Ferrexpo Plc · LSE:FXPO
Ferrexpo — FY2019 Earnings Presentation
19 slides from Ferrexpo's earnings presentation, March 2020
Slide 1: 2019 Full Year Results Presentation
2019 Full Year Results Presentation March 2020
Slide 2: Disclaimer
DISCLAIMER This document is being supplied to you solely for your information and does not constitute relation to the contents of this presentation. You agree that you will not at any time have or form part of any offer or invitation or inducement to sell or issue, or any solicitation of any discuss
Slide 3: Corporate Governance
Steve Lucas, Chairman Corporate Governance 2
Slide 4: Focus on Corporate Governance
F O C U S O N C O R P O R AT E G O V E R N A N C E Corporate Governance Independent Board Executive Director – Comply with UK Corporate governance code – Related party transactions – strict procedures, systems & controls in place – Board composed of a majority of Independent Christopher Mawe Non-Exe
Slide 5: 2019 Financial Performance
Roman Palyvoda, Acting CFO 2019 Financial Performance 4
Slide 6: Strong Performance with Net Cash Flow from Operating Activities Up 60%
STRONG PERFORMANCE WITH NET CASH FLOW F R O M O P E R AT I N G A C T I V I T I E S U P 6 0 % Summary Financials Operations $M (unless otherwise stated) 2019 2018 Change – Production of 65% Fe pellets from own ore up 3% – 65% Fe pellets 96% of total production (2018: 94%) Pellet production from own o
Slide 7: 17% Increase in 2019 EBITDA vs. 2018
17% INCREASE IN 2019 EBITDA VS. 2018 EBITDA 2019 vs. 2018 $ million 73 10 19 1 47 12 11 246 47 503 633 586 FY 2018 Platts 62% Fe Average pellet C3 freight Sales volumes Other realised C1 cost S&D Other EBITDA Non cash FY 2019 EBITDA index premium price effect operating forex EBITDA MARKET FOREX OPER
Slide 8: C1 Cost Increased Due to Local Inflation, Stronger Currency and Higher Maintenance
C 1 C O S T I N C R E A S E D D U E T O L O C A L I N F L AT I O N , S T R O N G E R CURRENCY & HIGHER MAINTENANCE COSTS Average C1 cost 2019 vs. 2018 $ per tonne 2.5 2.0 43.27 47.81 FY 2018 UA inflation & UAH Repair & maintenance Commodity inputs Consumption norms FY 2019 appreciation Costs reflect
Slide 9: Higher Cash Generation Funded Increased Investment, Dividends and Net Debt Reduction
H I G H E R C A S H G E N E R A T I O N F U N D E D I N C R E A S E D I N V E S T M E N T, D I V I D E N D PAY M E N T S & N E T D E B T R E D U C T I O N Cash flow 2019 vs. 2018 EBITDA – Higher iron ore fines prices partially offset by lower pellet premiums $M (unless otherwise stated) 2019 2018 Ch
Slide 10: Continued Deleveraging & Strong Balance Sheet
CONTINUED DELEVERAGING & STRONG BALANCE SHEET Strong debt reduction – 2017 PXF facility amortises at c.$33M per quarter from 1Q 2020 to 4Q 2022 – Debt free by 1 January 2023 assuming no further borrowing $ million – Further decrease in net debt in 2020, in line with amortisation profile Net debt to
Slide 11: Conclusion to Financial Review
CONCLUSION TO FINANCIAL REVIEW Excellent Cash Generation – Average received price up 17% – EBITDA up 17% – Profit after tax up 20% – Cash generated from operating activities up 62% – Significant increase in cash generation applied to: • Capital investment – low risk growth • Dividend payments • Net
Slide 12: Investment Proposition, Strategy, Outlook
Yeristovo mine The town of Horishni Plavni Poltava mine Tailings Dam Concentrator Pelletizer facilities facilities Chris Mawe, Acting CEO Investment proposition, Strategy, Outlook 11
Slide 13: Investment Proposition
INVESTMENT PROPOSITION Diversified sales portfolio (2018 % split) Continuing to expand production – significant reserve base Strong market reputation – Updated JORC statements for GPL & Yerystivske CENTRAL & – Reserve uplift of c. 350MT (mainly GPL) & higher Fe content (33%) & Fe mag (24%) CHINA & E
Slide 14: Iron Ore Pellet: A High Value Added Product
I R O N O R E P E L L E T A H I G H VA L U E A D D E D P R O D U C T Ferrexpo low on cost curve Industry fundamentals support long term demand Pellets sold at a premium & show supply side flexibility – Higher quality demands Pelletising conversion costs from pellet feed to pellet, 2019, ex-works, US
Slide 15: Strong, Reliable Production Continues to Underpin Results
S T R O N G R E L I A B L E P R O D U C T I O N C O N T I N U E S T O U N D E R P I N R E S U LT S OUTPUT GROWTH UNDERPINNING LOW COST POSITION Focus on quality has improved returns – 2019: increased quality & consistency Thousand tonnes $ per tonne – Expanding beneficiation plant to process more co
Slide 16: Strategy to Continue: Disciplined Approach to Capital Allocation
S T R AT E G Y T O C O N T I N U E : D I S C I P L I N E D A P P R O A C H T O C A P I TA L A L L O C AT I O N GROWTH BASED ON SOUND ECONOMICS & EXECUTION LOW NET DEBT COMMITTED TO DIVIDENDS $281M AS OF 31 DECEMBER 2019 $750M OF DIVIDENDS PAID SINCE IPO (2007) CAPITAL INVESTMENT INCREMENTAL GROWTH A
Slide 17: Investing & Operating with Confidence
I N V E S T I N G & O P E R AT I N G W I T H C O N F I D E N C E A KEY COMPONENT OF UKRAINIAN INDUSTRY Safety First $829M NO FATALITIES IN 2019 OF TAXES & ROYALTIES PAID TO GOVERNMENT SINCE IPO LTIFR 0.58 PER MILLION MAN HOURS 2% ACCOUNTED FOR 2% OF UKRAINE’S TOTAL GOODS EXPORTED IN 2019 $2.5+BN OF
Slide 18: Summary: Continue to Execute Disciplined Approach
S U M M A R Y: C O N T I N U E T O E X E C U T E D I S C I P L I N E D A P P R O A C H – Market dynamics underpin pellet demand – Cost curve underpins pellet premium – Production growth in pipeline – Disciplined approach to capital expenditure – Continue to lower debt – Committed to dividends CAT 79
Slide 19: Thank you
Thank you 18