Evraz posts $1.26 billion net loss in 2009, expects better performance in 2010

The Russian mining and steel producer Evraz Group has announced that in 2009 it registered a net loss of $1.26 billion compared to a net profit of $1.86 billion in 2008, due to the global softness of the steel markets.
 
"The year 2009 proved to be challenging for Evraz and the global steel industry in general. We were particularly affected by the contraction of the Russian construction sector and the slowdown in infrastructure spending in the markets where our production facilities are located: North America, Europe and South Africa," Evraz's CEO Alexander Frolov stated.
 
In 2009, Evraz's adjusted EBITDA decreased by 80.1 percent to about $1.24 billion, while its consolidated revenue went down by 52.1 percent to $9.77 billion, both compared to 2008.
 
Steel segment sales accounted for the majority of the decrease in revenues, largely due to lower average prices and sales volumes of steel products. Evraz's sales volumes of steel products to third parties decreased from 17 million mt in 2008 to14.3 million mt in 2009. "These decreases directly reflected the general slowdown in the steel markets in 2009 and related cuts in production volumes," reads the company's statement.
 
"Since the beginning of 2010 we have seen improvements in demand in all our markets. Steel prices have risen on a global basis, in line with raw material prices, and this will translate into improved results for us due to the scale of our vertical integration," Mr. Frolov commented, adding that in the medium term the company expects that global demand for long steel products and structural flat products will continue to strengthen on the back of infrastructure investments.
 
"The Russian domestic market is showing an encouraging trend with construction steel sales volumes currently above the highest monthly levels achieved in 2009, having grown steadily since the beginning of the year. Export demand remains strong and this will allow us to continue running our Russian steelmaking operations at full capacity. The North American market has also demonstrated marked improvements since the start of the year and this, in turn, will allow us to increase utilization rates in our US and Canadian plants," Mr. Frolov stated.
 
Evraz expects its Q1 2010 EBITDA to increase from Q4 to about $400 million, CFO Giacomo Baizini said in the statement, adding that the full impact of growing steel prices is expected to be reflected in the company's financial performance later in 2010.
 
As of December 31, 2009, Evraz's total debt amounted to $7.923 billion, down from $9.986 million as of December 31, 2008.
 
In 2009, Evraz's capital expenditure totaled $441 million, including $264 million in respect of its steel segment and US$148 million in respect of its mining segment.