Posted on 06 Dec 2011
Magnitogorsk Iron & Steel Works, Russia's third-largest steelmaker, expects global steel prices and demand to rise next year, with Russian consumption growing on construction and manufacturing spend.
"We expect positive momentum to recover in H1 2012 with respect to both demand and steel prices," MMK said on Monday as it reported third-quarter results.
"Overall Russian steel consumption in 2012 is expected to grow 8-10 percent, mostly driven by the auto manufacturing, machine-building and construction sectors," it said.
MMK, which last month agreed a deal to buy Australian iron ore developer Flinders Mines for $538 million, posted a third-quarter net loss of $205 million, mainly due to a foreign exchange hit of $252 million after the rouble slid against the dollar.
Third-quarter revenue was up 1 percent quarter-on-quarter at $2.43 billion.
"The results are disappointing. The foreign exchange loss is a big factor, but not the only one. Revenue growth was disappointing as well," said Iryna Trygub-Kainz, a steel analyst at Raiffeisen bank.
Shares in the company were down 1.2 percent at 0840 GMT.
A company spokesman said MMK's operating costs were in roubles and while it sold 70 percent of its output in Russia, its obligation to report results in dollars meant it had to take the currency hit.
MMK said excluding that factor third-quarter profit would have been $59 million, above market expectations of $40 million.
Russian steelmakers have benefited from low-cost domestic mills amid worsening economic conditions this year.
MMK ships about 10-15 percent of its exports to the crisis-hit euro zone.
The company's third-quarter earnings before interest, taxes, depreciation and amortisation (EBITDA) were $350 million, below a forecast of $356 million.
