18 Apr 2024 13:40

Ferrexpo swings to $85 mln net loss in 2023

MOSCOW. April 18 (Interfax) - Mining company Ferrexpo plc, with assets in Ukraine, had a net loss of $84.75 million in 2023, compared with profit of $220 million in 2022.

"The loss of $85 million mainly results from the recognition of provisions for ongoing legal proceedings and disputes in Ukraine totaling $131 million as at December 31, 2023. Without the effect from these provisions, there would have been a profit of $46 million, reflecting a 82% decrease in the group's operating profit," Ukrainian media reported, quoting the company's financial statement.

Ferrexpo links the drop in operating profit to the ongoing conflict in Ukraine, as well as significantly lower net foreign exchange gains of $23 million in 2023, compared to $276 million in 2022.

Ferrexpo's revenue fell 47.8% to $651.8 million, and operating profit 82.5% to $71.13 million.

The drop in revenue is due to limited access to export routes, while in sales in volume fell 32% to 4.2 million tonnes.

Despite the loss for the year, underlying EBITDA remained positive in 2023, but decreased by 83% to $130 million. In addition to the aforementioned reasons, the drop was also affected by a 21% decline in realized prices driven by lower benchmark iron ore fines price and pellet premiums in 2023.

Ferrexpo's capital investments in 2023 amounted to $101.247 million, compared to $161.01 million in 2022 and $361 million in 2021. The cash balance was $108.293 million at end-2023, $106.397 million at end-2022 and $117 million at end-2021.

Capex for sustaining and optimization projects covering the activities at all of the Group's major business units was $31 million in 2023, $57 million in 2022 and $113 million in 2021.

Due to the ongoing operational and logistics constraints as a result of the ongoing conflict in Ukraine, the group further reduced the level of its investments in sustaining capital expenditure projects, by reviewing and optimizing the level and timing of its repair activities. The group also reconsidered the timing of its strategic development projects resulting in a reduction of the related capital expenditure to $70 million, compared to $104 million in 2022.

"As such, major projects advanced in 2023 include $22 million spent on stripping activities for future production growth and $13 million spent on the enhancement of the Group's press filtration complex, which will help raise pelletizing capacity in the near term once operations return to full capacity," Ferrexpo said.

The group invested $22 million in the concentrator and pelletizer projects as part of the expansion program to manage previously entered commitments and also spent $3 million in the development and exploration of the Belanovo deposit, as well as $1 million in a hydrolysis plant for the trial of hydrogen use as a fuel in the Group's pelletizer.

The publication of the report was delayed because it took longer to prepare due to litigation against Ferrexpo subsidiary Poltava Mining.

Ferrexpo owns 100% Yeristovo Mining and Poltava Mining and 99.9% of Belanovo Mining. The businessman Konstantin Zhevago is the majority shareholder.