www.ferrexpo.com
Ferrexpo plc is a Swiss headquartered resource company with assets in Ukraine. We are principally involved in the production and export of iron ore pellets, which are used in the manufacture of steel. Our asset base comprises one of the largest iron ore resources in the world.
We produce around ten million tonnes of iron ore pellets per year and with several growth projects in place are aiming to double future production. We are committed to becoming a leading global supplier of iron ore pellets, providing outstanding service to our customers and strong returns to our shareholders.
We became the first Ukrainian company to be listed on the main market of the London Stock Exchange (ticker: FXPO) following a successful Initial Public Offering on 15 June 2007. We are a member of the FTSE 250 UK Index.
Ferrexpo plc is the only pure-play iron ore company currently listed on the London Stock Exchange.
Broker still keen on Ferrexpo after good output
Deutsche Bank has kept a buy stance on iron ore group Ferrexpo (LON:FXPO) after describing yesterday’s fourth quarter production numbers as “very strong”.
The Ukraine-based group produced 2.6Mtpa or 3.3% more iron pellets in the three months to December. The broker had expected lower output due to the tough winter conditions.
The rate of production was the highest of any quarter over the year, which meant annual pellet production from its own raw materials rose by 0.3% to 9.06 million tonnes.
Ferrexpo makes the pellets used by steel mills. Its resource base is one of the largest iron ore deposits in the world at Poltava in the Ukraine producing approximately 10 million tonnes of iron ore pellets in 2010.
Mine output rose by 5.9% qoq and run–of-mine iron ore in the latest quarter was a record at 7.942Mt indicating improving mining capacity in the operations, the broker said.
The mix between higher and lower grade pellets improved marginally to 47% of 65% grade and 53% of 62% grade and all signs indicate a stable process with steadily optimising capacity.
“This bodes well in our view for the ramp-up of mine production from next year and the upgrading to the process plant,” said DB.
The higher than expected production has prompted Deutsche to raise its earnings forecast by 1% to US$578m for 2011, with underlying operating profits or EBITDA forecast at US$789m.
Its target price for Ferrexpo shares is 537p, though it added the risks remain the company’s sensitivity to iron ore prices, local currency and inflation.
Cost performance is also a key variable that could impact the earnings performance of the company and specifically for Ferrexpo, the iron ore pricing outcome could lead to significant earnings and valuation changes.
At 298p,the shares trade well below its target price and Deutsche Bank’s investment stance remains “buy”.
