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Ferrexpo PLC on Wednesday reported a loss for the first half of its current financial year, as a weak iron ore price and the suspension of value added tax refunds continue to hurt production levels. The Baar, Switzerland-based iron ore producer in Ukraine said it swung to a pretax loss of $186.9 million in the six months that ended June 30 from a $75.7 million profit the year before. Revenue declined 17% to $452.6 million from $548.5 million, while operating expenses increased 26% to $641.3 million from $508.4 million. Total commercial production in the first half fell 8.1% to 3.4 million tonnes from 3.7 million tonnes a year earlier. ‘We started the year on a strong footing, with the best quarterly production since the full-scale invasion of Ukraine in February 2022. This momentum, was, however, significantly curtailed in the second quarter as we were forced to downscale our activities due to the decision by the Ukrainian tax authorities’ to suspend the refund of VAT to our Ukrainian subsidiaries. This is reflected in a 40% drop in production in the second quarter compared to the first quarter,’ explained interim Executive Chair Lucio Genovese. The Ukrainian tax authorities in March decided to suspend refunds of VAT at its two main operating subsidiaries, Ferrexpo Poltava Mining and Ferrexpo Yeristovo Mining. This resulted in lower liquidity and to Ferrexpo downscaling production to one pellet line. In the six months to the end of June, total VAT refunds refused amounted to $38.3 million. The company therefore ‘moved quickly’ to lower its costs, with around 40% of its workforce currently on reduced working hours or furlough. Ferrexpo has also implemented programmes to optimise stripping rates, repairs and maintenance, and to cut any non-essential spending across the business. Looking ahead, Ferrexpo says its outlook for the second half is ‘challenging’. Though iron ore prices staged a ‘small recovery’ in July, average 65% iron ore fines prices in the first half were 14% lower at $113 per tonne against $131 per tonne a year earlier. Ferrexpo said it will continue to operate at ‘reduced levels’ as long as the refund on VAT has not been received. ‘Representations are being made to the Ukrainian authorities to restore VAT refunds, in addition to other international stakeholders,’ the company added. Shares in Ferrexpo were down 0.2% at 45.43 pence in London on Wednesday afternoon. The stock is down 5.9% over the past year. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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