Severstal back to profit in Q2, expects improvement in steel markets

Monday, 06 September 2010 16:53:41 (GMT+2)

The Russian steel producer Severstal has announced that in Q2 2010 it registered a net profit of $192 million compared to a net loss of $785 million in Q1 2010, benefiting from increased production volumes, higher sale prices and enhanced operational efficiency while absorbing higher raw material, energy and transportation costs.

Accordingly, Severstal's Q2 2010 EBITDA increased by 94.1 percent quarter on quarter to $955 million, while its revenue went up by 35.1 percent to $4.245 billion compared to Q1 2010. The company's net debt (excluding Lucchini) on June 30, 2010 was $4.3 billion, up from $3.6 billion as at December 31, 2009.

"The improved underlying performance reported in Q1 continued to build into Q2 enabling the company to report its quarterly net profit. This reflected increased sales and improved EBITDA performance across all divisions as we benefited from higher prices and utilization as well as the efficiency initiatives implemented in prior periods," Severstal's CEO Alexey Mordashov commented.

As regards the future, Severstal said that, despite the softening of global steel prices in early Q3, it expects an improvement in the steel markets as it moves through the balance of the year, with prices supported by higher raw materials costs.

In H2 2010, Severstal posted a net loss of $593 million compared to a net loss of $946 million in H1 2009, its revenue amounted to $7.387 billion - up 53.6 percent year on year, while its EBITDA was $1.447 billion compared to minus $30 million in H1 2009.

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