2010 outlook more positive for Ferrexpo

23rd Mar 2010 08:35

Iron ore producer Ferrexpo saw earnings slump in 2009 as demand for iron ore remained poor until the final quarter of the year. Earnings before interest, tax, depreciation and amortisation in 2009 tumbled to $138.1m from $503.9m the year before, while profit before tax collapsed to $80.85m from $375.58m.Revenue tumbled to $648.67m from $1,116.85m in a year in which ‘no formal settlement of the international benchmark price was concluded, exposing us to spot and provisional market prices for much of the year,’ said Kostyantin Zhevago, chief executive of Ferrexpo.On the bright side, the outlook for 2010 is much more positive, Zhevago claimed, with increased visibility and strengthening iron ore prices.‘We believe that market conditions will continue to improve during 2010 with a slow but definite recovery in steel demand now evident in Europe. Encouragingly, Chinese spot prices for iron ore have stabilised above the current contract level and the cycle of de-stocking and re-stocking by steel mills is largely behind us,’ Zhevago said.In the first two months of 2010 90% of sales were made under long-term contract while 53% of sales went to customers in traditional markets.Average prices secured were slightly ahead of fourth quarter levels. The group produced 1.5m tonnes or iron ore pellets in the first two months of 2010, similar to the production levels in the corresponding period of 2009.The final dividend has been held at 3.3 cents.