Ferrexpo's H1 profits surge as weak Ukrainian currency lowers costs

6th Aug 2014 08:30

Ukraine-focused iron ore group Ferrexpo delivered a strong jump in profits in the first half despite the wider geopolitical crisis, with its bottom line helped by the devaluation of the local currency.The company, whose facilities are located in the central Ukrainian region of Poltava, said that its operations have not been directly impacted by the ongoing unrest in the east, where Ukraine's army continue to battle against pro-Russian rebels.Ferrexpo's operations are 313km south of Kyiv and 425km north of Donetsk."The board would like to express their deepest sympathy for those who have been affected by the conflict in the east of Ukraine. [...] Ferrexpo's solid operational performance and strong export sales during the period were able to provide the country with much needed revenue and tax income," said non-executive chairman Michael Abrahams.Pre-tax profits in the six months to 30 June totalled $248m, up 65% on the $150m made in the first half of 2013.Ferrexpo said that the 48% devaluation of the hryvnia against the US dollar saw cash costs drop by 23% year-on-year to $47.80 per tonne, with "production efficiencies" also helping.Its bottom line was also buffeted by a one-off gain of $47m from the revaluation of US dollar denominated trade receivables at the local subsidiaries.However, it did warn that the reduction in costs seen in the first half could be offset by inflation in the future.Revenues declined 2% to $759m in the first half while sales volumes improved by 3% to 5.498m tonnes.Total pellet production rose 2% to 5.369m during the period and the company said it remains on track to increase pellet volumes to 12m tonnes.BC