The Russian mining and steel producer Evraz Group has announced its unaudited interim results for the first six months of 2009.
Accordingly, in the first half of 2009 Evraz posted a $999 million net loss, being adversely affected by the changes in its accounting policies, without which the company would have posted a loss of just $166 million. Evraz's H1 revenues decreased by 56.7 percent year on year to $4.639 billion, with its steel segment sales accounting for the majority of the decrease in revenues, largely due to the drop in the average prices and sales volumes of steel products.
The decrease in the producer's steel sales volume in the first half of the year, by 28 percent year on year to 6.8 million mt, primarily relates to a decline in demand from the construction and automotive sectors, and was attributable to the general slowdown in the steel markets in the period in question.
Evraz's total steel product sales in H1 2009 included 2.704 million mt of semi-finished products - down 9.5 percent, 1.728 million mt of construction products - down 44.9 percent, 887,000 mt of flat rolled products - down 37.9 percent, 822,000 mt of railway products - down 34.1 percent, and 501,000 mt of tubular products - up 36.5 percent, all compared to H1 2008. Evraz's iron ore sales volumes, including intersegment shipments, totaled 7.73 million mt - down 35 percent year on year.
Due to the improved demand registered from April, accompanied by higher pricing, for steel products from Evraz's traditional international markets, particularly Southeast Asia, the Middle East and North Africa, the company was able to restart its previously idled blast furnace in Siberia and to reach full capacity utilization across its Russian operations from July 1, 2009. As a result, its steel segment sales to clients outside Russia accounted for 72 percent of its revenues in the first half of 2009, compared to 58 percent for the same period of 2008.
Evraz's H1 2009 adjusted EBITDA was $468 million - down 87.4 percent year on year, while its operating cash flow stood at $1.123 billion. During the period in question, the company's total debt decreased by $1.5 billion to $8.482 billion, while its net debt amounted to $7.78 billion at the end of the period.
"The first half of 2009 proved a challenging time for Evraz and for the global steel industry in general. The ongoing economic recession negatively affected global infrastructure investments and steel consumption in our key markets," Evraz CEO Alexander Frolov commented.
Accordingly, the signs of steel market improvement seen in the second quarter have led to an improved outlook for the rest of the year. "We expect better results in the second half of the current financial year than in the first half," Mr. Frolov stated.