Russian steel company Evraz posted a first-half (H1) net loss of US$999mn, reflecting lower steel prices and a change in accounting methods. The loss was higher than analysts expected.
Sales fell 57% to US$4.64bn in the first six months of 2009 compared to the same period last year. The company’s sales volumes of steel products decreased from 9.5 million tonnes in H1 2008 to 6.8 million tonnes in H1 2009.
Like other steelmakers in Russia, Evraz has suffered from a decline in demand since the financial crisis hit last year. The situation started to improve in the second quarter, leading to an improved outlook for the rest of the year.
“The first half of 2009 proved a challenging time for Evraz and for the global steel industry in general,” said Alexander Frolov, Evraz Group’s CEO in a statement issued by the company. “We expect better results in the second half of the current financial year than in the first half.”
“We decreased our total debt by approximately US$1.5bn in the first half of 2009. In addition, we improved our liquidity position through a successful concurrent issuance of GDRs and convertible bonds in July 2009, raising US$96mn,” Frolov added.
The company’s steel segment sales to clients outside Russia accounted for 72% of revenues in the first half of 2009, versus 58% for the same period of 2008.
Evraz’s Russian operations were among the first to be hit by the global economic crisis during the second half of 2008, whereas their operations in North America achieved a stronger performance and, at the onset of 2009, displayed greater resistance. This helped in partially offsetting the negative impacts.
“Later, as the prices and volumes in North America started to deteriorate in line with the region’s overall market trend, we achieved certain improvements in our other business units,” Frolov’s statement said. “From April 2009, we witnessed the onset of improved demand, accompanied by higher pricing for steel products from our traditional international markets, particularly Southeast Asia, the Middle East and North Africa. This allowed us to restart our previously idled blast furnace in Siberia and reach full capacity utilisation across our Russian operations from July 1, 2009.”
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