MMK posts net profit of $76 million in Q3

Friday, 18 December 2009 15:53:09 (GMT+3)   |  
       

The Russian steel producer Magnitogorsk Iron and Steel Works (MMK) has issued its consolidated financial results for the third quarter of 2009 under the International Accounting Standards (IAS).

Accordingly, in the third quarter of 2009, MMK posted a second consecutive quarterly profit. "High profitability is the result of the investment program aimed at increasing the share of high value-added products for promising Russian and CIS markets," reads the company's statement.

MMK's Q3 net profit, which allowed it to arrive at break-even level for the first nine months of 2009, amounted to $76 million, which is 124 percent higher than in Q2 2009, while its EBITDA growth exceeded its sales growth rate and amounted to 49 percent quarter on quarter, equaling $309 million, and demonstrating "the best EBITDA recovery rate to the level of 2008," according to MMK. In Q3, MMK's sales increased by 35 percent quarter on quarter to $1.404 billion, while its EBITDA margin went up by two percent to 22 percent.

Due to more intensive revenue growth compared to the increase in operational costs, in Q3 2009 MMK increased its operating profit to $82 million from $17 million in Q2 2009. The generated funds were used to finance MMK's capital expenditure program, to replace borrowed funds, as well as to optimize the credit portfolio. MMK's cash outflow to investments in property, plant and equipment declined considerably to $296 million in Q3 2009 compared to $571 million in Q2 2009, particularly due to the completion of its plate mill 5000.

Meanwhile, MMK was also less indebted than its main Russian counterparts, with its total debt at the end of Q3 amounting to $1.569 billion. The company said it reduced its short-term debt by eight percent in Q3 to $830 million, in particular due to repayments of short and expensive credits such as the VTB credit of $128 million, and the credit of $81.9 million from Turkey's Garanti Bank for the MMK-Atakas project.

In Q4 2009, MMK expects to produce 2.3 million mt of finished steel products. The optimal geographical sales distribution and the increasing share of high value-added products make it possible to expect further price growth for the main MMK products in Q4 2009 compared to Q3 2009. "These factors, as well as the exclusion of the one-off items from other members of MMK Group, make it possible to expect EBITDA growth in Q4 2009 considerably exceeding sales growth rate," says MMK in its statement.


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