MMK's H1 Results, Outlook Boost Shares

Magnitogorsk Iron & Steel Works, or MMK, the country's third-largest steel producer, forecast strong annual sales growth on rising volumes and higher steel prices after meeting first-half expectations Wednesday, sending its shares higher.

MMK reported net income up 19 percent to $1.03 billion and earnings before interest, taxes, depreciation and amortization up 25 percent to $1.51 billion on first-half revenues of $5.65 billion, up 41 percent.

All were slightly above analysts' expectations.

"The figures show that the market's concerns over rising cost pressure at nonvertically integrated steel producers were so far unfounded as the company was able to pass rising raw material costs on to customers," analysts from UniCredit said in a research note.

The main driver behind the gain was high steel prices, which started rising in April, although raw materials prices also increased.

The main owner of MMK, board chairman Viktor Rashnikov, said in a statement that the company had managed to deliver strong results despite cost pressures.

"As we look forward, strong demand for our high quality products and the continued development of our self-sufficiency in raw materials present us with significant opportunities to create shareholder value," Rashnikov said.

Chief financial officer Vladimir Shmakov told a conference call with investors that the firm expected revenues to grow by over 60 percent this year from $8.2 billion last year.