Ferrexpo dividend makes a comeback as profits leap

Iron ore miner Ferrexpo said it was resuming dividend payments after increasing net cash flows by more than 1.5 times to $332m.

The company, which has assets in Ukraine, said it would pay a final ordinary dividend of 3.3 cents a share along with a 3.3 cent a share special dividend.

Full year pre-tax profits at the Swiss-based miner were $231m compared to $25m in 2015.

Profit from continuing operations rose to $189m from $31m. Earnings per share jumped to 31.91 cents from 5.63.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 20% to $375m as a result of increased turnover and lower costs. Net debt to EBITDA for the last 12 months was 1.57x compared to 2.78x.

“The iron ore pellet industry continues to have high barriers to entry given the capital intensity of new investment while demand for high grade ore, including pellet, remains strong,” the company said.

"The average 62% Fe iron ore fines price in 1Q 2017 (as of 20 March 2017) was approximately $86 per tonne compared to the average of US$58 per tonne in 2016, while Ferrexpo's average pellet premium for 2017 is expected to be in line with the PLATTS Atlantic long-term contract pellet premium less adjustments for quality."

"The pellet premium has steadily recovered from lows seen in 1Q 2016 and now reflects tight market conditions. Costs remain subject to commodity prices, the Hryvnia exchange rate and inflation levels in Ukraine. Cash generation to date in 2017 has been strong and we expect the group's net debt to EBITDA to improve further during the year. On the whole, these factors underpin a positive outlook for 2017."