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MMK Reports Net Loss for Q1 2009
06/15/2009 - Magnitogorsk Iron and Steel works reports a net loss of US$110 million on sales of US$965 million for the first quarter of fiscal 2009.
Magnitogorsk Iron and Steel works (ММК) reported a net loss of US$110 million on sales of US$965 million for the first quarter of fiscal 2009, which ended March 31, 2009. The company also reported positive EBITDA of US$99 million for the quarter.
The first quarter net loss of US$110 million represents a US$292 million improvement compared to a net loss of US$402 million in the previous quarter. Sales of US$965 million represent a US$403 million decrease compared to sales of US$1.368 billion in the previous quarter. The company attributes a portion of the reduced first-quarter sales to the fluctuation of USD exchange rate. EBITDA of US$99 million (10.3%) represents a US$568 million increase compared to EBITDA of - US$469 million (-34.3%) for the previous quarter.
The volume of domestic sales amounted to 1.1 million tons, or 58% of the total sales in Q1 2009. Shipments to Russia and CIS accounted for 65% of Group revenue, which is the highest level in the Russian steel sector.
The company produced 2070 tonnes of crude steel in the first quarter, a 26%increase compared to the 1648 tonnes of crude steel produced in the previous quarter. The company also produced 1917 tonnes of commercial products, a 24% increase compared to 1542 tonnes of commercial products produced in the previous quarter. Production levels reached 61% of the production averages during the first 9 months of 2008; this compares to 49% of those levels for the previous quarter.
MMK said that the domestic market continues to be its top priority, and that it continues to provide an acceptable level of profitability. Globally, MMK focuses on meeting the demand of fast-growing markets, including the South East Asia and Middle East markets.
MMK Group’s debt level is the lowest among its largest Russian peers, with total debt of US$ 1.694 billion and net debt of US$ 775 million. The Debt/Equity ratio as of March 31, 2009 was x0.2. Revolving credit facilities of traders affiliated with MMK for financing steel shipments account for about 25% of the short-term debt.
MMK’s cash and cash equivalents reached US$ 907 million in the first quarter, a decrease from the previous quarter due to growth of the USD exchange rate, which also caused a change of assets value. The company acquired fixed assets (including objects of financial leasing) for the sum of US$ 401 million in the reporting period.
The company said that it continues to implement its crisis management program, which aims to increase liquidity and maintain profitability. The positive effect of the actions taken in the first quarter will help to preserve stable operations for the balance of 2009.
The Magnitogorsk Iron and Steel Works OJSC (MMK) is among the world's largest steel producers and is one of the leaders of Russia's steel industry. The company operates a large steel-producing complex encompassing the entire production chain, from preparation of iron ore to downstream processing of rolled steel. MMK turns out a broad range of steel products with a predominant share of value-added goods. In 2008 the company produced 12 million tonnes of crude steel and 11 million tonnes of commercial products. MMK Group sales stood at USD 10.550 billion.
