Ferrexpo Plc · LSE:FXPO
Ferrexpo — FY2013 Earnings Presentation
30 slides from Ferrexpo's earnings presentation, 2014
Slide 1: 2013 Annual Results: Producing iron ore pellets for 35 years
2 0 1 3 A N N U A L R E S U LT S Producing iron ore pellets for 35 years
Slide 2: Disclaimer
DISCLAIMER This document is being supplied to you solely for your information and does not constitute or form This presentation and its contents are confidential. By reviewing and / or attending this part of any offer or invitation or inducement to sell or issue, or any solicitation of any offer to
Slide 3: Introduction
INTRODUCTION MICHAEL ABRAHAMS CBE DL, CHAIRMAN 3
Slide 4: 2013 Financial Results
2 0 1 3 F I N A N C I A L R E S U LT S C H R I S M AW E , C F O 4
Slide 5: 2013 Highlights: Increased Volumes Driving Growth
2013 HIGHLIGHTS: INCREASED VOLUMES DRIVING GROWTH ― Record pellet production of 11mtpa US$M (unless otherwise stated) 2013 2012 Change ― Revenue reflects higher sales volumes & prices Revenue 1,581 1,424 11% ― Remained competitively positioned on global cost curve EBITDA 506 405 25% Profit for the y
Slide 6: Income Statement 2013 vs. 2012
I N C O M E S TAT E M E N T 2 0 1 3 V S . 2 0 1 2 US$M (unless otherwise stated) 2013 2012 ― Production from own ore increased 11%, adding US$40M to Pellet production from own ore (000’ tonnes) 10,466 9,409 EBITDA Pellet sales (000’ tonnes) 10,689 9,675 ― Average prices up 4% compared to prior year
Slide 7: Revenue 2013 vs. 2012
REVENUE 2013 VS. 2012 1,650 37 1 1,600 8 1,581 127 1,550 1,500 US$M 1,450 1,424 1,400 1,350 1,300 2012 revenue Sales volume Sales price, own ore CIF/CFR sales Other 2013 revenue 7
Slide 8: EBITDA 2013 vs. 2012
US$M 0 100 200 300 400 500 600 405 2012 EBITDA 40 Sales volume 56 Iron ore prices 11 Customer mix 17 Freight savings Global freight 12 prices 1 C1 cost EBITDA 2013 VS. 2012 DAP/FOB 0 distribution costs G&A & other 12 2013 EBITDA 506 8
Slide 9: C1 Cash Costs Benefitting from FYM
C1 CASH COSTS BENEFITTING FROM FYM C1 cash cost evolution Breakdown of C1 cash cost 4.1% 3.6% Electricity 6.3% 65 63.9 Gas 64 7.0% 25.5% Materials 63 Fuel 62 US$ C1 Cash cost Personnel Costs 7.6% 61 59.8 59.8 Maintenance & consumables 60 59.6 13.0% 9.8% Grinding bodies 59 58.2 Spare parts 58 57.6 11
Slide 10: Cash Flow 2013 vs. 2012
CASH FLOW 2013 VS. 2012 US$M (unless otherwise stated) 2013 2012 ― Working capital reflects stocking of FPM lean ore & EBITDA 506 405 pre-payment of corporate profit tax Working capital movements (103) (128) ― VAT stabilised, US$318M VAT outstanding at 31 Dec 20131 Interest paid (56) (56) ― US$87M p
Slide 11: 2013 Capex Reflects Expenditure on Approved Projects & Savings
2013 CAPEX REFLECTS EXPENDITURE O N A P P R O V E D P R O J E C T S & S AV I N G S Project status: Capital expenditure FPM CUP1: US$M 2013 2012 – Concentrating capability increased to 1.1mt per month through 2013 – On track to achieve annualised processing capability of 12 million FPM 142 192 tonnes
Slide 12: Balance Sheet 2013 vs. 2012
BALANCE SHEET 2013 VS. 2012 Credit Metrics – High Liquidity – New committed PXF US$350M, currently undrawn1 US$M 31 Dec 2013 31 Dec 2012 – Diversified sources of funding Cash and Equivalents 390 597 – No material debt repayments in 2014 & 2015 Total Gross Debt 1,029 1,020 Net Debt (639) (423) Pro fo
Slide 13: Conclusion to Financial Review
CONCLUSION TO FINANCIAL REVIEW – Record production & sales volumes – Profitability increased: higher output, higher prices, freight savings, stable C1 costs, lower admin costs – Costs reduced steadily throughout 2013 – Growth projects on track, output to increase going forward – Special dividend ref
Slide 14: Business Update
B U S I N E S S U P D AT E K O S T YA N T I N Z H E VA G O 14
Slide 15: Marketing & Logistics
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Slide 16: Growing Logistics Capability
G R O W I N G L O G I S T I C S C A PA B I L I T Y In 2013 developed: In 2014 continue to: Rail cars – Optimise & reduce internal freight costs by: – Increased fleet (+267; 2,200 cars as of 31 December) – Provided savings & improved service reliability to customers – Increasing rail car fleet (expec
Slide 17: Marketing Expansion with Focus on Premium Crisis Resistant Clients
M A R K E T I N G E X PA N S I O N W I T H F O C U S O N P R E M I U M C R I S I S R E S I S TA N T C L I E N T S Benefits of diversity to Ferrexpo – Not reliant on any one region for demand – In 2013: signed new contract with China’s leading steel mill, renewed a contract & commenced a trial cargo
Slide 18: Industry Pelletising Cost Curve: Ferrexpo Is Well Placed
INDUSTRY PELLETISING COST CURVE: FERREXPO IS WELL PLACED Pelletising Cost Curve 70 56 Vale Samarco Vale 42 Vale IOC LKAB USc/dmtu Ferrexpo LKAB CLIFFS Metinvest Metinvest 28 Metalloinvest ENRC 14 0 0.2 Bnt Source: CRU, January 2013 – Ferrexpo to benefit from rising pellet premiums due to growing dem
Slide 19: Operations & Investments
O P E R AT I O N S & I N V E S T M E N T S 19
Slide 20: Strong Performance from FPM in 2013
STRONG PERFORMANCE FROM FPM IN 2013 – FPM processed more ore, produced more concentrate & pellets FPM KPI’s 2012 2013 2014 on a monthly basis Stripping (‘000 m3) 27.9 28.9 30.0 – 32.0 – Completing major modernisation whilst continuing to increase output Processed ore (incl FYM) 29.8 30.7 31.0 – 32.5
Slide 21: Average Monthly Production Statistics from Own Ore
AV E R A G E M O N T H LY P R O D U C T I O N S TAT I S T I C S F R O M O W N O R E Average monthly concentrate & pellet production from own ore Average monthly production of 65% Fe pellets from own ore 400 +15% 1150 +13% 375 1050 Thousand tonnes 350 Thousand tonnes 950 +13% 850 325 750 300 650 2007
Slide 22: Improving Consumption Norms – C1 Cost Reduced by US$8.6/Tonne Since 2005
IMPROVING CONSUMPTION NORMS – C1 COST REDUCED BY US$8.6/TONNE SINCE 2005 68.4 -3.7 -2.8 -1.0 -1.1 59.8 PF 2005 Electricity Gas Grinding Media Personnel FY2013 Electricity Gas Grinding Media Productivity kWh per tn of pellets m3 per tn of pellets Kg per tn of pellets ‘000 tones of pellets per employe
Slide 23: FYM Producing, Lowering Costs & Operational Risk Profile
FYM PRODUCING, LOWERING COSTS & O P E R AT I O N A L R I S K P R O F I L E – FYM ore contributed 20% to pellet production volumes in 2013 – Reduced C1 costs on avg by US$1.20 per tonne (principally due to lower mining costs) – Lower operational risk through two operating mines – In 2014: 9mt of FYM
Slide 24: Overall Cost Position
OVERALL COST POSITION Cash Charge Curve (US$/t – Dry, 62% Fe, CIF China)1 140 130 Predominantly 120 China 110 Ferrexpo 100 FMG 90 80 Predominantly Vale, Rio, BHP US$/tonne 70 60 50 40 30 20 10 0 0 500 1000 1500 2000 Source Deutsche Bank; Ferrexpo, November 2013 mtpa – A 10% UAH devaluation vs. the U
Slide 25: Output to Grow to 12mtpa, FYM Can Add Further Tonnage
OUTPUT TO GROW TO12MTPA, FYM CAN ADD FURTHER TONNAGE 2014 targets: – Sustained production of 1.2mt of concentrate per month – Sustained production of 1mt of pellets per month – Increase output of 65% Fe pellets – Further reductions in cost of pellets from FYM ore – Completion of FYM infrastructure –
Slide 26: Ukraine
UKRAINE 26
Slide 27: Ukraine
UKRAINE – Our deepest regrets for the lives lost in the recent political turmoil – We are hopeful of a satisfactory political outcome reflecting democratic principles – At the time of writing, there have been no disruptions to Ferrexpo’s operations in Ukraine 27
Slide 28: Outlook
OUTLOOK
Slide 29: Ferrexpo: A World Class Iron Ore Pellet Producer
FERREXPO A WORLD CLASS IRON ORE PELLET PRODUCER 2014 Market Outlook: – Price of iron ore lower in 1Q 2014, expect some recovery in remainder of the year, but remains volatile – Expect to benefit from a growing market requirement for high quality ore – Local currency devalued reducing local costs 201
Slide 30: Thank You
THANK YOU 30