Russia’s Severstal expects domestic steel demand to recover in 2021

Monday, 08 February 2021 11:18:35 (GMT+3)   |   Istanbul
       

Russian steelmaker Severstal has announced its financial results for the fourth quarter and the full year of 2020.

Accordingly, in the fourth quarter of the current year, Severstal registered a net profit of $386 million, increasing by 131.1 percent compared to the previous quarter, while its sales revenues decreased by seven percent compared to the third quarter to $1.72 billion, reflecting lower steel sales volumes compared with a high base in the third quarter of the year, although this was partly offset by the quarter-on-quarter growth in steel and iron ore prices.

Severstal’s EBITDA moved up by 8.2 percent to $710 million in the fourth quarter this year, when compared to the previous quarter. Meanwhile, the company’s EBITDA margin in the same quarter was 41.2 percent, maintaining the group’s position of having one of the highest EBITDA margins in the steel industry globally. 

In 2020, Severstal registered a net profit of $1.02 billion, falling by 42.5 percent compared to the previous year, while its sales revenues decreased by 15.8 percent year on year to $6.87 billion, due to weaker pricing dynamics for steel products and lower sales volumes in this period.

Severstal’s EBITDA moved down by 13.7 percent to $2.42 billion in 2020 when compared to 2019, primarily reflecting lower revenues, which were partially offset by a decline in sales costs. Meanwhile, the company’s EBITDA margin in the same period was 35.3 percent, up from 34.4 percent recorded in 2019.

In the fourth quarter of the year, steel prices surged, driven by a supply deficit in the global steel market with revived demand in China. Raw material prices were increasing, supported by an expansion of steelmakers’ margins and a production increase compared to the third quarter. Severstal anticipates that the positive momentum in steel and raw material prices in November and December last year will positively impact the results for the first quarter this year. Severstal said it expects domestic steel demand to recover by 3-4 percent in 2021, driven by improved construction activity and an oil & gas sector recovery. Severstal stated that its low-cost position enables it to sustain competitiveness in the market although there are many potential challenges in both the export and domestic markets. It added that it remains confident in the resilience of the company’s business model relative to its local and global peers.


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