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A tender moment for Evraz

Currency effects have had a major impact on Evraz's full-year figures
April 2, 2015

Evraz (EVR) revealed a net loss of $1.28bn (£858m) for 2014, more than double the $551m loss in the previous year. Reported figures for the Russian steelmaker were hit by foreign-exchange losses of $1bn as the devaluation of the rouble effectively inflated US-denominated amounts owed by subsidiaries in Russia and Ukraine. There was a separate $583m charge on currency and interest rate swaps, in addition to standard asset write-downs amounting to $540m.

IC TIP: Hold at 200p

However, the underlying figures paint a different picture. The dollar's relative strength also reduced operating expenses for the group's Russian and Ukrainian subsidiaries, so cash profit increased by over a quarter to $2.33bn on a margin of 17.8 per cent - up from 12.6 per cent in the previous year. Operating cash flow also remained strong at $1.96bn, which pushed net debt down 11 per cent to $5.81bn. (Net debt rose as a proportion of net assets, but that's because of the negative translation effects on Evraz's balance sheet.)

Evraz also announced a plan to return up to $375m to shareholders by way of a tender offer at a price of $3.10 a share. The offer, which is subject to shareholders' approval, represents a maximum of 8 per cent of the group's issued share capital.

Prior to these figures, JPMorgan Cazenove was predicting 2015 cash profit of $2.04bn with adjusted EPS of $0.24 a share.

EVRAZ (EVR)
ORD PRICE:200pMARKET VALUE:£3bn
TOUCH:199-200p12-MONTH HIGH:205pLOW: 72p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:119¢*NET DEBT:288%

Year to 31 DecTurnover ($bn)Pre-tax profit ($bn)Earnings per share (¢)Dividend per share (p)
201013.10.6339.0nil
201116.10.8836.017
2012 (restated)14.7-0.19-29.011 †
2013 (restated)14.4-0.64-34.06 ††
201413.1-1.08-78.0nil
% change-9---

£1=$1.48. *Includes intangible assets of $1.98bn, or 132¢ a share. † Half-year dividend only.

†† Special dividend resulting from asset sale.