Evraz freezes dividend after earnings drop 31 per cent

Russian steelmaker Evraz suffered a 31 per cent drop in earnings in 2012 as the metal's price dropped and markets became increasingly volatile in the second half of the year.

Russian steelmaker Evraz suffered a 31 per cent drop in earnings in 2012 as the metal's price dropped and markets became increasingly volatile in the second half of the year.

While the industry's manufacturing capacity experiencing substantial underutilisation due to subdued steel and raw materials prices, the company claimed to have demonstrated respectable operating results.

The steel, mining and vanadium giant saw revenues slide 10.2% to $14.7bn in the calendar year, with earnings before interest, tax, depreciation and amortisation (EBITDA) 30.6% lower at $2.0bn.

Management, after taking into account the substantial deterioration in the respective prices of steel and steel raw materials towards the year-end, decided to forgo the recommendation of a final dividend "in order to preserve the financial standing of the company and provide greater flexibility to manage the current market environment".

The group ended the year with cash and deposits of $2.1bn and net debt trimmed slightly to $6.2bn.

Chief executive officer Alexander Frolov said: "The year 2012 was characterised by challenging trading conditions for the global steelmaking industry.

"Although some recovery was seen during the first half of the year, there was a significant deterioration in sentiment towards the year end. As a result, steel and raw material markets remained highly volatile with global steel industry capacity experiencing substantial underutilisation."

A highlight post year-end was the purchase of a controlling interest in the Raspadskaya coking coal company, a transaction that establishes Evraz as the largest producer of coking coal in Russia.

Frolov admitted that a promising start to 2012 gave way to a year characterised by challenges and that the board is therefore "cautious" about near-term prospects.

However, he said that the group's "strong competitive cost base, superior operating efficiency and flexible investment programme" led him to view the long-term outlook with confidence.

OH

Recommended

Broker safety – your questions answered
Investment strategy

Broker safety – your questions answered

Cris Sholto Heaton answers more of your questions about the safety of stockbroker accounts
25 Mar 2020
How demographics affects stock valuations
Investment strategy

How demographics affects stock valuations

New research suggests that stock and bond valuations are driven by the age of the population – at least in the US.
24 Feb 2020
Do you own shares in Sirius Minerals? Here’s what you need to do now
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020
Why investors should be “cautiously bullish” for 2020
Stockmarkets

Why investors should be “cautiously bullish” for 2020

Analysts have been out in force making rosy predictions for stockmarkets in 2020, but while there is certainly a case for optimism, investors should r…
17 Jan 2020

Most Popular

Here’s why you really should own at least some bitcoin
Bitcoin

Here’s why you really should own at least some bitcoin

While bitcoin is having a quiet year – at least in relative terms – its potential to become the default cash system for the internet is undiminished, …
16 Sep 2020
Will a second wave of Covid lead to another stockmarket crash?
Stockmarkets

Will a second wave of Covid lead to another stockmarket crash?

Can we expect to see another lockdown like in March, and what will that mean for your money? John Stepek explains.
18 Sep 2020
James Ferguson: How bad data is driving fear of a second wave of Covid-19
UK Economy

James Ferguson: How bad data is driving fear of a second wave of Covid-19

Merryn and John talk to MoneyWeek regular James Ferguson about the rise in infections in coronavirus and what the data is really telling us.
17 Sep 2020