Ferrexpo Plc · LSE:FXPO
Ferrexpo — FY2020 Earnings Presentation
29 slides from Ferrexpo's earnings presentation, Mar 17, 2021
Slide 1: Delivering Sustainable Growth: 2020 Full Year Results
DELIVERING SUSTAINABLE GROWTH 2020 FULL YEAR RESULTS March 2021 Lucio Genovese, Chair Jim North, CEO (Acting) Roman Palyvoda, CFO (Acting) Brett Salt, CMO
Slide 2: Introduction to Ferrexpo
2 INTRODUCTION TO FERREXPO Ferrexpo plc Climate Change: Positioning Sustainable Growth for the Future - 3rd largest global exporter of iron - 16% reduction in Scope 1 & 2 - 7% production growth 2020. ore pellets; 12.1Mt exports in 2020. carbon footprint in 2020. - Shareholder returns, US$195M in - L
Slide 3: Strategic Pillars
3 STRATEGIC PILLARS Safety continues to be our first priority Strong ESG credentials 0.79 1st Lost time injury frequency Fast follower in - Community support: combined total of US$3.5M rate of 0.79 in 2020, 22% technology: approved for COVID-19 Relief Fund. below 5 year trailing implementation of la
Slide 4: Governance
4 GOVERNANCE 2020 2016 Recent Updates: - New Chair Lucio Genovese. Lucio Genovese, Chair of the Board Vitaliy Lisovenko Senior Independent Non-executive Director - New Executive Director Jim North. 2020 2019 - New Independent Non-executive Director Ann- Christin Andersen. - Enhanced procedures and i
Slide 5: Safety Review
5 SAFETY REVIEW The Group unfortunately experienced one fatality at its operations in 2020 (2019: none). LTIFR of 0.79 in 2020, representing a level 22% below the Group’s 5 year trailing average (1.01), and ahead of peers. DDSG Crewmen wearing newly Group’s barging subsidiary, DDSG, completed update
Slide 6: COVID-19 Response
6 COVID-19 RESPONSE The Group responded with an early intervention in March 2020 to protect both its workers and local communities. Workforce actions: - Nearly 40% of Group’s operational staff, representing over 3,000 people, working remotely. - COVID-19 testing capacity for over 1,000 tests a Ambul
Slide 7: Sustainability Highlights
7 SUSTAINABILITY HIGHLIGHTS -16% 25% 3% Carbon footprint reduced by 16% in Biofuel (sunflower husk) Production of Direct Reduction a single year, through targeted consumption increased to 25% of pellets commenced in 2020, electricity purchasing strategy and pelletiser energy in 2020 (2019: 22%). rep
Slide 8: 2020 Financial Results
2020 FINANCIAL RESULTS Speaker: Roman Palyvoda Chief Financial Officer (Acting) Ferrexpo plc | FY Results Presentation, March 2021
Slide 9: FY2020 Financial Highlights
9 FY2020 FINANCIAL HIGHLIGHTS +13% +46% 50% Revenues increasing by 13% to Increase in Underlying EBITDA by Underlying EBITDA margin US$1.7Bn in 2020 (2019: US$1.5Bn), 46% to US$859 million in 2020, result increases to 50%, representing a 11 combination of increasing production of improved market con
Slide 10: Delivering Growth in 2020
10 DELIVERING GROWTH IN 2020 WELL POSITIONED FOR RECENT MARKET STRENGTH INVESTMENTS YIELDING GREATER HIGH GRADE PELLETS – 99% OF TOTAL GROWTH IN BOTH VOLUME AND QUALITY PROFITABILITY THAN PREVIOUS CYCLE 12.0 All figures Mt 0.7 1.3 0.1 0.4 1000 180 0.7 0.6 169 10.8 900 160 859 10.4 10.0 801 10.1 10.0
Slide 11: Financial Overview
11 FINANCIAL OVERVIEW 46% GROWTH IN EARNINGS (US$M, unless stated otherwise) 2020 2019 % - Revenue: +13% - Increasing as a result of higher volumes, iron ore Total pellet production from own ore (kt) 11,218 10,519 +7% pricing and increased product quality. Total sales volumes (kt) 12,062 10,312 +17%
Slide 12: Key Drivers of Underlying EBITDA in 2020
12 KEY DRIVERS OF UNDERLYING EBITDA IN 2020 MATERIAL INCREASE DESPITE 4% REDUCTION IN DAF/FOB REALISED PRICI NG All figures US$M 1,000 900 800 +35 +108 700 +71 +171 (251) 600 +39 +100 500 859 400 300 586 200 100 0 FY 2019 Platts 65% Fe Atlantic Pellet C3 freight Sales volumes C1 cost Logistics and F
Slide 13: Effective Cost Control
13 EFFECTIVE COST CONTROL 13% SAVING IN C1 COSTS IN 2020 C1 Cash Cost Structure C1 Cash Cost: Key Factors 2019-2020 CRU Cost Curve (Iron Ore pellet exports)1 (US$ per tonne) (US$ per tonne) (Pellet exports to China) 50.00 Explosives, 120.0 120.00 0.5 Others , Electricity, 48.00 Pellet cost for deliv
Slide 14: Resilient Cash Flows
14 RESILIENT CASH FLOWS DRIVEN BY VOLUME GROWTH AND LOWER COSTS (All figures US$, unless stated 2020 2019 % - Underlying EBITDA increasing 46% as result of otherwise) commodity pricing, volume growth and lower costs. Underlying EBITDA 859 586 46% - Lower interest cost due to debt reduction. Working
Slide 15: Balance Sheet Discipline
15 BALANCE SHEET DISCIPLINE STRONG PLATFORM FOR FUTURE GROWTH DISCIPLINED CAPITAL ALLOCATION RESULTS IN SIGNIFICANT DEBT TO EQUITY RATIOS REACHING ALL TIME LOWS STRENGTHENING OF BALANCE SHEET All figures US$M 370 Source: Bloomberg 1,305 1,029 1,020 970 904 868 227 734 182 678 639 589 501 424 423 220
Slide 16: Disciplined Capital Allocation
16 DISCIPLINED CAPITAL ALLOCATION BALANCE SHIFTING TOWARDS DIVIDENDS AS DEBT REDUCES BALANCE OF INVESTMENT AND FOCUS ON CAPEX AND DIVIDENDS AS SHAREHOLDER RETURNS REFLECT SHAREHOLDER RETURNS IN 2020 BALANCE SHEET STRENGTHENS 50% STRENGTH OF BUSINESS AND MARKET All figures US$M All figures US$M 45% 1
Slide 17: Iron Ore Market Review
IRON ORE MARKET REVIEW Speaker: Brett Salt Chief Marketing Officer Ferrexpo plc | FY Results Presentation, March 2021
Slide 18: Market Trends Observed in 2020
18 MARKET TRENDS OBSERVED IN 2020 DEMAND FACTORS SUPPLY FACTORS IRON ORE MARKET INDICES 2020/2021 (US$/T) 01 04 250 Global COVID-19 pandemic, Supply disruption of Brazilian with regional demand variations high grade fines and pellets between China / RoW throughout 2020 200 150 02 05 Demand recovery
Slide 19: Looking Ahead
19 LOOKING AHEAD POSITIVE TRENDS IN STEEL PRICING SEEN IN LATE 2020 & EARLY 2021 1 Green Steel / Carbon Free Steel (medium term). 1,300 EU HRC US HRC HRC Price (US$/t) Japan HRC Shanghai HRC 1,000 Increasing focus on environmental controls, positive 2 impact on pellet demand (short term). 700 3 I/O
Slide 20: Organic Growth Opportunities
ORGANIC GROWTH OPPORTUNITIES Speaker: Jim North Chief Executive Officer (Acting) Ferrexpo plc | FY Results Presentation, March 2021
Slide 21: Near Term Growth
21 NEAR TERM GROWTH Concentrator expansion project completed in 2020: - Additional 680tph of processing capacity. - Provides platform to fully utilise pelletiser nameplate capacity in 2021. Key operational projects for 2021: Investing in technology to facilitate growth and sustainability - Pelletise
Slide 22: Future Growth Priorities
22 FUTURE GROWTH PRIORITIES Development of Ferrexpo’s Volume growth through modular expansions of existing production facilities. world class resource base to deliver both volume growth and quality enhancements for a Focus on quality. Direct Reduction pellets represent the long term future for the i
Slide 23: Conclusions
23 CONCLUSIONS 1 Continued focus on culture of safety, with LTIFR below 5 year average and peers. 2 Resilient financial performance in 2020, underpinned by robust operational growth. 3 Delivering balance of investment, shareholder returns and debt reduction. 4 Increase output of DR pellets in 2021,
Slide 24: Appendices
APPENDICES Ferrexpo plc | FY Results Presentation, March 2021
Slide 25: Disclaimer
25 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 Ferrexpo Plc (the “Company”, and together with
Slide 26: Established Production & Logistics
26 ESTABLISHED PRODUCTION & LOGISTICS Ferrexpo plc | FY Results Presentation, March 2021
Slide 27: Iron Ore Pellets
27 IRON ORE PELLETS PREMIUM MARKET WITHIN IRON ORE SPACE ROLE OF IRON ORE PELLETS GLOBAL IRON ORE PRODUCTION IN 20201 - Iron ore pellets represented less than 15% of global iron Pellets ore1 production in 2020, with pellets representing premium 14% Pellet feed product used in steelmaking to produce
Slide 28: Types of Iron Ore Pellet
28 TYPES OF IRON ORE PELLET DIFFERENT PELLETS FOR DIFFERENT REGIONS - Two main types of pellet exist – blast furnace (“BF”) and GLOBAL PELLET EXPORT MARKET – 129MT IN 2020 direct reduction (“DR”) pellets. (+2MT VS. 2019)1 - BF pellets have iron ore grades of either 62% Fe or 65% DR Pellets, BF Pelle
Slide 29: Carbon: Positioning for the Future
29 CARBON: POSITIONING FOR THE FUTURE DELIVERING 16% REDUCTION IN CARBON FOOTPRINT 2020 - Scope 1 emissions: INVESTING IN ZERO-CARBON TECHNOLOGIES - 8% reduction in 2020 (per tonne basis), achieved through operational improvements and productivity gains. - Ferrexpo’s Scope 1 emissions (direct emissi