Severstal 9M Profit Falls 42% on Falling Prices

MOSCOW, November 15 (RIA Novosti) – Russian steelmaker Severstal posted an IFRS net profit of $912 million in January-September 2012, down almost 42 percent on the same period last year, the company said on Thursday, citing falling prices for the result.

The figure was however above a consensus forecast of analysts polled by Prime news agency who predicted the company’s net financial result at $809 million.

The company’s revenue fell by 9.1 percent to $10.988 billion compared with the analysts’ forecast of $10.959 billion and EBITDA was down by 37.1 percent to $1.772 billion compared with $1.778 billion expected by analysts.

Severstal said its revenues and EBITDA in January-September 2012 were down due to the lower realized prices of the company’s steel products.

Severstal’s third quarter net profit grew by 112 percent over the second quarter to $329 million, above the analysts’ forecast of $222 million. The company’s Q3 revenues fell by 3.4 percent to $3.591 billion while EBITDA was down by 17.8 percent to $546 million.

“Severstal delivered a solid financial and operational performance in Q3 2012; a quarter that, across the steel and steel-related mining markets, was characterized by contracting prices. Until the year end we anticipate coking coal and iron ore prices to remain stable, while steel prices have some downside risk, therefore we expect Q4 2012 to be more challenging for us, as compared to Q3 2012,” Severstal CEO Alexey Mordashov said.

The company’s liquidity position improved to $2.121 billion in cash and cash equivalents, comfortably covering its short-term debt of $1.877 billion, Severstal said.


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