Slide 1: 2016 Full Year Results
2016 FULL YEAR RESULTS MARCH 2017
Slide 2: Disclaimer
DISCLAIMER This document is being supplied to you solely for your information and does not any discussion, correspondence or contact concerning the information in this document constitute or form part of any offer or invitation or inducement to sell or issue, or any with any of the directors or empl
Slide 3: Chairman's Review
STEVE LUCAS CHAIRMAN’S REVIEW 3
Slide 4: Successful 2016, Well Positioned for the Future
SUCCESSFUL 2016, WELL POSITIONED FOR THE FUTURE EXCELLENT BUSINESS – Good assets – Low cost – High value product – Quality customers – High performing team EXCELLENT RESULTS – Strong operational & financial performance – Very strong share price performance – Dividend reinstated 4
Slide 5: 2016 Financial Performance
C H R I S M AW E , C F O 2016 FINANCIAL PERFORMANCE 5
Slide 6: 2016 Results - A Strong Business Profile
2 0 1 6 R E S U LT S - A S T R O N G B U S I N E S S P R O F I L E SUMMARY FINANCIALS REVENUES HIGHER (up 3%) $M (unless otherwise stated) 2016 2015 Change – Production – 2% • Continued improvement in quality (94% high grade / HG plus) Production from own ore (kt) 11,072 11,258 -2% – Record sales vo
Slide 7: Continued Strong Margins Through the Cycle
CONTINUED STRONG MARGINS THROUGH THE CYCLE – U P 5 P E R C E N TA G E P O I N T S T O 3 8 % EBITDA FY 2016 VS. FY 2015 ($M) EBITDA MARKET +$15M OPERATIONS +$60M FOREX / OTHER margin EBITDA 38% margin 32 12 1 25 47 28 375 33% 32 6 313 2015 EBITDA Platts 62% Fe fines Lower C3 Pellet premium / Sales vo
Slide 8: Low Cost Producer Through the Cycle, C1 Cash Cost
LOW COST PRODUCER THROUGH THE CYCLE, C1 CASH COST O F P R O D U C T I O N VA R I E S W I T H C O M M O D I T Y P R I C E S & U A H STRONG COST PERFORMANCE C1 CASH COST THROUGH THE COMMODITIES CYCLE $ per tonne – Operational efficiencies in mining & processing delivered savings • Truck utilisation 16
Slide 9: $284M of Cash Generated from Operations After Capex
$ 2 8 4 M O F C A S H G E N E R AT E D F R O M O P E R AT I O N S A F T E R CAPEX CASH FLOW FY 2016 VS. FY 2015 IMPROVEMENTS IN THE 3 KEY AREAS $M (unless otherwise stated) 2016 2015 Change – EBITDA: LOWER COSTS HIGHER REVENUES (+$62M) EBITDA 375 313 20% – WORKING CAPITAL (+$86M) Operating FX gains
Slide 10: Manageable Debt Profile
MANAGEABLE DEBT PROFILE REBUILT BALANCE SHEET FURTHER DELEVERAGE EXPECTED IN 2017 – $110 million increase in cash to $145 million – Target Net debt to EBITDA below 1x – Net debt reduced by $279 million TARGET PRUDENT SUSTAINABLE DEBT RATIOS STRONG CREDIT METRICS – Repay from own cash flows – Net Deb
Slide 11: 2016 Results Demonstrate Strong Competitive Position
2 0 1 6 R E S U LT S D E M O N S T R AT E S T R O N G C O M P E T I T I V E POSITION NICHE PRODUCT, TOP CLASS CUSTOMERS, WELL INVESTED LONG LIFE ASSET BASE & LOW POSITION ON COST CURVE DELIVERS HIGH MARGINS EVEN AT THE LOW POINT IN THE CYCLE – Average EBITDA margin since 2007 35.6% (or $44/ tonne) E
Slide 12: Conclusion to Financial Review
CONCLUSION TO FINANCIAL REVIEW - 2016 results demonstrate strong business profile - High cash generation - Balance sheet rebuilt - Dividend reinstated - Continue deleveraging in 2017 - Close new bank lines and manage maturity profile 12
Slide 13: Operational Review & Strategy
K O S T YA N T I N Z H E VA G O , C E O O P E R AT I O N A L R E V I E W & S T R AT E G Y 13
Slide 14: Strong Business Profile
STRONG BUSINESS PROFILE NICHE PRODUCER LONG LIFE RESOURCE BASE LOW POSITION ON COST CURVE WORLD CLASS ASSET – PRODUCTION (incl fines & lump) +$2BN INVESTED SINCE IPO DEVELOPMENT Breakeven price of seaborne exporters, CFR China, LICENCE MAINTENANCE 62% Fe sinter fines, $/ dry t Logistics: $312M 70 60
Slide 15: Operate in a Niche Market - Demand Strong
O P E R AT E I N A N I C H E M A R K E T – D E M A N D S T R O N G IRON ORE PELLETS PELLET PREMIUMS REMAIN STABLE THROUGH THE CYCLE $ per tonne – Most efficient source of iron ore for a blast furnace Peak of iron ore fines price China 62% Fe fines CFR – Reduce energy requirements in the steel making
Slide 16: Low Cost Producer with Strong Market Presence
LOW COST PRODUCER WITH STRONG MARKET PRESENCE TOP PELLET EXPORTERS 2ND LARGEST SUPPLIER IS A HIGH COST PRODUCER SUPPORTING COST CURVE Million tonnes 2016 Pellet conversion costs, $/t (nominal) 2016 Vale (Brazil + Oman) 38.0 LKAB (Sweden) 18.5 Ferrexpo (Ukraine) 11.7 Rio Tinto (IOC, Canada) 9.8 Arcel
Slide 17: Focus on Operational Efficiencies Continues to Deliver Value
F O C U S O N O P E R AT I O N A L E F F I C I E N C I E S C O N T I N U E S T O D E L I V E R VA L U E 1. MINING & FLEET OPTIMISATION PROJECTS Blast fragmentation optimisation to lift equipment productivities Grade control programme Shovel productivity – 30% increase in effective dig rates in
Slide 18: Excellent Customer Portfolio Delivering Value
E X C E L L E N T C U S T O M E R P O R T F O L I O D E L I V E R I N G VA L U E ON THE BACK OF IMPROVED QUALITY 2017 REVENUE UNDERPINNED BY PELLET PREMIUM – Platts Atlantic pellet premium trading above $40 per tonne GROWING MARKET SHARE IN PREMIUM MARKETS Significant growth in shipments to premium
Slide 19: Pipeline of Growth Projects
PIPELINE OF GROWTH PROJECTS APPROVED GROWTH PROJECT: STUDIES UNDERWAY TO INCREASE CAPACITY GRADUALLY Increased Crushing & Concentration Capacity UP TO 20MTPA: 1. Additional Processing Capacity Description: Accelerated expansion of concentrate capacity Description: Considering several options - addin
Slide 20: Ukraine
UKRAINE - Improvement in GDP coming through as country recovers from troubles in 2014 - VAT refunds on a timely basis: as of 31 Dec 2016 Ferrexpo had received all outstanding VAT repayments - Structural & governmental reforms continue - In November 2016 Fitch upgraded Ukraine’s credit rating to B- w
Slide 21: Outlook
OUTLOOK - One of the lowest cost pellet producers in the world - Pellet premiums remain well supported due to lower supply & higher demand - Well placed to generate positive operating cash flows through the cycle - Focus on debt reduction & dividends in 2017 - 2018 & beyond: balance between debt amo
Slide 22: Thank You
THANK YOU -_ <(F _ FERREXPO