19 Nov 2009 11:38

Severstal posts $66 mln Q3 IFRS profit, above forecast

MOSCOW. Nov 19 (Interfax) - Severstal had net profit of $66 million to International Financial Reporting Standards (IFRS) in the third quarter of 2009, compared with losses the previous quarter, the Russian steel major said in a statement.

EBITDA was positive $368 million in Q3 compared with negative $5 million in Q2. Sales revenue grew 22.3% quarter-on-quarter to $3.487 billion.

Analysts said in a consensus forecast that they thought Severstal would post net losses of $90 million in Q3, revenue - $3.3 billion and EBITDA - $279 million.

"Severstal Russian Steel performed particularly well during the quarter, with an 80% increase in EBITDA. This division is a world class, low cost producer of steel which has continued to deliver strong results throughout this difficult year," Severstal said. "In the International division, our North American and European operations also delivered improved EBITDA, reducing the losses in these businesses. The European business continued to operate in a difficult trading environment and prices fell quarter on quarter in Q3."

Severstal financial highlights for 9M 2009 ($ mln):

9M 2009 9M 2008
Sales revenue 9 135 18 373
EBITDA 207 5 067
Profit (loss) from operations (503) 4 255
Net profit (878) 3 243

Severstal said it was upbeat about the prospects for Q4 2009 and 2010, and expected demand to recover. "Greater stability in our primary markets has made us more optimistic on the prospects for the remainder of 2009 and 2010. Whilst a Q4 seasonal correction cannot be ruled out, we believe further measured recovery in 2010 is now more likely. Continued recovery will depend on the pace of global economic growth and discipline in production and pricing across the industry," said Alexei Mordashov, Chief Executive of Severstal.

Severstal said its funding position "remains robust." Cash, cash equivalents and short-term bank deposits of $3.161 billion as at September 30, 2009. Net debt was $4.714 billion, almost unchanged from $4.784 billion at the end of last year, with short term liabilities of $1.495 billion.

Severstal said it successfully agreed covenant amendment to our major banking facility during Q3.

Severstal has assets in Russia, North America, Europe, Ukraine and Kazakhstan. Alexei Mordashov owns more than 82% of the company. The free-float is around 18%.