Novolipetsk Says Q4 Steel Output Down 40.2%

Novolipetsk Steel, or NLMK, said Monday that fourth-quarter 2008 steel output fell 40.2 percent from the preceding three months, and it warned that falling prices could affect its -financial results in the first half of 2009.

NLMK, controlled by billionaire Vladimir Lisin, said it expected full-year revenues of $11.6 billion in 2008 and earnings before interest, taxation, depreciation and amortization in the $4.7 billion to $4.8 billion band.

"In early 2009, we are facing further deterioration in the pricing environment in our key markets and, despite decreasing production costs for our main products, this may adversely impact our H1 2009 financial results," the company said.

Following a strong performance in the first nine months of 2008, Russian steel majors sharply cut fourth-quarter production as demand from manufacturers dried up because of the weak domestic economy.

Most have also reduced 2009 production and investment plans, matching moves by rivals across the globe.

NLMK, Russia's fourth-largest steelmaker by volume, said in a statement that it produced 1.37 million tons of crude steel in the fourth quarter of 2008, compared with 2.30 million tons in the third quarter.

Production at its Lipetsk site for the full year of 2008 reached 8.51 million tons, down 6 percent from 9.06 million tons in 2007.

Including its Maxi Group acquisition, the group's total production in 2008 reached 10.4 million tons, up 14 percent year on year but below the planned 11.6 million ton target.

NLMK acquired the Russian mini-mill operator for about $600 million two years ago, and it continues to issue separate production figures for the group, although it has consolidated its results since December 2007.