Evraz warns on the cost of world turmoil

ROMAN Abramovich’s steelmaking group Evraz surprised markets with a cautious update yesterday that said pressure on prices would lower profits in the last months of the year.

Evraz said revenues hit $12.5bn (£7.8bn) in the first nine months of the year, up 28.9 per cent from the same period in 2010, including $4.2bn of sales in the third quarter.

But it warned the downturn in the global economy was pushing its prices down and worsening a seasonal shift in its sales towards cheaper and lower-margin part-finished steel goods.

“The seasonal change in the product mix...coupled with slightly lower prices for the main product groups due to the volatile global economic environment, is impacting Evraz’s performance in the fourth quarter,” it said in a statement.

The news sent Evraz shares down five per cent in morning trading but they closed just 0.5 per cent down.

The news could disappoint Evraz’s investors, who bought into its flotation ahead of its planned entry into the FTSE 100 index, on hopes of surging growth in the industry.

Evraz’s earnings before interest, tax, depreciation and amortisation (ebitda) for the nine months jumped almost 36 per cent to $2.4bn.