30 Oct 2009 16:20

MMK cuts Q3 earnings 18.6% to 7.2 bln rubles

MOSCOW. Oct 27 (Interfax) - Magnitogorsk Iron & Steel Works (MMK) saw its net profit to Russian Accounting Standards (RAS) fall 18.6% in the third quarter of 2009 compared with the second quarter, to 7.195 billion rubles from 8.838 billion rubles, the Russian steel major said in a press release.

Q3 2009 revenues increased by 48% q-o-q and amounted to 41.5 billion rubles. Operating income went up by 94% compared to Q2 2009 to 9.2 billion rubles, mainly due to a 36%-increase in steel product output and 10%-growth in the average price for steel products.

The change of net income in Q3 2009 compared to Q2 2009 is attributed to operating income growth and non-cash operation on financial investments revaluation due to market prices fluctuations of foreign entities' securities in possession of MMK.

Net profit was 12.733 billion rubles in the first half of 2009, so profit for the nine months ended September 30 was 19.928 billion rubles, down 40.4% from 33.454 billion rubles in the same period of last year.

Total assets increased by 6% and amounted to 222.5 billion rubles.

The balance sheet value of non-current assets grew by 21% and amounted to 155.2 billion rubles resulting from a 40%-increase of the balance sheet value of fixed assets to 73.6 billion rubles due to the construction of Mill 5000 complex and color coating line #2; and positive revaluation of long-term investments by 26% to 35.7 billion rubles, mainly due to market prices fluctuations of foreign entities' securities in possession of MMK.

Current assets value decreased by 18% to 67.2 billion rubles, mainly due to a decrease of receivables by 11.5% or 4.06 billion rubles due to repayment of trade accounts receivable by 28% to 17.04 billion rubles; decrease of inventories by 19.4% or 3.45 billion rubles as the result of the working capital optimization programme; cash and short-term financial investments amounting to 19.97 billion rubles.

Long-term liabilities increased to 37.6 billion rubles as the result of investment programme implementation.

Short-term liabilities went down by 58.3% due to repayment of short-term loans and credits by 58.3% or 10.45 billion rubles and decrease of trade accounts payable by 14.6 billion rubles.

Crude steel output amounted to 2.8 million tones (+31% q-o-q). Finished steel products output totaled 2.6 million tonnes (+36% q-o-q).

Production volume in Q3 2009 grew significantly compared to Q2 2009. MMK management continued supporting the low level of cash cost and optimizing the structure of production portfolio.

High value added (HVA) products output grew by 29% compared to Q2 2009 and amounted to 735,000 tonnes, which is at the pre-crisis level.

The share of HVA products came to 28% in Q3 2009 and accounted for 37% of total revenue from steel products sales.

The share of domestic and CIS sales stood at 54% and provided for 60% of total revenue from steel products sales.