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Russia’s Severstal upbeat after 25 pct rise in Q3 earnings

Russia’s Severstal, one of the country’s largest steelmakers, reported a 25 percent rise in third-quarter core earnings on Friday compared to the same period the previous year, though slightly below analyst forecasts.

Earnings before interest, taxation, depreciation and amortisation (EBITDA) totalled $768 million, the company said. Analysts had forecast earnings of $773 million.

Net profit was $455 million in the third quarter, up 53 percent year-on-year, the company said.

However, compared to the previous quarter revenues declined, slipping 9 percent to $2,063 million. This was due to reduced sales volumes, the company said, and declining steel prices.

Chief executive Alexander Shevelev said the company expects global demand to support a solid performance in the next quarter.

“We are expecting global steel demand to remain at good levels on the back of strength of the world’s economy and continued capacity cuts in China,” Shevelev said.

The company’s board recommended a third-quarter dividend payment of 44.39 roubles ($0.6755) per share on Thursday, paying out over 100 percent of its quarterly free cash flow, Severstal said.

Analysts at BCS Global Markets struck a cautious note.

“We disagree with management’s view on (the fourth quarter of 2018), as steel prices are softening in Russia and globally,” BCS Global Markets analyst Oleg Petropavlovsky said, pointing to weak sales volumes.

Last week, Severstal reported crude steel sales fell 5 percent compared to the previous quarter.

Shares in the company were flat in early trading on the Moscow exchange.

Source: Reuters

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