The Russian steel producer Severstal has announced positive financial results for the third quarter of 2009, citing a further rebound in global demand, a strong performance at its Russian operations and an improvement at its US operations.
Accordingly, Severstal's revenues in Q3 increased by 22.3 percent quarter on quarter to about $3.5 billion, its EBITDA went up to a positive $368 million compared to a negative $5 million in Q2, while its net profit amounted to $66 million compared to net loss of $290 million in the second quarter of the year.
"The combination of increased demand and the continued successful implementation of our cost-saving programs delivered a return to a positive EBITDA and net profit in Q3. We also continued to deliver strong cash flow," Severstal CEO Alexey Mordashov stated. In Q3, Severstal registered a free cash flow of $279 million compared to $18 million in Q2.
During the third quarter of the current year, Severstal's steel production increased by 19.5 percent in line with demand improvements, which enabled higher capacity utilization against a background of improved pricing. The group's production of coking coal concentrate and iron ore products increased by 15.4 percent and 11.8 percent respectively during the quarter, also as a result of higher demand.
Severstal's Q3 positive financial results were achieved mainly due to the strong performance of Severstal Russian Steel, which registered an 80 percent increase quarter on quarter in its EBITDA and a 29.5 percent rise quarter on quarter in its sales, due to the improved demand for pipe plate and the seasonal pick-up in demand from the construction market.
"Greater stability in our primary markets has made us more optimistic on the prospects for the remainder of 2009 and 2010. Whilst a Q4 seasonal correction cannot be ruled out, we believe further measured recovery in 2010 is now more likely. Continued recovery will depend on the pace of global economic growth and discipline in production and pricing across the industry," Mr. Mordashov said.
"Whilst a seasonal correction in Q4 2009 cannot be ruled out, we believe there will be continued stability in our main markets for the remainder of 2009. In Russia we expect steady recovery in demand from key consuming industries with export sales remaining high. Although it is still early, we anticipate further improvement in both the US and European markets in 2010, but not to pre-September 2008 levels. In the US, the restructuring we are undertaking is expected to deliver a more flexible cost base and improve our competitiveness in 2010. In Europe, further cost cutting should improve the financial performance of Lucchini," reads the company's release, adding, "Further improvements in the global steel markets will continue to depend on the pace of economic recovery and production and pricing discipline in the industry."