8 February 2017
According to Interfax Ukraine S&P Global Ratings raised its long-term corporate credit rating on Ukrainian iron ore producer Ferrexpo Plc to 'B-' from 'CCC', following the recent rally in the prices of iron ore in the world.
"The recent rally in the price of iron ore, supported by a tight supply of iron ore pellets, should result in improved cash flows for Ukrainian iron ore producer Ferrexpo PLC. The company's liquidity has improved, supported by its increased cash balance and positive free operating cash flows, which should allow it to meet its debt maturities in 2017," S&P said in a report issued on Tuesday.
We (ShareUAPotential) additionally note that basing on our assumptions, net operating cash flow of the company in H2 2016 made close to USD 205M, which allowed Ferrexpo to repay close to USD 76M of its debt, provide for some maintenance investments and improve its cash position from USD 45M as of 30.06.16 up to USD 145M. Taking into account amount of debt principal to repay by the company in Y2017 stands at about USD 200M, short-term positions of Ukrainian pellets producer really significantly improved.
There is still risk for Y2018, but with current market fundamentals and financial standing of Ferrexpo in general (Net Debt stands at about USD 560M vs. USD 868M a year ago), we estimate ability of the company to extend its debt maturities as rather good.
We also estimate that in Y2016 revenues of Ferrexpo are to make about USD 1bln, EBITDA Ц close to USD 365M. Under current market fundamentals we forecast monthly EBITDA of the company in the range of USD 40-50M.