Ferrexpo Plc · LSE:FXPO
Ferrexpo — H1 2008 Earnings Presentation
27 slides from Ferrexpo's earnings presentation, Aug 28, 2008
Slide 1: Ferrexpo Group 2008 Interim Results Presentation
Ferrexpo Group 2008 Interim Results Presentation 28 August 2008
Slide 2: Disclaimer
Disclaimer This document is being supplied to you solely for your information and does not constitute or form part of any offer or invitation or inducement to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares in the Company or any other securities, nor shall an
Slide 3: Today's Agenda
Today’s Agenda HIGHLIGHTS Mike Oppenheimer INTERIM RESULTS Chris Mawe GROWTH & OUTLOOK Mike Oppenheimer Q&A Ferrexpo Team 2
Slide 4: Strong Financial Results
Strong Financial Results • Revenue increased by 58% to $519.5 million (H1 2007: $327.9m) • EBITDA increased by 101%, to $228.0 million (H1 2007: $113.3m) • Profit increased by 288%, to $157.7 million (H1 2007: $40.6m) • Net cash flow from operating activities increased by $58.5m (FY 2007: $83.3m) •
Slide 5: Operational Improvement Continues
Operational Improvement Continues • Product quality improved – 8% increase in production of higher grade 65% Fe pellets – 43% of total production now higher grade pellets • Production cost increases mitigated despite high inflationary environment • Health and Safety improvement initiatives continuin
Slide 6: Marketing and Logistics Successes
Marketing and Logistics Successes • Pellet prices increased by over 90% on average from 1 April – Realising premium to benchmark • 330 of the 550 own rail cars ordered have been delivered and are operating – Remainder expected by year end • Deliveries to Turkey commenced via TIS Ruda port • Studies
Slide 7: Accelerated Growth on Track
Accelerated Growth on Track • Project to expand and extend existing operations on schedule and on budget • Definitive Feasibility Study for GPL processing plant near completion – Final Board review in October • Definitive Feasibility Study for new Yeristovskoye mine near completion – Final Board rev
Slide 8: Agenda
Agenda HIGHLIGHTS INTERIM RESULTS Chris Mawe GROWTH & OUTLOOK Q&A 7
Slide 9: Production Performance
Production Performance Production Profile mt Ore Pellets % of 65% Fe pellets % 40 43% 45% 41% 35 40% 40% 37% 30 28.9 35% 26.5 25 30% 20 25% 14.5 14.4 15 20% 10 8.6 9.3 4.7 4.6 15% 5 0 10% 2006 H1 2007 2007 H1 2008 Stripping (mm3) 13.7 9.3 18.6 10.6 8
Slide 10: Strong revenue and operating profit growth
Strong revenue and operating profit growth Revenue Operating Profit US$m $ per tonne DAF/FOB US$m % Revenue Price 750 120 50% 250 Operating Profit Margin 111.9 625 110 209.3 200 519 40% 500 100 40% 150 375 90 328 99.0 100 250 80 30% 72.3 30% 50 125 70 0 60 0 20% H1 2007 H1 2008 H1 2007 H2 2008 9
Slide 11: EBITDA and influencing factors
EBITDA1 and influencing factors EBITDA waterfall H1 2007 – H1 2008 ($m) 12.5 -51.4 188.4 -19.7 -14.0 -0.1 228.0 112.3 H1 2007 Sales Price Other COS C1 Costs Distribution G&A Other H1 2008 costs 1EBITDA is profit from continuing operations before tax and finance less foreign exchange gain/(loss) plus
Slide 12: EBITDA Margin
EBITDA Margin EBITDA from produced concentrate EBITDA from purchased concentrate US$m EBITDA Margin % US$m EBITDA Margin % 300 50% 12 20% 275 45% 45% 250 246 10 16% 227 225 40% 14% 15% 200 36% 8 35% 175 35% 10% 150 142 30% 6 10% 125 111 27% 25% 7% 100 4 23% 6% 75 20% 5% 51 2.2 50 2 1.3 1.5 1.4 15% 1
Slide 13: Marketing – a strong performance
Marketing – a strong performance Revenue and average pellet price Market mix 1 Revenue Price 16.2% 14.5% 750 120 111.9 625 110 2.2% Ukraine 519 Traditional Markets $ per tonne DAF/FOB 500 100 Natural Markets $m 375 328 90 Growth Markets 250 80 72.3 125 70 67.1% 0 60 H1 2008 Sales: 4,517kt H1 2007 H1
Slide 14: C1 Costs Breakdown
C1 Costs Breakdown C1 Costs1 by input ($/t) Reduction in utilisation of critical inputs2 Rebased Electricity (MWhr) Gas (Th cubic Metres) to 100 Grinding Media (Kg) Other 110 Explosives 9% Electricity 100 4% 24% 90 Natural Gas 80 10% 70 60 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08
Slide 15: C1 Costs – relative increases
C1 Costs – relative increases C1 Costs waterfall H1 2007 – H1 2008 ($/t) 0.26 0.24 40.92 1.14 1.48 1.66 1.70 2.28 2.28 29.88 H1 2007 Diesel Fuel Electricity Grinding Spares & Labour Natural Gas Other Costs Explosives H1 2008 Media Maintenance 1 C1 costs are total cash costs of production of pellets
Slide 16: Factors effecting cost performance
Factors effecting cost performance DAF/FOB Cash Costs (C1 Costs1 + Distribution Costs) 2 3 4 5 US$/t Other C1 Costs Other Distribution Costs Government Influenced Costs Cyclical Costs 70 60 54.81 50 15.5 39.73 % 40 +58 9.8 30 23.8 16.3 +46% 20 4.0 4.2 10 9.6 11.3 0 H1 2007 H1 2008 Ukrainian PPI6 (%)
Slide 17: Quarter-on-Quarter Performance
Quarter-on-Quarter Performance Q2 2008 gives a better idea of likely FY 2008 performance US$m 400 Revenue EBITDA C1 Costs 375 357.9 350 325 300 275 250 225 200 191.7 175 161.6 150 125 97.1 100 87.2 75 50 36.3 25 0 Q1 2008 Q2 2008 Average Achieved 74.88 144.22 Price (US$/t) Ukrainian PPI inflation 12
Slide 18: Capital expenditure accelerating
Capital expenditure accelerating Capital Expenditure Split US$m GPL Sustaining GPL Development 150 YBG Development Railcars & Logistics Area Infrastucture & Utilities 131.2 125 23 104.4 100 18 43 14 75 53.4 23 50 28 12 25 49 35 36 0 H1 2007 2007 H1 2008 17
Slide 19: Agenda
Agenda HIGHLIGHTS INTERIM RESULTS GROWTH & OUTLOOK Mike Oppenheimer Q&A 18
Slide 20: Progress – growth project pipeline
Progress – growth project pipeline Achieved Underway / Imminent Future Others • Scoping study • JV with Strategic Partner? • Q4 2008 - Further conceptual studies • Mine concept study • PFS - Sept 08 • Q3 2011 – draglines ordered • Further drilling program to • Q3 2012 – First dragline in operation c
Slide 21: Strategic Investor Concept
Strategic Investor Concept Ferrexpo plc Ferrexpo AG FPM Sales Gorishne - Plavninskoye Lavrikovskoye – Northern Extension 100% Marketing than 50% Not less JV Yeristovskoye Belanovskoye 100% Logistics Up to 50% Galeshchinskoye Strategic Investor • Advisors appointed to run process • Yeristovskoye deve
Slide 22: Outlook for remainder of 2008
Outlook for remainder of 2008 • Positive market environment for iron ore pellets continues – Pricing extremely strong – contractual prices set for rest of year – Demand for pellets growing in key Traditional and Natural markets • Incremental production & product quality improvements continuing – Ove
Slide 23: Agenda
Agenda HIGHLIGHTS INTERIM RESULTS GROWTH & OUTLOOK Q&A Ferrexpo Team 22
Slide 24: Appendix – Financial Highlights
Appendix – Financial Highlights INCOME STATEMENT BALANCE SHEET CASHFLOW STATEMENT 23
Slide 25: Financial highlights – Income Statement
Financial highlights – Income Statement US$ ‘000 6 Months to 30 June 2008 6 Months to 30 June 2007 % Change Revenue 519,498 327,915 58% Gross Profit 311,990 167,628 86% % Margin 60% 51% Operating Profit 209,259 98,965 111% % Margin 40% 30% EBITDA 228,023 113,289 101% % Margin 44% 35% Profit before T
Slide 26: Financial highlights – Balance Sheet
Financial highlights – Balance Sheet US$ ‘000 As at 30 June 2008 As at 30 June 2007 % Change Non-Current Assets 737,039 535,874 38% Property, Plant & Equipment 474,742 322,769 47% Current Assets 292,462 236,033 24% Inventories 75,234 55,383 36% Trade & Other Receivables 78,447 49,951 57% Cash & Equi
Slide 27: Financial highlights – Cash Flow Statement
Financial highlights – Cash Flow Statement 6 months ended 6 months ended US$ ‘000 30 June 2008 30 June 2007 % Change Net Cash Flows from Operating Activities 141,805 83,324 70% Net Cash Flows from Investing Activities (131,147) (35,617) 268% Purchase of Property, Plant & Equipment (131,200) (53,430)