Ferrexpo Q2 output slumps as Ukraine govt suspends VAT refunds

(Sharecast News) - Ukraine-focused iron ore pellet maker Ferrexpo reported a slump in second-quarter production as a government suspension of VAT refunds hit liquidity, forcing it to scale back operations. Production fell 40% quarter on quarter to 1.267m tonnes. The lack of liquidity meant Ferrexpo had to downscale operations from two to one pelletising line and also to reduce the production of high-grade concentrate.

"The strong momentum at the start of the year, including our best quarterly production since the full-scale invasion in February 2022, was significantly curtailed in the second quarter as we started to experience the full impact of the Ukrainian tax authorities' decisions to suspend the refund of VAT to our Ukrainian subsidiaries," said interim executive chair Lucio Genovese.

"Lower iron ore prices and lower production, have ... weighed on margins. This has been exacerbated by higher prices for raw materials such as gas and electricity. Throughout the second quarter the Group worked extensively to lower its cost base to remain financially viable."

"This includes placing approximately 37% of employees on reduced working time or on furlough, cuts in procurement of goods and services and a suspension of all non-essential CapEx, CSR and humanitarian spending."

Reporting by Frank Prenesti for Sharecast.com