Production tumbles at Ferrexpo amid Ukraine power attacks

(Sharecast News) - Output at Ferrexpo tumbled in the first quarter, the iron ore specialist confirmed on Wednesday, after Russian attacks on Ukraine's power networks temporarily halted production. Nationwide attacks on electricity generation and transmission infrastructure meant Ukraine-focused Ferrexpo was forced to suspend operations at the start of this year. Subsequent improvements in the availability and price of electricity meant production was able to restart in February, but only on a limited basis.

As a result, total commercial production at the iron ore specialist fell 45% to 593,751 tonnes in the three months to March end.

Ferrexpo, which is listed in London and headquartered in Switzerland, said its focus during the quarter had been to "extensively manage working capital and costs in a difficult operating environment". This included reducing employees' hours, cutting the procurement of goods and services and the continued suspension of all non-essential capex, overheads and spending.

"The company continues to closely monitor its cash and working capital position and has continued to actively explore and progress a number of potential funding options, which could include an equity capital raise," it added.

However, it acknowledged there was "no certainty" at this stage it would be successful in raising further funds, and warned that should that be the case - and if the Ukrainian government continued to withhold VAT refunds - it "could give rise to material negative consequences for the group".

As at 1230 BST, the stock was off 4% at 43.22p.

Lucio Genovese, interim executive chair, said: "The lower production numbers...reflect focused Russian attacks on Ukraine's power and energy infrastructure.

"We are grateful for the hard work across the country that has enabled repairs to be completed quickly. I'm also grateful to colleagues who have worked tirelessly to restart the operations of one pellet line.

"Going forward, our focus remains on managing working capital and costs throughout this challenging operating environment."

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