Russian steel producer Magnitogorsk Iron and Steel Works (MMK) has announced its financial results for the third quarter of 2019.
In the third quarter, MMK registered a net profit of $271 million, slightly down by 0.4 percent compared to the previous quarter, while the company's revenues increased by 0.5 percent year on year to $2 billion, thanks to growth in sales volumes amid a decline in average sales prices that reflected a price correction in the global steel market. In the third quarter, MMK's EBITDA increased by 5.6 percent to $525 million, with the EBITDA margin rising to 26.1 percent from 24.9 percent in the same quarter of 2018.
During the first nine months of the year, MMK’s net profit declined by 28.4 percent to $768 million, while the company's revenues decreased by 6.5 percent to $5.84 billion, both year on year. The decline in the revenues was attributed to lower sales volumes as a result of maintenance work at the blast furnace, converter and rolling production units amid the decline in prices. In the given period, MMK's EBITDA fell by 22.3 percent to $1.46 billion, with the EBITDA margin declining to 25 percent from 30.1 percent in the same period of 2018.
Currently, MMK sees a decline in demand in exports markets and a seasonal weakening in consumption of metal in the domestic market amid the correction in steel prices, reflecting the unfavorable conditions in the global market. Together, these factors are expected to put pressure on the company’s fourth quarter performance.
However, despite the negative trends, MMK expects that, while the price premium in the domestic market compared to exports will decline, it will remain at a sufficiently high level. This, together with a decline in prices for key raw materials and high capacity utilization of high-margin production units, should have a positive effect on the company’s results.