The Russian steel producer Magnitogorsk Iron and Steel Works (MMK) has issued its consolidated financial results for 2008 under the International Accounting Standards (IAS).
Accordingly, in 2008 MMK achieved record results in terms of revenue which grew 29 percent year on year to $10.55 billion, and in terms of operating income which totaled $2.778 billion. Meanwhile, the company's 2008 EBITDA amounted to $2.204 billion - down eight percent, while its earnings for the period equaled $1.081 billion - down 17 percent, both compared to the 2007 data.
In 2008, MMK maintained its leading position in the Russian domestic market, which remains a priority for the company, accounting for 20 percent of total domestic production of rolled steel products. In its exports MMK focused on meeting the demand of fast growing markets, primarily the Middle East market.
In 2008 MMK's domestic sales volume amounted to 7.2 million mt, or 66 percent of the producer's total sales - the maximum annual percentage of total sales achieved so far. In Q3 2008 MMK carried out 74 percent of its total sales - an all-time high - to Russia and the CIS countries. Meanwhile, in Q1 2009 MMK's domestic sales grew by 46 percent whereas export sales increased only by four percent, compared to Q4 2008. In Q1 2009 MMK's domestic sales volume amounted to 58 percent of its total sales.
During last year, MMK continued its investment projects, aimed at reducing costs and diversifying its product mix. MMK's total capital expenditure in 2008 was $1.595 billion - up 69 percent year on year.
MMK's capital expenditure in 2009 is mainly aimed at expanding the production of readily marketable downstream products. The company's 2009 investments will total approximately $1.1 billion. MMK's key investment projects to be implemented in 2009 are its plate mill 5000, the colour coating line No. 2, and a production facility comprising a continuous slab caster and a secondary steel treatment unit. Moreover, the company continues to explore the possibility of implementing the cold rolling mill 2000 project for the production of quality sheet for the automotive sector, with an annual capacity of 2 million mt. This issue will be considered in detail following the completion of the plate mill 5000 project.
In Q4 2008 MMK adopted a crisis-management program aimed at maintaining profitability, increasing liquidity, diversifying into new lines of products and expanding into new markets.
"With the current market trends persisting, MMK management will continue the implementation of the...crisis-management steps in 2009 in order to raise the company's operational efficiency and to overcome the negative environment," MMK's press release states.