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(Alliance News) - Ferrexpo PLC on Friday said increase in iron ore pellets prices led to a 78% year-on-year jump in first half pretax profit.
The Swiss-based commodity trading and mining company, as a result, doubled its dividend for the six months to June 30 to 6.6 US cents per share from 3.3 cents the year before.
Ferrexpo's pretax profit increased to USD317.8 million from USD179.1 million in the interim period, on a revenue that surged 28% to USD787.1 million from USD616.7 million.
Underlying earnings, before interest, taxes, deprecation and amortisation - the company's preferred profit measure - grew 59% to USD372 million year-on-year.
Total pellet production increased by 5% to 5.4 million tonnes, with sales rising 4% to 4.9 million tonnes. Iron ore pellets - small bits or iron - are used to manufacture steel.
Ferrexpo said benchmark 62% iron ore fines price rose 31% year-on-year to USD91.7 per tonne in the first half. The price for 65% iron ore increased 20% to USD105.4 per tonne from USD88.1.
The relative decline in the price difference between 65% iron ore and 62% iron ore was due to adjustment to the product mix by steel mills in favour of lower grade product due to lower steel prices and lower demand outside China, the company said.
"During the period we continued to benefit from strong pricing for our high-grade iron ore pellets, which helped deliver healthy cash flows. This enabled us to allocate capital to further reduce debt, increase organic investment in our assets to drive medium term growth and declare a record interim dividend to shareholders," said Non-Executive Chair Steve Lucas.
Lucas added that current overall iron ore pellet pricing remains attractive compared to historic levels despite muted steel demand in some regions on increased raw material costs and weak end-user demand.
Shares in Ferrexpo were down 2.4% at 248.30 pence each in morning trade.
