If you thought August’s half-year results for Russian steel giant Evraz (EVR) were impressive, just cop a look at the full-year numbers. Free cash flow doubled to $1.32bn (£960m), despite a 41 per cent hike in capital expenditure. Nor was the colossal $430m half-year dividend a one-off act of largesse, apparently; another 30¢ a share is heading investors’ way, despite $836m of earnings being diverted to the reduction of net debt to a still dizzying $4bn.
What is behind such sharp reversals in events? No, Evraz hasn’t launched a Stakhanovite movement for the oligarch era. It is simply benefiting from surging sales prices for coal and steel, while doing everything it can to save money from cost-cutting and “customer focus initiatives”. These dual effects boosted cash profits by $163m and $104m, respectively, although this was more than outweighed by rising input costs. In fact, the appreciation of the rouble meant raw material cash costs for slabs, washed coking coal, and iron ore products all climbed between 30 and 40 per cent.
These results dropped on the same day Donald Trump confirmed he would impose tariffs on US imports of steel and aluminium. As we have detailed, Evraz believes it may be able to re-route some of its American-bound products to other markets, although in theory the group’s North American steel division could benefit from lower competition for its finished products.
On average, analysts expect $1.49bn of pre-tax profit and adjusted EPS of 69.8¢ this year, compared with $1.29bn and 63.7¢ in 2017.
| EVRAZ (EVR) | ||||
| ORD PRICE: | 461p | MARKET VALUE: | £6.6bn | |
| TOUCH: | 460-461p | 12-MONTH HIGH: | 461p | LOW: 170p |
| DIVIDEND YIELD: | 9.5% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 125¢ | NET DEBT: | 196% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
| 2013 | 14.41 | -0.64 | -34.0 | 6.0 |
| 2014 | 13.06 | -1.08 | -78.0 | nil |
| 2015 | 8.77 | -0.71 | -45.0 | nil |
| 2016 | 7.71 | -0.09 | -15.0 | nil |
| 2017 | 10.83 | 1.16 | 49.0 | 60 |
| % change | +40 | - | - | - |
| Ex-div: | 8 Mar | |||
| Payment: | 29 Mar | |||
| £1=$1.37 | ||||
