Ferrexpo (LSE:FXPO) reported a sharp decline in first-quarter production, with output nearly halving as ongoing attacks on Ukraine’s energy infrastructure disrupted operations. The iron ore pellet producer saw its shares fall around 2.6% in early trading following the update.
Total production dropped 45% quarter-on-quarter to 593,000 tonnes, including 525,000 tonnes of premium iron ore pellets and 68,000 tonnes of commercial concentrate. Concentrate output was particularly impacted, plunging as much as 90%, while pellet production rose 27% as the company began restarting one production line toward the end of February.
Interim Executive Chair Lucio Genovese said the weak performance was largely due to sustained damage to Ukraine’s power grid caused by Russian strikes late last year. “By January, given the supply of electricity could not be assured on a sustainable basis at the levels required, we were forced to make the difficult decision to temporarily suspend operations and place our workforce on furlough,” he said.
As electricity availability and pricing conditions improved, Ferrexpo was able to resume limited operations at its Ferrexpo Poltava Mining unit, restarting one pellet production line in late February. However, overall output remains constrained, with the company continuing to operate below full capacity. Exports are ongoing, with rail logistics being used to supply customers across Eastern and Central Europe.
The company also highlighted ongoing financial strain, prioritising cash preservation and cost reductions. Measures include cutting working hours and halting all non-essential capital expenditure. Ferrexpo added that it is exploring potential funding options, including a possible equity raise, although it cautioned there is no guarantee that such initiatives will be successfully completed.
Leave a Reply