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

The MoneyWeek Podcast: picking stocks is fun, but you need to do your homework
Investment strategy

The MoneyWeek Podcast: picking stocks is fun, but you need to do your homework

John Stepek talks to Steve Clapham, investor, analyst and author of The Smart Money Method, about the dangers in picking individual stocks and why you…
8 Apr 2021
BP looks set to return more money to shareholders as it beats expectations
Energy stocks

BP looks set to return more money to shareholders as it beats expectations

Oil major BP is to embark on a share buyback programme after significantly reducing its debts. Saloni Sardana looks at what it means for your portfoli…
6 Apr 2021
Deliveroo has hit the market – but it’s not getting the warmest welcome
UK stockmarkets

Deliveroo has hit the market – but it’s not getting the warmest welcome

Food delivery company Deliveroo made its debut on the stockmarket this morning. But with the share price sliding by 30% straight away, it’s not made t…
31 Mar 2021
Three stocks to buy now that will come back stronger after Covid-19
Share tips

Three stocks to buy now that will come back stronger after Covid-19

Professional investor Ed Wielechowski of Odyssean Capital, chooses three compelling stocks that should thrive in a post-pandemic world.
29 Mar 2021

Most Popular

The bitcoin bubble will burst: here’s how to play it
Bitcoin

The bitcoin bubble will burst: here’s how to play it

The cryptocurrency’s price has soared far beyond its fundamentals, says Matthew Partridge. Here, he looks at how to short bitcoin.
12 Apr 2021
Four investment trusts for income investors to buy now
Investment trusts

Four investment trusts for income investors to buy now

Some high-yielding listed lending funds have come through the crisis with flying colours. David Stevenson picks four of the best.
12 Apr 2021
Central banks are rushing to build digital currencies. What are they, and what do they mean for you?
Bitcoin

Central banks are rushing to build digital currencies. What are they, and what do they mean for you?

As bitcoin continues to soar in value, many of the world’s central banks are looking to emulate it by issuing their own digital currencies. But centra…
8 Apr 2021