Ferrexpo production jumps as pellet prices leap
By Duncan Ferris
Date: Friday 05 Jul 2019
(Sharecast News) - Ferrexpo on Friday reported a return to quarterly pellet production and said it expected a 4% jump in first-half sales volumes as average prices received climbed due to stronger iron ore prices and premiums for iron ore pellets.
The Ukrainian iron pellet producer reported an 11% increase in second quarter production, returning to production growth following a 2% drop in the previous quarter and bringing total first half production up by 5% to 5.4MT.
Full year production guidance remains at 10.6MT, roughly flat against last year.
Ferrexpo is currently in the midst of a sizeable maintenance programme, which is expected to complete in 2020, at which point the company expects to be producing 12MT per annum.
The FTSE 250 company said it expected first-half sales volumes to have increased by 4%, while average prices received jumped by 29% compared to the 2018 average due to stronger iron ore prices and premiums for iron ore pellets.
Net debt as of 30 June was approximately $277m, down from $339m at the end of last year, as the company said it continued to generate strong cash flow thanks to the aforementioned price increases.
Finally, cost of production for the first half is expected to be have risen to approximately $46 per tonne compared to the 2018 average cost of $43 per tonne due to Ukrainian inflation and a strong Hryvnia currency against the US dollar.
Ferrexpo's shares were down 5.09% at 257.50p at 0805 BST.
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