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

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