Ferrexpo Plc · LSE:FXPO
Ferrexpo — H1 2021 Earnings Presentation
22 slides from Ferrexpo's earnings presentation, August 2021
Slide 1: Delivering Sustainable Growth: Interim Results Presentation
DELIVERING SUSTAINABLE GROWTH INTERIM RESULTS PRESENTATION August 2021 Lucio Genovese, Non-Executive Chair Jim North, Interim Chief Executive Officer Nikolay Kladiev, Chief Financial Officer Brett Salt, Chief Marketing Officer Ferrexpo plc | Interim Results Presentation, August 2021
Slide 2: Introduction
2 INTRODUCTION • CONTINUED STRONG SAFETY PERFORMANCE • SOLID FINANCIAL PERFORMANCE - Over US$2.9 billion of investment since IPO has positioned Ferrexpo at the forefront of high-grade iron ore market. • INVESTING IN FUTURE GROWTH - Building from one phase of growth to the next. • SHAREHOLDER RETURNS
Slide 3: Key Highlights
3 KEY HIGHLIGHTS 0.37 LTIFR +147% 6%REDUCTION SAFE AND SUSTAINABLE UNDERLYING EBITDA DELIVERING CARBON REDUCTIONS PRODUCTION, OPERATIONS INCREASING TO US$868 MILLION, TODAY, CUTTING CARBON CONTINUE TO PERFORM AHEAD OF REFLECTING MARKET STRENGTH FOOTPRINT PER TONNE, ON TOP OF HISTORIC SAFETY AVERAGE
Slide 4: Financial Review
FINANCIAL REVIEW Nikolay Kladiev, Group Chief Financial Officer Ferrexpo plc | Interim Results Presentation, August 2021
Slide 5: Summary Financials
5 SUMMARY FINANCIALS (USD million, unless stated) 1H21 1H20 Change FY2020 INVESTING IN HIGH-GRADE IRON ORE PRODUCTION • Pellet production in line in 1H 2021, despite pelletiser Pellet production (kt) 5,563 5,598 (1%) 11,218 upgrade work undertaken in the period. Sales volumes (kt) 5,567 6,107 (9%) 1
Slide 6: Strong Cash Flow via High Grade Output
6 STRONG CASH FLOW VIA HIGH GRADE OUTPUT All figures US$, millions 1,200 (54) (66) +165 (60) 1,000 (32) (31) +3 800 +591 600 868 400 200 352 0 1H 2020 Platts 65% Pellet C3 freight Sales Other C1 cost S&D and Others (incl. 1H 2021 EBITDA Fe index Premium volumes realised G&A non cash EBITDA price eff
Slide 7: Maintaining Effective Cost Control
7 MAINTAINING EFFECTIVE COST CONTROL MAINTAINING POSITION AS LOW 1H 2021: KEY DRIVERS OF CASH COSTS C1 COSTS: 40% RELATED TO ENERGY PRICES COST PRODUCER EXPLOSIVES, 2% • 2020: COVID-19 related cost 50.0 C1 Cash Cost (US$ / t) ROYALTIES, movements as commodity prices 7% 5.1 0.2 GRINDING fall. ELECTRI
Slide 8: Cash Flow Review
8 CASH FLOW REVIEW (USD million, unless stated) 1H21 1H20 Change FY2020 STRONG PERFORMANCE ENABLING CAPITAL ALLOCATION Underlying EBITDAA 868 352 +147% 859 • Working capital outflow as a result of higher trade receivables due to the high prices and an increase of inventories due to Working capital m
Slide 9: Disciplined Capital Allocation
9 DISCIPLINED CAPITAL ALLOCATION LOOKING TO BALANCE GROWTH AND RETURNS 5Y CAPITAL INVESTMENT PROFILE • Early repayment of debt facility (June 2021) 160 200 Iron ore price (62% Fe, US$/t) Capital Investment (US$,M) 180 • Capital investment 140 160 - Over US$2.9 billion invested since IPO. 120 140 - I
Slide 10: Market Review
MARKET REVIEW Brett Salt, Chief Marketing Officer Ferrexpo plc | Interim Results Presentation, August 2021
Slide 11: Market Review: 1H 2021
11 MARKET REVIEW: 1H 2021 IRON ORE ATLANTIC PELLET PREMIUMS1 HIGH GRADE PREMIUM $212/t ▲100% $54/t ▲82% $28/t ▲91% GOVERNMENT STIMULUS IN REFLECTING TIGHT SUPPLY AND FOCUS ON ENVIRONMENTAL RESPONSE TO COVID-19 DRIVING INCREASING ENVIRONMENTAL CONTROLS DRIVING DEMAND FOR STEEL DEMAND CONTROLS HIGHER
Slide 12: Near-Term: Demand-Side Indicators
12 NEAR-TERM: DEMAND-SIDE INDICATORS STRONG PMI RECOVERY ACROSS REGIONS… 2500 …FUELLING ELEVATED STEEL PRICES 70 2000 Hot rolled coil prices (US$/t) 65 +266% YoY 60 Manufacturing PMI 1500 +201% 55 1000 50 +99% +61% 45 500 40 35 0 China Germany Japan USA China HRC Europe HRC ASEAN HRC USA HRC Ferrexp
Slide 13: Longer-Term: Decarbonisation in Steel
13 LONGER-TERM: DECARBONISATION IN STEEL CO2 PRODUCED PER 1.85 TONNES TONNE STEEL (GLOBAL AVERAGE) STEEL REPRESENTS 7% OF GLOBAL CARBON EMISSIONS1 -30% CO2 AMBITIOUS SOVEREIGN CARBON HIGH-GRADE BLAST FURNACE PELLETS REDUCE EMISSIONS IN STEELMAKING BY 2030 PLEDGES TODAY NEUTRALITY GREEN STEEL & CARBO
Slide 14: Market Outlook
14 MARKET OUTLOOK 1 2H 2021 supply-side: Iron ore deficit to narrow as additional supply arrives (Australia, India). 2 2H 2021 demand-side: China policy and increased scrap usage to reduce fines demand. 3 Fines prices likely to soften into 2022, but remaining elevated (FY2022 consensus: $132/t) 4 Ne
Slide 15: Operations & Responsible Business
OPERATIONS & RESPONSIBLE BUSINESS Jim North, Interim Chief Executive Officer Ferrexpo plc | Interim Results Presentation, August 2021
Slide 16: Operations Update
16 OPERATIONS UPDATE • Strong safety performance (LTIFR: 0.37). • Performance continues materially below the 5-year trailing average for the Group (0.98). • Production: 5.6 million tonnes produced 1H 2021, in line year on year. • Growth in 2021: First stage of pelletiser upgrade work nearing complet
Slide 17: Direct Reduction Pellets
17 DIRECT REDUCTION PELLETS • Production process: high grade ores, slower processing rates. Fundamentally same production process however. • DR pellet offering developing: 1st long-term contract secured. Trial shipments continuing. • Global footprint: • Typical customer base in Middle East and North
Slide 18: Technology & Innovation
18 TECHNOLOGY & INNOVATION • Fleet automation: five haul trucks now deployed, following project commencement December 2020. • Mining electrification: overhead cable network on ramps to significantly reduce diesel consumption in mining. • Further electrification of mining operations under review (hau
Slide 19: Responsible Business
19 RESPONSIBLE BUSINESS • Continued reporting: 6th annual Responsible Business Report published today. • Delivering carbon cuts today: • FY 2020: realised 16% reduction1. • 1H 2021: further 6% reduction1. • Water stewardship • 91% water recycling in plant. Image: “Fe_Munity” training programme, • 7t
Slide 20: Conclusions
20 CONCLUSIONS SAFETY GROWTH PREMIUM EMBEDDING A CULTURE OF SAFETY DEVELOPING ASSETS TODAY DEVELOPING PREMIUM PRODUCTS, THROUGH CONTINUED OPERATING THROUGH CONTINUED SIGNIFICANT EXPANDING INTO NEW DISCIPLINE. INVESTMENT IN THE GROUP’S PREMIUM MARKETS. OPERATIONS. MODERN RESOURCES SUSTAINABLE DEPLOYI
Slide 21: Thank You
THANK YOU Ferrexpo plc | Interim Results Presentation, August 2021
Slide 22: Disclaimer
22 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