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. Last Updated: 07/27/2016

Local Demand Boosts MMK Profits

VedomostiThe Magnitogorsk plant's output and sales are up 9.4 percent and 10.6 percent, respectively, in the first half of 2007.
YEKATERINBURG -- Magnitogorsk Iron & Steel Works, the country's third-largest steelmaker, said Monday that net profit rose 47 percent to $866 million in the first half of 2007 as it sold more steel at higher prices.

First-half revenue growth of 44 percent to $4 billion exceeded analysts' expectations as construction projects across the country boosted demand for steel.

"We see untethered growth in sales of long products, for which there is insane demand, and the [domestic] premium compared to export prices is 15 to 20 percent," said Yury Vlasov, metals analyst at Renaissance Capital. Long products are primarily used in the construction sector. Vlasov said the share of MMK's sales to the domestic market had increased to 64 percent from 54 percent last year.

MMK is majority owned by its chairman, Viktor Rashnikov, whom Forbes magazine this year ranked the country's 11th-richest man. The firm raised $1 billion this year floating shares in London.

MMK, which operates the country's largest single steel plant, produced 6.5 million tons of steel and sold 5.9 million tons of steel products in the first half of 2007, up 9.4 percent and 10.6 percent, respectively, year on year.

The average price of its steel products rose to $578 per ton in the first half of 2007, 26.8 percent higher than a year ago.

The company's financial results were calculated to U.S. generally accepted accounting principles standards. Earnings before interest, tax, depreciation and amortization rose to $1.2 billion from $785 million.

In the second quarter of 2007, MMK posted a net profit of $516 million, compared with $340 million in the same period a year earlier.

Second-quarter sales revenues rose to $2.2 billion from $1.6 billion.