Last checked at 29 Oct 2008 09:32
29 October 2008
Trading Update
Ferrexpo plc ("Ferrexpo" or the "Group") announces that since the release of its Interim Management Statement on 15 October 2008, the Group has been notified of materially reduced demand for iron ore pellets by a number of its export contract customers for the remainder of the year due to a significant reduction in both steel demand and output. As a result these customers have requested deferral of some Q4 2008 planned deliveries into 2009. This will result in a significant increase in unallocated production in the current year. The Group estimates that this slowdown in demand will have a negative impact of around 5% to 10% of its expected sales for the full year in 2008.
This weakness in demand has mainly impacted the Group's 62% Fe product, prompting the Group to reduce production of these pellets in the remainder of the fourth quarter. The resulting reduction in variable costs together with the falling price of diesel and steel inputs and the rapid devaluing of the Ukrainian Hryvnia will partly mitigate the impact on full-year earnings.
Simon Wandke, Ferrexpo Chief Marketing Officer, said:
"The deterioration in the demand outlook has been marked and is exacerbated by customer de-stocking of iron ore in the Group's core market regions. This trend may reverse as quickly as it began, but the Group is taking all precautions to prepare its business to manage during this period of uncertain economic outlook. We have already put in place a new marketing plan and initiatives to manage production volumes and to further reduce costs. We have the flexibility to deal with changed circumstances and we will focus on cash conservation and continue to prioritise the production of higher quality pellets, for which the demand is more robust."
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.