Ferrexpo Plc · LSE:FXPO
Ferrexpo — H1 2009 Earnings Presentation
21 slides from Ferrexpo's earnings presentation, Aug 5, 2009
Slide 1: Ferrexpo plc 2009 Interim Results Presentation
Ferrexpo plc 2009 Interim Results Presentation 5 August 2009
Slide 2: Disclaimer
Disclaimer This document is being supplied to you solely for your information and does not constitute or form part of any offer or invitation or inducement to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares in the Company or any other securities, nor shall an
Slide 3: Introduction and Today's Agenda
Introduction and Today’s Agenda INTRODUCTION Michael Abrahams HIGHLIGHTS Kostyantin Zhevago INTERIM RESULTS Chris Mawe OUTLOOK Kostyantin Zhevago Q&A 2
Slide 4: Agenda
Agenda INTRODUCTION Michael Abrahams HIGHLIGHTS Kostyantin Zhevago INTERIM RESULTS Chris Mawe OUTLOOK Kostyantin Zhevago Q&A 3
Slide 5: Strong Results – Tough Environment
Strong Results – Tough Environment Operations performing well • Production volumes at 100% of capacity from March 2009 • 4.3% increase in production of higher grade 65% Fe pellets • Flexible marketing strategy • Shift to higher proportion of spot China sales • Compensated for weaker European contrac
Slide 6: Flexible Marketing Strategy
Flexible Marketing Strategy Market Mix by Sales Volume – Significant increase in Growth markets exports 14.5% 3.0% 11.8% 16.2% Ukraine 2.2% Europe/Traditional 26.8% Markets 54.0% Turkey China 4.5% India 67.1% H1 2008 H1 2009 Sales Volumes (‘000t) Flexibility has been key 5000 4'517 • Sales volumes m
Slide 7: Low Prices and Exposure to Freight
Low Prices and Exposure to Freight Higher proportion of CFR sales to China – margins temporary squeezed by freight rates from Black Sea • High relative freight rates from Black Sea in Q2 • Temporary structural phenomenon – ships out of service / in wrong ocean • Effects only spot sales to Asia –CFR
Slide 8: Ukraine – Economic Environment Improving
Ukraine – Economic Environment Improving • IMF released $3.3bn third tranche of $16.4bn loan to Ukraine on 28 July • Over $10bn of loan extended to Ukraine to date • Follows successful second IMF review of economic conditions • Monetary policy stance approved by IMF • Consumer confidence and unemplo
Slide 9: Agenda
Agenda INTRODUCTION Michael Abrahams HIGHLIGHTS Kostyantin Zhevago INTERIM RESULTS Chris Mawe OUTLOOK Kostyantin Zhevago Q&A 8
Slide 10: Financial Highlights
Financial Highlights • Revenue of US$301.8 million (H1 2008: US$519.5 million) • EBITDA of US$60.3 million (H1 2008: US$228.0 million) • Production costs flat compared to Dec 2008 and below Ukrainian CPI inflation • Substantial reduction in C1 costs to $34.5/t • Profit of US$28.7 million (H1 2008: U
Slide 11: Quarter-on-Quarter Performance
Quarter-on-Quarter Performance US$m 200 Revenue EBITDA Cost of Sales 175 160.7 150 141.1 125 100 83.0 75 64.9 50 35.0 25.4 25 0 Q1 2009 Q2 2009 Average Achieved 76.8 59.3 Price (US$/t) Sales Volume (kt) 1.722 2.472 C1 cost (US$/t) 37.4 32.3 10
Slide 12: EBITDA and influencing factors
EBITDA1 and influencing factors EBITDA waterfall H1 2008 – H1 2009 (US$m) EBITDA Margin 44% 228 -213 20% 3 11 60 11 26 -6 H1 2008 Sales Price Sales volume C1 Costs Distribution G&A Other H1 2009 costs 1 EBITDA is profit from continuing operations before tax and finance less foreign exchange gain/(lo
Slide 13: Achieved Prices – Likely Upside
Achieved Prices – Likely Upside Dollar per tonne average achieved prices (on a DAF/FOB basis) by quarter 1 2 US$/t Sales Price (DAF/FOB) Implied 2009 Benchmark (DAF/FOB) MB CFR China Fines Spot 200 186 180 175 2009 Vale Pellet 2008 159 Settlement – ‘Implied Benchmark Benchmark’ 150 Settlement 125 10
Slide 14: C1 Costs Breakdown
C1 Costs Breakdown C1 Costs1 by input ($/t) C1 Costs waterfall H1 2008 – H1 2009 ($/t) 40.9 2.3 Other 10% 0.9 Explosives 1.2 Electricity 3% 0.2 1.7 27% 0.0 0.5 34.5 Natural Gas 0.5 13% Grinding Media 10% Labour 13% Explosives Labour Spares & Maintenance H1 2008 Grinding Media H1 2009 Diesel Fuel Ele
Slide 15: Capital Expenditure and Funding
Capital Expenditure and Funding Capital Expenditure Split Debt Position Secure US$m GPL Sustaining GPL Development • Ferrexpo’s principal debt facility is a YBG Development Railcars & Logistics pre-export financing facility with 150 Area Infrastucture & Utilities US$244 million that remains 131.2 ou
Slide 16: Agenda
Agenda INTRODUCTION Michael Abrahams HIGHLIGHTS Kostyantin Zhevago INTERIM RESULTS Chris Mawe OUTLOOK Kostyantin Zhevago Q&A 15
Slide 17: Outlook for remainder of 2009
Outlook for remainder of 2009 Strategy • Maintain strong financial position and target continued profitability in H2 2009 • Maintain production at full capacity to reduce costs • Continue to react quickly, adapt to market changes and take advantage of strong marketing reputation Outlook • Outlook fo
Slide 18: Agenda
Agenda INTRODUCTION Michael Abrahams HIGHLIGHTS Kostyantin Zhevago INTERIM RESULTS Chris Mawe OUTLOOK Kostyantin Zhevago Q&A 17
Slide 19: Financial highlights – Income Statement
Financial highlights – Income Statement US$ ‘000 6 Months to 30 June 2009 6 Months to 30 June 2008 % Change Revenue 301,759 519,498 (42%) Gross Profit 142,106 311,990 (54%) % Margin 47% 60% Operating Profit 44,484 209,259 (79%) % Margin 15% 40% EBITDA 60,295 228,023 (74%) % Margin 20% 44% Profit bef
Slide 20: Financial highlights – Balance Sheet
Financial highlights – Balance Sheet US$ ‘000 As at 30 June 2009 As at 30 June 2008 % Change Non-Current Assets 595,420 535,874 (19%) Property, Plant & Equipment 445,271 322,769 (6%) Current Assets 261,694 236,033 (11%) Inventories 60,176 55,383 (20%) Trade & Other Receivables 44,117 49,951 (44%) Ca
Slide 21: Financial highlights – Cash Flow Statement
Financial highlights – Cash Flow Statement 6 months ended 6 months ended US$ ‘000 30 June 2009 30 June 2008 % Change Net Cash Flows from Operating Activities 46,297 83,324 (67%) Net Cash Flows from Investing Activities (37,358) (35,617) (72%) Purchase of Property, Plant & Equipment (43,215) (53,430)