A capacity glut has kept steel prices low all year and there were few indications in Russian steelmaker Evraz 's (EVR) half-year results that the situation is showing any sign of improvement as the company dealt with weak demand in europe and a fragile Russian economy. Steel volumes remained largely unchanged at 7.8m tonnes for the half year, but the pricing situation meant management had to find savings to boost liquidity. For example, capital expenditure forecasts for 2013 has been cut to between $900m-$1bn (£573m-£636m) from an initial estimate of $1.3bn.
The company has also mothballed or put up for sale its under-performing units. The Italian plate rolling mill, for example, was idled in order to release working capital and buyers were sought for the company's Czech subsidiary, Vitkovice Steel, and for Highveld Steel and Vanadium in South Africa. The funds are needed as the 21 per cent fall in cash profits to $939m puts upward pressure on the company's debt covenants, although there won't be a significant covenant test before the second half of 2014. The bright spot was the fall in the price of essential commodities, which contributed to a 20 per cent fall in raw material costs to $1.78bn.
Deutsche Bank forecasts a net loss of $93m for 2013, giving a loss per share of 6¢ (from a loss of $308m and a loss per share of 23¢ in 2012)
EVRAZ (EVR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 133p | MARKET VALUE: | £1.96bn | |
| TOUCH: | 132-133p | 12-MONTH HIGH: | 316p | LOW: 89p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 357¢* | NET DEBT: | 122% | |
| Half-year to 30 Jun | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | 7.62 | 90.0 | -0.03 | 11.0 |
| 2013 | 7.36 | -106 | -0.07 | nil |
| % change | - | - | - | - |
*Includes intangible assets of $2.67bn, or 181¢ a share | ||||
