10th Mar 2016 08:54
LONDON (Alliance News) - Ferrexpo PLC on Thursday said its profit and revenue plummeted in 2015 as an increase in production and a reduction in costs were not enough to offset steep falls in iron ore pellet prices, and it warned prices will drop further this year and remain low potentially until 2020.
Ferrexpo shares were down 18% to 31.40 pence per share on Thursday morning.
The iron ore pellet producer said its pretax profit amounted to USD25.4 million in the year, falling from the USD254.3 million profit in 2014 as revenue dropped to USD961.0 million from USD1.38 billion a year earlier.
Exceptional items totalling USD110.0 million also hampered results.
Underlying pretax profit, which excludes certain one-off items, fell to USD164.1 million from USD337.8 million whilst profit from continuing operations before tax and finance costs fell to USD112.4 million from USD318.4 million.
Earnings before interest, tax, depreciation and amortisation were 37% lower year-on-year to USD313.0 million from USD496.0 million, with Ebitda margin slipping to 33% from 36%.
The 31% fall in revenue in the year was driven by a 42% fall in iron ore pellet prices during 2015, dropping to only USD56 per tonne from USD97 per tonne in 2014. A 6% rise in production to 11.6 million tonnes from 11.0 million tonnes was not enough to offset the price falls.
Ferrexpo took action to battle those falling prices, with its cash cost falling 30% in the year to USD32 per tonne from USD46 per tonne.
"As a result of a forecast oversupply of iron ore fines in 2016, however, prices are expected to fall further in the present macroeconomic environment, while industry participants take additional measures to reduce costs or curtail production," said the company.
"Ferrexpo sells iron ore pellets which, in contrast to iron ore fines, are forecast to be in under supply, and demand is expected to grow in the period to 2020," it added.
Net debt at the end of the year stood at USD868.0 million, 28% higher than the USD678.0 million at the end of 2014. Its cash balance currently stands at USD36.0 million.
Ferrexpo said its capital expenditure in the year totalled USD65.0 million, a huge drop from the USD235.0 million budget in 2014.
The company also said it has appointed Malcolm Field as a new non-executive director. Field is currently a non-executive director of Hochschild Mining PLC and recently left his non-executive role at Petropavlovsk PLC.
By Joshua Warner; [email protected]; @JoshAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.
Related Shares:
HochschildFerrexpoPOG.L