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(Alliance News) - Iron ore pellet producer Ferrexpo PLC on Wednesday postponed dividend payments, with Covid-19 causing disruption in commodity markets.
Baar, Switzerland-based Ferrexpo paid a 6.6 US cent dividend at the half-way stage in 2019, which was doubled from the year before, amid a more than 75% rise in profit.
The company said Covid-19 has been disrupting supply chains in China, which is likely to cause short-term volatility in the iron ore market. Now it has spread to Europe, further uncertainty is likely, and Ferrexpo had expended prior to Covid-19 the European steel market to recover slightly from the second half of 2020 onwards.
"Amidst this backdrop, Ferrexpo remains well placed to manage our way through the current uncertainties due to our low-cost position relative to our peers, our well-invested asset base, our premium customer portfolio and our strong balance sheet," said Non-Executive Chair Steve Lucas.
"Nevertheless, given this general market uncertainty, the board has deferred its decision on a final ordinary and/or special dividend to an appropriate time when the market situation and the effect of the Covid-19 virus has become clearer. At this point, the board intends to declare a dividend and will keep the market updated."
Turning to 2019 results, revenue rose 18% to USD1.51 billion due to higher prices. Sales volumes were up 0.8% and pellet production 0.1% higher.
Ferrexpo's pretax profit for the year was 17% higher at USD459.6 million.
Ferrexpo's net cash flow was 62% higher at USD473 million, which has allowed it to reduce net debt as at the end of 2019 by 17% on a year prior to USD281 million.
Ferrexpo had a rocky year in 2019. It has been grappling with an investigation into the use of funds the company gave to Ukrainian charity Blooming Land.
Towards the end of the year, in October, Chief Executive Kostyantin Zhevago temporarily stepped down. Bloomberg earlier that month had said Ukrainian investigators were looking for him over "large-scale" money laundering and embezzlement accusations.
"Ferrexpo has continued to deliver strong cash flow generation which is up 62% year on year. This has enabled us to allocate capital to further reduce debt, to increase investment to drive medium-term growth, and to pay record dividends to shareholders," said Lucas.
Shares were 1.0% lower on Wednesday morning in London at 121.65 pence each.
By George Collard; georgecollard@alliancenews.com
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