The UK-based company Ferrexpo, whose main interests are in Ukrainian iron ore assets, has released its preliminary financial results for 2008.
In 2008, Ferrexpo had a record year, as its revenue increased by 60 percent to $1.12 billion, its EBITDA went up by 104.8 percent to $503.9 million, its underlying earnings rose by 129 percent to $347.4 million, and its free cash flow increased by 116 percent to $300.3 million, all compared to 2007.
Moreover, during the previous year, Ferrexpo achieved contract price increases of more than 90 percent on average in the 2008-2009 contract years, leading to a 72.3 percent increase year on year in its 2008 average price for pellets, the output of which was maintained at the 2007 level.
"We improved all aspects of our business, and were able to increase our operating
efficiency and production quality during the year while reducing cash costs in the fourth quarter, " Ferrexpo CEO Kostyantin Zhevago commented.
In the fourth quarter of 2008, Ferrexpo's domestic market in Ukraine, followed by its export markets, began to deteriorate, thus prompting the company to find alternative markets, to limit production and to reduce overall costs.
"While November sales were weaker, an outstanding performance by our marketing department and our established status as a reliable supplier enabled us to return to the market quickly and successfully in December," said Mr. Zhevago, adding that the company remained cash flow-positive and profitable during the final quarter of 2008
Ferrexpo was able to maintain positive margins during the first two months of 2009, despite the ongoing weakness in the global iron ore market, with the substitution of additional seaborne spot sales for weaker contract volumes in its traditional markets enabled the group to remain profitable.
The outlook for the iron ore market remains uncertain in the short term, as the effects of the global economic crisis continue to be felt in 2009. However, in 2009 the company says it will focus primarily on cash conservation, will aim to increase its cost competitiveness through aggressive operating cost reduction, capital management and continuing efficiency improvements. Ferrexpo also stated it will resume investment in its growth projects when the markets recover.