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Ferrexpo PLC on Wednesday reported a big drop in half-year profit as it continues to cope with Russia's invasion of Ukraine.
Iron ore pellet producer Ferrexpo has its operations in central Ukraine, so its first-half financials felt the brunt of the conflict.
Sales volumes declined 21% and pellet production fell 14% to 4.8 million tonnes in the first half of 2022.
Ferrexpo said pellet sales have been largely limited to European customers due to Russia's blockade of Ukraine's Black Sea ports in February. What's more, average pellet prices fell by 22% in the first half, to $165 a tonne from $212 a year before.
More positively, it said, the premium for high-grade pellet prices are strong due to reduced supply to global markets from Russia and the efforts of steelmakers to reduce emissions. The Platts Atlantic Pellet Premium rose by 36% in recent half-year to $74 a tonne from $54.
Revenue in the six months to June 30 declined by 31% to $935.8 million, compared to $1.35 billion in the first six months of 2021. Pretax profit plunged 80% to $155.7 million from $796.9 million a year earlier.
Ferrexpo declared a dividend of 19.8 cents, down from 52.8 cents a year before.
The miner said it continues to invest in operations even as the war rages around it.
Non-Executive Chair Lucio Genovese said: ‘Despite the ongoing conflict in Ukraine, the group continues to invest in the future - advancing both near-term projects to completion such as the group's newly completed medium and fine crushing plant, to the development of longer term projects such as development stripping activities at the group's third mine - Belanovo, which have continued despite the current environment.
‘The group's major capital investment programme, the Wave 1 expansion project, which will add a further three million tonnes of annual pellet production, remains paused, but will recommence once the conflict risk facing the group subsides,’ Genovese added.
Ferrexpo also said that it increased funding for its humanitarian fund to $15 million in June. To date, the company has helped provide accommodation and assistance to over 2,000 displaced people as a result of Russia's invasion, it noted.
Looking ahead, Ferrexpo said that the outlook for Ukraine remains ‘inherently unpredictable’ in the short to medium term. It noted that, at least in the near term, the conflict will put an increasing strain on the Ukrainian economy, which is reportedly experiencing a monthly budget deficit of $5 billion per month.
Shares in Ferrexpo were up 2.2% to 146.00 pence each in London on Wednesday morning.
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