Evraz’s (EVR) share price has plunged in recent months and its 2019 numbers back up investors’ wariness. The Russian steel producer, which also mines its own iron ore, coal and vanadium, was hit by a drop in steel demand in Europe and the vanadium price tanking. High iron ore prices in the first half also hit steel margins.
Sales were down for the Russian and US steel divisions as well, but the European drop-off was a third compared to 2018, with sales down to $956m (£735m). Overall the steel division had revenue of $8.1bn, an 8 per cent drop on 2018, even as sales increased 10 per cent year-on-year.
Chief executive Alexander Frolov said market conditions were less favourable than 2018 and coal and vanadium prices had come down as both materials returned to “supply-demand equilibrium”.
While overall cash profits were down almost a third - to $2.6bn - free cash flow was further impacted by capex climbing 45 per cent to $762m, and landed 25 per cent below 2018 at $1.5bn. Capex is forecast at $900m for 2020. Despite falling compared to the 2018 payout, the 40ȼ final dividend means the payout ratio for the year was 75 per cent of free cash flow, using the total dividend of 75ȼ per share.
The major fall in earnings caught analysts by surprise, with JPMorgan forecasting EPS of 54ȼ after the December quarter trading update, almost double the actual figure of 23ȼ. Bloomberg consensus forecasts for 2020 see cash profits falling 13 per cent to $2.2bn.
| EVRAZ (EVR) | ||||
| ORD PRICE: | 344p | MARKET VALUE: | £ 4.9bn | |
| TOUCH: | 344-344.3p | 12-MONTH HIGH: | 710p | LOW: 330p |
| DIVIDEND YIELD: | 16.9% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 115ȼ* | NET DEBT: | 179%** | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (ȼ) | Dividend per share (ȼ) |
| 2015 | 8.76 | -1.09 | -45 | nil |
| 2016 | 7.71 | -0.71 | -15 | nil |
| 2017 | 10.8 | 1.16 | 49 | 60 |
| 2018 | 12.8 | 3.20 | 167 | 118 |
| 2019 | 11.9 | 0.90 | 23 | 75 |
| % change | -7 | -72 | -86 | -36 |
| Ex-div: | 05 Mar | |||
| Payment: | 27 Mar | |||
| £1=$1.29 *Includes $779m in intangible assets, or 54ȼ per share **Includes $117m in lease liabilities | ||||
