The war in Ukraine has raged for many months now and has caused widespread devastation to civilians and infrastructure. One Ukrainian firm, Ferrexpo (LSE:FXPO), has defied expectations and continued operations. The Ferrexpo share price is down 64% in the past year, so should I buy now?
Muddling through the war
The share price of Ferrexpo – an iron ore pellet company operating in Ukraine – is almost directly correlated to how the war is progressing. With an iron ore plant in the centre of the country, it is always possible that shelling or missile strikes could impact operations.
The shares in the business are currently trading at 147p, down 50% in just the past six months.
Many potential investors, including myself, are wondering if the war might affect production, or the existence of the company itself.
Just last week, the firm announced that it is scaling back summer production. This is partially because ports on the Black Sea remain closed.
Furthermore, there was damage to some barging operations in the southwest part of the country. In 2021, barges transported around 800,000 tonnes of the company’s iron ore pellets, so this damage is a blow for the firm.
With rail now the main option, Ferrexpo has turned to Ukraine’s vast network to shunt its produce across the country and into Europe.
Where are things going next?
There was some recent good news, however. In an update for the three months to 31 March, the business stated that iron ore pellet production was level compared with the same period in 2021.
What’s more, sales for the period amounted to 2.6m tonnes. Ferrexpo is able to maintain both production and sales in the middle of a warzone. This may be an indication that it can muddle through this crisis.
This leads to the overall question of where the war itself is going, because it directly influences the shares in Ferrexpo. It is clear that fighting is hurting both sides. This is not just on the battlefield, but in rising energy costs and sanctions.
Oil and gas prices throughout Europe have surged as a result of the war. This means that people have less and less disposable income as they are forced to spend more to fill up their vehicle with petrol, for instance.
On the other side of the fence, sanctions are hurting Russia, with many businesses having pulled out of the country.
For me, I think a prolonged conflict is in nobody’s interest, so I’m expecting the war to end sooner rather than later. This could have a massive bearing on the direction of the Ferrexpo share price.
Overall, this is a company that is doing its best to maintain operations in the middle of a war. Although it is scaling back production in the coming months, an end to the war, or even a ceasefire, could have a positive impact on the firm. I will be purchasing shares soon.
