Last checked at 15 May 2008 07:00
15 May 2008
Interim Management Statement
Ferrexpo plc ("Ferrexpo" or the "Group") today issues its interim management statement 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 price increases of over 90% confirmed for 2008/2009 contract year in respect of the majority of the Group's sales book
Production and sales levels in line with expectations
Product quality continues to rise
Ukrainian PPI inflation of 12.2% in the first quarter of 2008 impacting costs
Sharp increases in cyclically priced inputs further impacting production costs
Operational efficiency and productivity initiatives continue to partly mitigate these cost pressures
Growth projects proceeding on schedule and within budget
Operating and Financial Performance
Further to its announcement on 17 April 2008 regarding contract price settlements, the Group now confirms that it has secured DAF/FOB price increases for its products of over 90% on average compared with the 2007/2008 contract prices in respect of more than 80% of its sales book. The balance of the Group's contractual negotiations is expected to be completed in the second quarter of 2008. The new prices will apply for the year commencing 1 April 2008.
Ferrexpo's pellet production in the first four months of 2008 has been in line with management expectations. The proportion of high quality (65% Fe) pellets produced, which rose by 19% in 2007, has continued to rise in 2008.
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 in Ukraine, with official PPI inflation reaching 12.2% in the first quarter of 2008. In addition to this, the Group is also experiencing the impact of sharp price increases in cyclical commodities, principally the steel-related materials used in its production processes and diesel fuel.
The project to expand and extend the existing Gorishne-Plavninskoye Lavrikovskoye ("GPL") mine is proceeding on schedule and within budget. Increased mining volumes are expected as a result of this project from 2009, according to schedule.
The projects to upgrade the beneficiation and pelletising plants at the GPL complex 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 to achieve a strong financial performance in 2008 as a result of the substantial price increases achieved this year for the Group's products and the ongoing improvements in operating efficiency, notwithstanding the prevailing cost pressures.
Next Update
In line with its normal reporting pattern, Ferrexpo will issue its Q2 2008 Production Report in July, and 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 resources Group with assets in Ukraine, principally involved in the production and export of iron ore pellets, used in producing steel. Current output is over 9 million tonnes per annum, approximately 85% of which is exported to steelmakers around the world, and the Group is currently undertaking a significant growth programme. The Group is listed on the main market of the London Stock Exchange under the ticker FXPO. For further information please visit www.ferrexpo.com.