Ferrexpo revenues fall 31% as Ukraine conflict impacts mining operations

Ferrexpo shares gained 1.1% to 144.5p in early morning trading on Wednesday, despite a revenue decline of 31% to $936 million in HY1 2022 against $1.3 billion last year, as a result of lower production and tighter market conditions.

The Ukraine-focused company confirmed a 14% drop in pellet production to 4.8 million tonnes, with the decrease attributed to the conflict in Ukraine and associated logistics constraints.

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The commodities group announced a post-tax profit fall of 88% to $82 million compared to $661 million, as result of a realised $254 million impairment over the term.

Ferrexpo mentioned an underlying EBITDA slide of 44% to $486 million linked to higher costs, driven by lower production volumes, soaring global inflation and rising energy prices.

The firm noted a net cash position of $172 million compared to $177 million year-on-year, and a minimal debt as of June 2022.

“Twelve months ago, we spoke in our Interim Results announcement of an exciting future ahead for the Ferrexpo business, and whilst this positive growth story remains in the Group’s plans, today we are focused on supporting the people and communities of Ukraine following more than 150 days of Russia’s continued invasion,” said Ferrexpo CEO Lucio Genovese.

“The results announced today reflect an unprecedented period in the history of Ukraine, and Ferrexpo, and should be viewed as a result derived through the strength and determination of Ferrexpo’s workforce in Ukraine and those involved in facilitating the export of the Group’s products.”

“Having previously shown resilience during the global Covid-19 pandemic in 2020 and 2021, the Group’s operational teams managed to produce 4.8 million tonnes of iron ore pellets in 1H 2022, and a financial result that is in many ways comparable to historic periods, despite a deterioration in global iron ore markets.”

Ferrexpo cut its dividend 63% to 19.8p per share from 52.8p the year before.

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