of USD 45 per 1 ton we expected EBITDA in Y2016 to be at about USD 300M), which means that the company will be able to fulfill its obligations towards creditors (total debt principal to be repaid in Y2016 stood at USD 196M, interest payments and maintenance investments – another USD 100-110M), though margin of safety is definitely not large. On positive side is that Ferrexpo earlier reported about repayment of USD 103M of debt principal and interest in first 4m 2016, which is rather good dynamics, especially taking into account non-favorable market fundamentals in January-Februar’16.
Financial report of Ferrexpo for 1H 2016 is expected on 3 August 2016.