Ferrexpo Plc · LSE:FXPO
Ferrexpo — H1 2020 Earnings Presentation
18 slides from Ferrexpo's earnings presentation, August 2020
Slide 1: Interim Results Presentation August 2020
2020 Interim Results Presentation August 2020
Slide 2: Update on Corporate Governance
Steve Lucas, Chairman Update on Corporate Governance 1
Slide 3: Update on Corporate Governance
U P D AT E O N C O R P O R AT E G O V E R N A N C E CORPORATE GOVERNANCE FERREXPO BOARD OF DIRECTORS Executive Director – Comply with UK Corporate governance code – Related party transactions – strict procedures, systems & controls in place – At least half of Board (excluding the Chairman) are Indep
Slide 4: 1H 2020 Financial Performance
Roman Palyvoda, Acting CFO 1H 2020 Financial Performance 3
Slide 5: Net cash flow from operations remains at highest level since 2010
N E T C A S H F L O W F R O M O P E R AT I O N S R E M A I N S AT H I G H E S T L E V E L SINCE 2010 SUMMARY FINANCIALS OPERATIONAL PERFORMANCE – Production up 5% to 5.6Mt, second highest first half production since IPO US$M (unless otherwise stated) 1H 20 1H 19 Change 2019 – 22% increase in sales,
Slide 6: Consistent cash generation despite fall in pellet premium
C O N S I S T E N T C A S H G E N E R AT I O N D E S P I T E FA L L I N P E L L E T P R E M I U M EBITDA 1H 2020 Vs. 1H 2019 US$ million 3 237 52 31 3 83 372 32 12 352 300 1H 2019 EBITDA Platts 65% Fe Pellet Premium C3 Freight Other realised price Sales volumes C1 cost S&D and other EBITDA Non cash
Slide 7: Falling oil price drives % fall in C1 cost
FA L L I N G O I L P R I C E D R I V E S 11 % FA L L I N C 1 C O S T AVERAGE C1 COST 1H 2020 VS. 1H 2019 COSTS REFLECT: US$ per tonne – 5% production increase diluting fixed cost base 0.2 4.3 – Falling oil prices result in natural gas cost halving as proportion of costs (now 4%), and diesel falling
Slide 8: Strong production combined with destocking supported cash generation
STRONG PRODUCTION COMBINED WITH DESTOCKING SUPPORTED C A S H G E N E R AT I O N CASH FLOW 1H 2020 VS. 1H 2019 EBITDA – Impact of lower pellet premiums, partially offset by higher sales volumes US$M (unless otherwise stated) 1H 2020 1H 2019 Change through destocking EBITDA 352 372 -5% WORKING CAPITAL
Slide 9: Continued deleveraging and strong balance sheet
CONTINUED DELEVERAGING & STRONG BALANCE SHEET STRONG DEBT METRICS MAINTAINING A BALANCED DISTRIBUTION OF CAPITAL – Company has shown strong cash generation throughout the cycle, – Draw down of undrawn portion of PXF facility in 2019 averaging full year EBITDA margin of 37% since IPO – Existing debt
Slide 10: Conclusion to financial review
CONCLUSION TO FINANCIAL REVIEW VERY STRONG FINANCIAL AND OPERATIONAL PERFORMANCE – Strong operating performance, with operations benefiting from previous years of higher capital investment. – Destocking during 1H 2020 has enabled Company to increase liquidity – Market uncertainty around global COVID
Slide 11: Operations and Strategy Update
Yeristovo mine The town of Horishni Plavni Poltava mine Tailings Dam Concentrator Pelletizer facilities facilities Jim North, Acting CEO Operations and Strategy Update 10
Slide 12: Developing a safety first culture
D E V E L O P I N G A S A F E T Y F I R S T C U LT U R E COVID-19 UPDATE SAFETY STATISTICS SINCE IPO: FATALITIES 4 – Operations continue with minimal disruption to activities 3 Group Fatalities EMBEDDING CHANGES IN APPROACH TO SAFETY 2 – 2019 represented a good year for safety performance, with this
Slide 13: Operational focus in 1H – expanding to 12MTPA
O P E R AT I O N A L F O C U S I N 1 H 2 0 2 0 – E X PA N D I N G T O 1 2 M T PA CONCENTRATOR EXPANSION RAMP UP IN 2H 2020 – Section 9 to be completed 2H 2020, adding 6MT of additional processing capacity, raising installed raw ore capacity to 36MTPA – Will enable Company to realise full capacity of
Slide 14: Future growth beyond 12MTPA
F U T U R E G R O W T H B E Y O N D 1 2 M T PA ENGINEERING STUDIES UNDERWAY FOR FURTHER EXPANSION BEYOND 12MTPA – Mining • Existing Ore Reserve allows for further 50 years of mining at current mining rates • Existing mining fleet capacity c.180MTPA, compared to 120MT mined in 2019 – Processing – Con
Slide 15: Well positioned to adapt to changing market conditions
WELL POSITIONED TO ADAPT TO CHANGING MARKET CONDITIONS STRONG LOGSITICS INFRASTRUCTURE IN UKRAINE DIFFERING GLOBAL IMPACT OF COVID-19 ON STEEL OUTPUT – Fleet of Ferrexpo owned rail cars and barges to deliver to 10% China customers in Europe - Steel Production YoY – Seaborne sales to Asian customers
Slide 16: Increasing the product portfolio – DR pellets
INCREASING THE PRODUCT PORTFOLIO – DR PELLETS LATEST STEP IN FERREXPO’S QUALITY IMPROVEMENT PROJECT – Direct Reduction (“DR”) pellets are higher grade (67% Fe), lower impurity pellets – DR pellets are used in Direct Reduced Iron process of making steel, which typically uses natural gas, rather than
Slide 17: Ferrexpo investment case
FERREXPO INVESTMENT CASE 1 2 3 4 PREMIUM STRONG WELL INVESTED HIGH QUALITY AND PRODUCT CASH FLOW ASSET BASE DIVERSE CUSTOMER BASE – Iron ore pellets represent a high – Average full year EBITDA – Over US$2.5 billion invested – Central location between Europe quality product for the premium margin of
Slide 18: Thank you
Thank you 17