14 October 2023

Growth of the output in reporting quarter was mainly related with increase of the iron ore pellets stock in anticipation of electricity blackouts in Ukraine in winter season.

In the third quarter of 2023, the total Ferrexpo iron ore output made 1,349 thousand tons, which is 15% more than in the previous quarter and 49% more than in the third quarter of 2022.

In general, in the first nine months of Y2023, production amounted to 3.5 million tons, which is 39% less y-o-y, and 59% less than in January-September 2021.

In the reporting quarter, the company worked at 45% of its capacity, i.e. two out of four pellet production lines were under operation. In its report Ferrexpo notes that with relatively stable sales figures, it has increased production in order to create a stock of finished products for the case of power outages in Ukraine in the winter period (which can negatively impact Ferrexpo output as was the case in winter 2022/23).

As a reminder Ferrexpo exports 100% of the produced iron ore pellets. After the start of the full-scale Russian invasion, it mainly shipped products by rail and through the Danube river ports. The current capacity of these routes does not allow the company to significantly increase its export figures.

If Ferrexpo will be able to export pellets through Ukrainian deep-sea ports (the first, after the start of the full-scale Russian invasion, vessels with metal products left Ukrainian ports in August-September 2023), both the production and financial figures of the company should improve significantly.

In H1 2023, Ferrexpo's EBITDA amounted to $64 million, operating cash flow - $80 million. The company has almost no debt, and the amount of its cash as of June 30, 2023 was $135 million.

Ferrexpo is a public company, its shares are listed on the London Stock Exchange, the market cap as of October 13 was approximately $540 million.

Our analysis of the financial report of Ferrexpo for H1 2023 is available at the link.