Ferrexpo Q1 update should reassure investors, says Investec

17th Apr 2014 11:33

Investec has reiterated its 'buy' rating and 176p target price for iron ore producer Ferrexpo, saying that production results on Thursday should reassure investors.The company, which is based in Switzerland but operates mainly in Ukraine, expressed its confidence in hitting production targets this year after output from own ore grew 9.2% in the first quarter.It also said that production costs declined by 21% to $50.3 a tonne due to the steep devaluation of the local currency. Investec said that this compares to average costs per tonne of just under $60 in 2013 and its own $53 forecast for 2014.Analyst Louise Collinge said that the bigger-than-expected drop in cash costs "is clearly a good result and relates to operational efficiencies as well as the weakened Ukraine currency". "We do not plan to make changes to our numbers as yet, as we believe cost inflation is likely to put some pressure on the company throughout the year. All in all, today's [statement] demonstrates a positive start to the year which should reassure the market in light of the current events in Ukraine."The stock was 1.1% lower at 149p by 11:32 on Thursday.BC