Weak prices take the shine off Severstal as profits plunge 89pc
RUSSIAN steel miner Severstal yesterday posted an 89 per cent fall in full-year profit, hit by writedowns and weak metal prices.
The company posted net profit of $83m (£50m) in 2013, while revenue fell 5.6 per cent to $13.3bn.
“It is a challenging time for the industry, due to oversupply in the steel market,” chief executive Alexey Mordashov told City A.M.
“But our focus is on prudent capital expenditure and capital efficiency to improve our balance sheet going forward.”
The company said its full-year profit was negatively impacted by an asset impairment of $356m, due to falling coking coal prices and foreign exchange losses.
“Results came substantially above our and consensus expectations on the [core earnings] line mainly due to superior cost control which should be taken positively by the market,” said Goldman Sachs research.
Severstal expects global steel demand to grow this year, driven by an anticipated bottoming-out of the European demand and further improvements in the US economy, which together might result in higher utilization rates for the global steel industry. Mordashov would not give forward profit or revenue guidance, but said he expects the macro environment to be comparable year-on-year.
“We don’t believe in a quick recovery,” he added. Shares closed 1.25 per cent.