The Russian steelmaking group Magnitogorsk Iron and Steel Works (MMK) has issued its consolidated financial results for the third quarter of 2010 under the International Financial Reporting Standards (IFRS).
Accordingly, in Q3 2010, MMK's profit for the period saw a decrease of about 19 percent, amounting to $43 million, while its EBITDA went down by 11.2 percent to $388 million, both compared to Q2 2010. Despite cost inflation in Q3 2010 and weak demand in the international markets, MMK's EBITDA margin remained at the high level of 19 percent (in Q2 it stood at 21 percent).
MMK said that in Q3 it managed to keep its sales almost at the levels of Q2 ($2.055 billion in Q3 and $2.068 billion in Q2). The high share of high value-added (HVA) products allowed MMK to keep its Q3 2010 average realized price at the high level of $632/mt.
In Q3 2010, MMK's production cost for slab increased to $360/mt, up from 320/mt in Q2 and $280/mt in Q1, mainly due to the increase in coking coal prices in August 2010 and the decrease in coking coal concentrate supplies from Belon due to one-off factors.
According to the company's statement, in Q3 2010, MMK's export shipments decreased by 84,000 mt or nine percent, while domestic shipments increased by 123,000 mt or seven percent, both compared to Q2. Shipments to Russia and the CIS amounted to 1.835 million mt, accounting for 69 percent of the company's overall production, while in money terms accounting for 77 percent of MMK's total steel product sales. Pipe manufacturers, machinery-builders and automakers remain the major customers of MMK in the domestic market in Q3 2010, accounting for 55 percent of shipments. Meanwhile, MMK's Q3 export revenue originated mainly from the Middle East and the Far East, which accounted for 44 percent and 35 percent of all export shipments respectively.
As of the end of Q3 2010, MMK's total debt amounted to $3.411 billion. In Q3 MMK's investments in property, plant and equipment amounted to $548 million ($498 million in Q2 and $620 million in Q1). Total CAPEX for January-September 2010 amounted to $1.666 billion, exceeding the record level of $1.613 billion for the whole of 2009.