Russian steel giant Evraz cheered shareholders via a substantial hike in its half-year dividend, but falling steel prices and softening global demand do not auger well for prospects through the remainder of this year.
Evraz recorded a 28 per cent fall in cash profits to $1.18bn (£747m), partly due to a 3 per cent fall in external steel sales volumes, but also reflecting softening demand in Evraz's main markets that led to a 3 per cent fall in average steel prices. A 12 per cent rise in selling and distribution costs, due to a change in sales terms in Russia, also impacted operating costs.
Net cash flow declined, too, falling almost a third to $1.09bn, but Evraz was still able to pay down $370m of debt since the year-end, while raising capital expenditure by a fifth to $565m, as the group accelerated the reconstruction of the rail mill at its West Siberian metallurgical plant. This work reduced sales volumes for the group's rail products due to a five-month production stoppage, which is scheduled to last until October. Second-half production volumes will also be negatively affected due to a one-month hiatus at EVRAZ Highveld Steel due to industrial unrest in South Africa.
Prior to these figures, JPMorgan Cazenove was forecasting full-year adjusted EPS of 29¢ (from 36¢ in 2011).
| EVRAZ (EVR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 231p | MARKET VALUE: | £3.1bn | |
| TOUCH: | 230-231p | 12-MONTH HIGH: | 465p | LOW: 207p |
| DIVIDEND YIELD: | 5.8% | PE RATIO: | 30 | |
| NET ASSET VALUE: | 383¢* | NET DEBT: | 114% | |
| Half-year to 30 June | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 8.38 | 473 | 21.0 | 6.7 |
| 2012 | 7.62 | 86 | -3.0 | 11.0 |
| % change | -9 | -82 | - | +64 |
Ex-div: 5 Sep Payment: 5 Oct £1 = $1.58 *Includes intangible assets of $2.95bn, or 220¢ a share | ||||
