Ferrexpo PLC (LSE:FXPO)’s full-year results were a mixed bag, according to Liberum analysts, as revenue beat estimates but pre-tax earnings missed.
Ukraine-based, the iron ore pellet producer recorded a US$85 million pre-tax loss for the year to December on Thursday, against a US$220 million profit last year.
This was largely due to Ferrexpo’s US$131 million provision to cover “any possible negative outcome” from two ongoing legal cases.
“Ferrexpo continues to believe that these cases are without merit,” Liberum highlighted in a note, where it reiterated a ‘buy’ rating and 220p share price target.
“We do believe that it would be very politically sensitive if punitive fines were made against Ferrexpo, impacting institutional investors, when the actual target of the actions is the major shareholder,” Liberum said.
Revenue came in 48% lower at US$652 million, due to logistical constraints and reduced iron ore prices, though Liberum said the figure was ahead of expectations.
According to the bank, news that Ferrexpo had restarted the third of its four pelletiser operations in February was the highlight of the update, reflecting improving European demand.
Logistical challenges seem to be easing while access to export markets improves, Liberum said.
“The previously reported net cash position of US$108 million leaves a comfortable buffer against further disruption,” the bank added.
Shares were flat at 46.25p on Thursday.