The 3.5% currency fall in a week is VERY GOOD for Arrium! (from...

The 3.5% currency fall in a week is VERY GOOD for Arrium!

(from 0.938 last Friday to 0.906 today)

from page 51 of the FY14 results presentation

Arrium FX exposure
Exposure to movements in AUD vs USD
 Direct impact: 1c change in AUD/USD = ~$16-19 million1 EBIT impact (annualised)
 Indirect impact: 1c change in AUD/USD = ~$9 million2 EBIT impact (annualised)
 FX sensitivity on gearing3: 5c movement in AUD/USD = ~1% impact on gearing
 USD debt acts as natural hedge against FX exposure on USD net assets
• Change in USD debt offset by change in value of USD assets
• Net balance sheet USD exposure $40 million4 at year end

1 Based on impact of USD iron ore sales, translation of overseas earnings (Mining Consumables and Recycling), impact on Recycling Australia’s margins, partially
offset by USD purchases of coal and alloys in Steel.
2 Indicative indirect impact on continuing businesses. Assumes constant raw material prices and demand levels.
3 Based on balances at 30 June 2014.
4 Excludes forward contracts hedging purchases and sales.

The writer implies no investment recommendation. This report contains material speculative in nature. Investors should seek professional investment advice. The writer owns shares in Arrium.