Ferrexpo lowers costs but results hit by iron ore plunge

19th Jan 2015 07:57

Ukraine-focused iron ore producer Ferrexpo said revenues and profits for the first three quarters of 2014 were slightly behind the prior year, though results were slightly better than analysts had feared.The company reported turnover of $1,079m for the nine months to 30 September, down from $1,109m the year before as an increase in sales volumes was offset by a tumble in iron ore prices.The company sold 8.3m tonnes of pellets, compared with 7.6m tonnes in the same period of 2013.The average price of 62% grade Fe iron ore was just $104 per tonne during the period, compared with $136 per tonne the year before.Net profit before tax fell to $199m from $211m.The company reported a one-off non-cash increase in operating profits of $56m fro the revaluation of US dollar receivables at its Ukrainian subsidiaries.However, the benefit was completely offset by a $82m impairment of Ferrous Resources "reflecting the iron ore market environment".Nevertheless, the company was able to lower costs with the average cash cost falling to $47.10 per tonne from $60.10 per tonne previously, partly due to the depreciation of the Ukrainian hryvnia which devalued 62% compared with the dollar during the period."These good operating results highlight our resilient business model," said chairman Michael Abrahams."We continue to benefit from increased production of high quality product which receives a price premium, and lower costs, driven by production efficiencies as a result of the investments we have made over the last four years combined with the fall in the value of the Hryvnia."Analyst Yuen Low from Shore Capital said: "Ferrexpo's [profit and loss statement] for the nine months ended September 2014 was better than we had hoped". Low said results were "only slightly behind" last year.The stock was down 0.2% at 55.28p by 08:33 on Monday.