14 January 2024

In terms of iron ore and pellets production, the fourth quarter was the worst for the company for all of 2023.

In the fourth quarter of 2023, Ferrexpo produced 677 thousand tons of iron ore concentrate and pellets, which is 50% less than in the previous quarter, and is the lowest figure for the entire year.

Regarding the figure for the corresponding period of 2022, the production volume in the fourth quarter was 457,000 tons – due to the fact that at that time Ukrainian producers had major problems related to energy blackouts caused by Russian missile attacks on the Ukrainian energy infrastructure.

In its production report, the group notes that during the reporting quarter, from one to two pellet production lines were in operation (total number of lines - four), and the decrease in production compared to previous quarters was caused by a decrease in demand from buyers at the beginning of the quarter, and also logistical difficulties.

It is worth noting that it was in the fourth quarter that Ukraine began to export iron ore through deep-sea Black Sea ports, so it is obvious that Ferrexpo has not been able to take advantage of this opportunity so far (despite the fact that the company is a co-owner of the port terminal for transshipment of ore in Pivdenniy – TIS-Ruda), as well as a favorable situation on the world market in terms of iron ore prices.

On the other hand, during the last two years, the only available market for Ferrexpo was the European market, to which the products were supplied by barges and railwau, so it can be concluded that demand has decreased from the side of European buyers.

In total, in 2023, Ferrexpo produced 4,152 million tons of iron ore concentrate and pellets, 33% less than in the previous year.

In case the temporary corridor through Ukrainian deep-sea ports continues to operate, Ferrexpo plans to resume the export of pellets through this route in the near future.

As for financial figures, as a reminder, for the first half of 2023, Ferrexpo's EBITDA was $64 million, operating cash flow made $80 million, and the amount of cash at the end of June was $135 million.

As of the end of 2023, the amount of Ferrexpo's cash was $109 million, which means that during the second half of 2023, the company's free cash flow was negative.

The strong side of the company continues to be the absence of debt, assets of the company are financed with Equity by almost 100%.

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