The Russian mining and steel producer Evraz Group has announced that in H1 2010 its financial performance showed a significant improvement, benefiting from the market recovery, which was reflected in a 147 percent increase in EBITDA to $1.15 billion and a 38 percent growth in its revenue to $6.38 billion, both compared to H1 2009.
In H1 2010, Evraz posted a net loss of $270 million (in H1 2009 - $987 million), which it blamed on the effects of non-cash and one-off transactions. "In the absence of these factors, our net profit for the first half of 2010 would have amounted to $284 million," Evraz's CFO Giacomo Baizini said.
"Demand in Russia was driven by an increase in private sector construction activity as well as Russian government-financed infrastructure projects, including infrastructure development in preparation for the APEC Summit in the Far East and the Sochi Olympic Games," Evraz's CE Alexander Frolov said.
"Export demand is driven by the ongoing growth of developing economies, particularly in Asia, which represents one of our key markets," Mr. Frolov added.
The H1 increase in steel demand across all Evraz's key markets, has allowed the company to fully utilize its steelmaking capacities in Russia and significantly increase the utilization rates of its international operations. In the first six months of this year Evraz' steel production increased by 22 percent year on year to 8.3 million mt, while steel sales grew by 13 percent to 7.7 million mt. Revenue in the steel segment increased by 35 percent to about $5.8 billion.
"Although the general demand trend in our key markets is positive, some volatility in steel prices and volumes in May-July 2010 have negatively affected our performance in the third quarter," Mr. Baizini said adding that Evraz expects its Q3 2010 EBITDA to be in the range of $480-550 million, and that assuming a continuation of the current trends, Evraz is on course to repeat its H1 2010 performance in H2 2010.
As of June 30, 2010, Evraz's net debt decreased to $7.198 billion compared to $7.226 billion as of December 31, 2009.
In H1 2010, Evraz's capital expenditure totaled $397 million, including $251 million in respect of its steel segment and $136 million in respect of its mining segment.