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15 May 2008 07:00
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15 MayΒ 2008
Interim Management Statement
FerrexpoΒ plc ("Ferrexpo" or the "Group")Β today issues itsΒ interim management statementΒ for the period from 1 January to 15 May 2008, in accordance with the UK Listing Authority's Disclosure and Transparency Rules.
Summary
Pellet sales priceΒ increases of over 90% confirmed for 2008/2009Β contract year in respect ofΒ the majorityΒ of the Group'sΒ sales book
ProductionΒ and salesΒ levels in line with expectations
Product quality continues to rise
UkrainianΒ PPIΒ inflationΒ of 12.2% in the first quarter of 2008Β impacting costs
Sharp increases inΒ cyclicallyΒ priced inputsΒ furtherΒ impactingΒ production costs
Operational efficiency and productivity initiatives continue to partly mitigate these cost pressures
Growth projects proceeding on schedule and within budget
Operating and FinancialΒ Performance
Further to its announcement on 17 April 2008 regarding contract price settlements, the Group now confirms that it hasΒ securedΒ DAF/FOBΒ price increases for itsΒ products of over 90%Β on average compared with the 2007/2008 contractΒ prices in respect of more than 80% of its sales book.Β The balance ofΒ the Group'sΒ contractual negotiationsΒ isΒ expected to be completed in the second quarter of 2008.Β The new prices will apply for the year commencing 1 April 2008.
Ferrexpo's pellet productionΒ in the first four months of 2008 has been in line with management expectations.Β The proportion of high quality (65% Fe) pellets produced, which rose by 19% in 2007,Β has continued to rise in 2008.Β
Following the recent fatalities at Ferrexpo Poltava Mining (FPM), Du Pont Safety Resources have completed an initial assessment of FPM's safety management and have recommended several improvement opportunities that are being pursued.
Inflationary cost pressures are intensifying inΒ Ukraine, with official PPI inflation reaching 12.2% in the first quarter of 2008. In addition to this,Β the Group is also experiencing the impact of sharpΒ priceΒ increases inΒ cyclicalΒ commodities,Β principallyΒ theΒ steel-related materialsΒ used in its production processesΒ and diesel fuel.Β
The project to expand and extend theΒ existingΒ Gorishne-PlavninskoyeΒ Lavrikovskoye ("GPL")Β mine isΒ proceedingΒ on schedule and within budget.Β Increased mining volumesΒ are expectedΒ as a result of this projectΒ from 2009, according to schedule.
The projects to upgrade the beneficiation and pelletising plants at the GPL complexΒ and the Group's new mine developments on the Yeristovskoye and Belanovskoye deposits are also proceeding on schedule. The Group continues to seek a Strategic Investor to partner with it in developing the Yeristovskoye and Belanovskoye mines.
Outlook
The Board expects the Group toΒ achieveΒ aΒ strong financial performanceΒ in 2008Β as a result of the substantial price increases achievedΒ this yearΒ for the Group's productsΒ and the ongoing improvements in operating efficiency, notwithstanding the prevailing cost pressures.
Next Update
In line with its normal reporting pattern,Β Ferrexpo will issueΒ its Q2Β 2008 Production Report inΒ July, andΒ its interim results on 28 August 2008.
For further information, please contact:
Ferrexpo: +44 207 389 8304
Gavin Mackay
Finsbury: +44 207 251 3801
Robin Walker
Alex Simmons
Notes to Editors:
Ferrexpo is a Swiss headquartered resourcesΒ GroupΒ with assets in Ukraine, principally involved in the production and export of iron ore pellets, used in producing steel. CurrentΒ output is over 9 million tonnesΒ per annum, approximatelyΒ 85% of which is exported toΒ steelmakers around the world, and the Group isΒ currently undertaking a significantΒ growth programme. The Group isΒ listed on the main market of the London Stock Exchange under the ticker FXPO.Β For further information please visitΒ www.ferrexpo.com.
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