Ferrexpo PLC, a producer of premium iron ore pellets, has released its audited financial results for the year ended 31 December 2023. Despite operating during a time of war, the company reported production and sales of over four million tonnes, generating revenues of US$652 million. The cost of sales on a unit basis fell 8% to US$76.5 per tonne, reflecting better availability and prices for consumables, efficiency gains, and cost-saving measures. The firm reported a net cash position of US$108 million, slightly ahead of the previous year. However, a provision of US$131 million was recorded to cover possible negative outcomes from ongoing legal cases, resulting in a reported loss of US$85 million.
The company's safety performance remained strong, with a third successive fatality-free year and a lost time injury frequency rate below the historical average. Market factors included a 15% increase in the premium 65% Fe iron ore price over the year, although the annual average price for 2023 was 5% lower at US$132 per tonne compared to 2022. The iron ore pellet market experienced some volatility during the year, with global pellet supply growing only 1%.
Financially, the revenue was 48% lower at US$652 million due to lower realizable sales resulting from logistics constraints and a decrease in average iron ore prices. The underlying EBITDA fell to US$130 million at an EBITDA margin of 20%, heavily influenced by operating foreign exchange gains. The net cash flows from operations remained positive at US$101 million despite the significant challenges posed by the war. The company also recognized provisions totaling US$128 million, including US$124 million for one specific ongoing legal dispute.
The new year has started well for Ferrexpo, with increased demand experienced in December 2023 continuing into the first quarter of the year. The company has seen good demand for its premium products in Europe and elsewhere, providing confidence to start a third pelletiser line and broaden its product mix, including restarting production of DR pellets.