Eurasian Natural Resources Corporation, or ENRC, labelled 2012 as a 'challenging year' as a swing into the red led to the miner scrapping its final dividend.
The resources giant recorded a loss before tax of $550m, down from a profit of $2.76bn the year before, as it took impairment charges and an onerous contract provision totalling $1.54bn.
Some $608m of the impairments were due to a write-down in the value of its aluminium assets which reflected the "deteriorating conditions of the aluminium market and increasing inflationary pressure on key cost items", the company said.
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Meanwhile, the cost of sales was up 6.0% at $3.72m due to higher depreciation.
This resulted in a basic loss per share of 62 cents, compared with earnings per share (EPS) of 153 cents in 2011. Adjusted EPS fell from 155 cents to 41 cents.
Revenue declined by 18% over the year from $7.71bn to $6.32bn as a result of a "poor pricing environment". Some $1.24bn of this reduction was blamed on lower commodity prices in 2012, while lower sales volumes of ferroalloys and alumina also had an effect.
The company did not propose a final dividend, compared to the 18 cents-a-share dividend the year before. Its payout ratio fell to 16% (from 18% in 2011) based on the interim dividend of 6.5 cents paid at the half-year stage.
Chief Executive Officer Felix Vulis said: "2012 was a challenging year for the group, with deteriorating prices having materially impacted our earnings. However, management's performance partially countered these declines by containing inflationary pressures and maximising output from our key divisions in Kazakhstan."
Debt soars; balance sheet a priorityNet debt soared to $5.14bn at the end of the period, up from just $0.97bn in 2011 and ahead of Credit Suisse's $5.0bn estimate
ENRC secured an additional $3.0bn of bank facilities in 2012 and issued a three-year $500m bond to fund capital expenditure and acquisition. It refinanced its revolving credit facility in February, increasing it to $500m and extending the maturity to 2015 and is said to be at an "advanced stage of negotiation" over a new $700m debt facility.
"The management of our balance sheet remains a priority and we have a firm plan in place to fund our immediate development plans, increase production volumes and reduce debt to a more sustainable level in the medium-term," Vulis said.
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