Severstal Profit Falls 18% on Disruption

Severstal on Monday said third-quarter profit fell 18 percent because of disruptions to steel and coal output. The shares declined the most in more than two weeks in London trading.

Net income dropped to $326 million, or 32 cents per share, from $399 million, or 43 cents, a year earlier, the company said on its web site. Sales climbed 10 percent to $3.56 billion.

"These are awful results, way worse than we had expected," said Dmitry Kolomytsyn, an analyst with Aton Capital. Kolomytsyn, who has a "hold" rating on the company, had expected profit of $600 million.

Severstal's global depositary receipts slid 93 cents, or 3.97 percent, to $22.47 as of the 4:30 p.m. close of London trading, the biggest drop since Nov. 16.

Its shares fell 9.97 rubles, or 1.77 percent, to 553.28 rubles ($22.60) at the close of the MICEX index. They have gained 81 percent this year.

"It was a very mixed quarter," chief financial officer Mikhail Noskov said in a conference call.

Production at Severstal's Cherepovets steel plant slowed 4 percent in the third quarter from the prior three months after a pipe exploded at a newly installed oxygen unit in July. A methane blast at its Vorkutaugol unit's Komsomol coal mine cut output 28 percent.