Slide 1: 2018 Half Year Results Presentation
2018 HALF YEAR RESULTS PRESENTATION AUGUST 2018
Slide 2: Disclaimer
DISCLAIMER This document is being supplied to you solely for your information and does not constitute relation to the contents of this presentation. You agree that you will not at any time have or form part of any offer or invitation or inducement to sell or issue, or any solicitation of any discuss
Slide 3: Steve Lucas, Chairman
Steve Lucas Chairman 2
Slide 4: 1H 2018 Financial Performance
1H 2018 FINANCIAL PERFORMANCE Chris Mawe, CFO 3
Slide 5: Strong market environment for pellets
STRONG MARKET ENVIRONMENT FOR PELLETS H I G H E R C O S T S D R I V E N B Y C O M M O D I T Y C O S T I N F L AT I O N Summary Financials Market – Strong market environment for high grade product $M (unless otherwise stated) 1H 18 1H 17 Change 2017 – Record pellet premium Pellet production (kt) 5,09
Slide 6: EBITDA 1H 2018 vs. 1H 2017
EBITDA 1H 2018 VS. 1H 2017 MARKET $26M OPERATIONS -$68M FOREX -$10M 22 63 15 49 1 14 3 10 287 reverse in 2H non-cash 234 1H 2017 Atlantic pellet Platts 62% C3 freight C1 cost of Logistic Pellet Production Operating 1H 2018 EBITDA premium Fe fines index production costs inventory volumes forex loss E
Slide 7: Competitive cost base through the cycle, C1 cost
COMPETITIVE COST BASE THROUGH THE CYCLE, C1 COST VA R I E S W I T H C O M M O D I T Y P R I C E S , L O C A L I N F L AT I O N , U A H C1 cost 1H 2018 vs. 1H 2017 Costs reflect: $ per tonne – Commodity price inflation: higher diesel, gas, steel prices, coal – Local inflation 2.6 0.2 2.6 – UAH apprec
Slide 8: Cash generation supporting balance sheet
C A S H G E N E R AT I O N S U P P O R T I N G B A L A N C E S H E E T Cash flow 1H 2018 VS. 1H 2017 EBITDA $M (unless otherwise stated) 1H 18 1H 17 Change % 2017 – Higher pellet premiums offset by cost inflation EBITDA 234 287 -18.5 551 Working capital reflects Working capital movements -11 -37 -70
Slide 9: Strong balance sheet
STRONG BALANCE SHEET Excellent debt reduction ($M) Amortisation profile as of 30 June 2018 ($M) 904 Net Debt Gross Debt ECAs PXF Bond 797 733 564 492 868 451 173 753 589 472 394 99 369 82 44 24 24 24 24 11 5 6 1 2 1 1 31 Dec 15 30 Jun 16 31 Dec 16 30 Jun 17 31 Dec 17 30 Jun 18 Cash 2H 2018 1Q 19 2Q
Slide 10: Conclusion to financial review
CONCLUSION TO FINANCIAL REVIEW FINANCIAL RESULTS – High quality product realising significant price premiums – Cost growth should moderate with lower local inflation assuming stable UAH – Increase in capex to support maintenance and volume growth – Strong balance sheet with low gearing – Dividend ma
Slide 11: Operational Review & Strategy
OPERATIONAL REVIEW & STRATEGY KOSTYANTIN ZHEVAGO, CEO 10
Slide 12: Iron ore market dynamics: relatively stable 62% Fe price
I R O N O R E M A R K E T D Y N A M I C S : R E L AT I V E LY S TA B L E 62% FE PRICE WHILE PREMIUMS & DISCOUNTS WIDEN Premiums for high quality ore Higher freight rates are reducing net prices have increased significantly to 2016 levels for 62% Fe $ per tonne $ per tonne 115 Platts 62 Platts 58 Pla
Slide 13: Strong demand for pellets while supply remains in deficit
S T R O N G D E M A N D F O R P E L L E T S W H I L E S U P P LY R E M A I N S I N D E F I C I T Crude steel capacity utilisation % Pellet supply in 1H 2018 100% – Impacted by 10 week strike at IOC China Ex-China 94% – Suspension of operations at Minas Rio (pellet feed) 90% 85% – Market leader bough
Slide 14: Marketing – strong customer demand
MARKETING – STRONG CUSTOMER DEMAND Geographic split of sales volume % – Strong demand from long term target customers – No sales to spot customers during the period 60% 1H 2018 – China & SE Asia includes sales to Vietnam and Taiwan 1H 2017 – 300kt increase in pellet stocks to be reduced in 2H 2018 5
Slide 15: Mining and processing operations
M I N I N G A N D P R O C E S S I N G O P E R AT I O N S SAFETY FIRST MINING PROCESSING PELLETISING – No fatalities – Increased stripping at FPM – Construction of MFC1 near – 1H 2018 production in line (2017: one) to access high grade ore completion with 1H 2017 at 5.1MT – 1H 2018 LTIFR 0.97 – Incre
Slide 16: 2018 Capex projects
2018 CAPEX PROJECTS Q fe, Wi ir Kopnyc cpedezo u Menkozo Gpodnenus N’2 (+6 mar. mowH pydtil) Medium and fine crushing N°2 (+6 million tons of ore} : Sie et) ~~ (Kopnyc cpedezo u menkozo GpoGnenua N° [+6 mak. moHH pudal) Medium and fine crushing N°1 (+6 min. tans af are) ~ Modepruaouun cexuui NS u NP
Slide 17: Strategy and outlook
S T R AT E G Y A N D O U T L O O K – Demand for high quality iron ore expected to remain strong, especially pellet – Capital allocation: balancing debt reduction, growth capex & dividends – Pellet output to increase 1.5MT to 12MT after completion of concentrator expansion in 2020 – Ferrexpo one of f
Slide 18: Thank you
Thank you 17
Slide 19: Large resource and well invested asset base
FERREXPO HAS A LARGE RESOURCE AND WELL INVESTED ASSET BASE PRODUCING A HIGH QUALITY PRODUCT Significant resource base World class asset – Premium iron ore product: 65% Fe pellets over US$2.15bn invested since IPO PRODUCTION DEVELOPMENT LICENCE MAINTENANCE Logistics: barging, rail cars, port/transshi