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. Last Updated: 07/27/2016

Evraz Posts 2009 Loss Of $1.3Bln, Sees Revival

Evraz Group posted a full-year net loss of $1.26 billion last year, compared with a net profit of $1.86 billion in 2008, after prices declined in the weak economy, the steel and mining giant said Wednesday.

"The year 2009 proved challenging for Evraz and the global steel industry in general. We were particularly affected by the contraction of the Russian construction sector and the slowdown in infrastructure spending in the markets where our production facilities are located: North America, Europe and South Africa," Evraz CEO Alexander Frolov said in a statement.

Evraz reported a 52 percent drop in revenue in 2009 to $9.77 billion, compared with $20.38 billion a year earlier.

The results were slightly below analysts' expectations. According to the consensus published by Bloomberg, analysts expected Evraz to post a net loss of $1.04 billion.

Steel sales by volume fell 16.4 percent last year to 14.33 million metric tons, from 17.14 million metric tons in 2008. "Steel segment sales accounted for the majority of the decrease in revenues, largely due to lower average prices and sales volumes of steel products," the company said.

But the company has an optimistic outlook for this year as demand has begun to recover, boosting global steel prices.

"Steel prices have risen on a global basis, in line with raw material prices, and this will translate into improved results for us due to the scale of our vertical integration," Frolov said.

The company expects its first-quarter earnings before interest, taxes, depreciation and amortization to be higher than in fourth quarter of 2009, chief financial officer Giacomo Baizini said.

"We anticipate a figure in the order of $400 million. The full impact of growing steel prices is expected to be reflected in our financial performance later in 2010," he said in the statement.

Evraz reported EBITDA of $1.24 billion in 2009, down 80 percent from $6.22 billion in 2008.

Total debt stood at $7.92 billion as of Dec. 31, 2009, compared with $9.99 billion a year earlier. Evraz does not see problems covering its $2 billion debt maturing by 2010, Baizini said during a conference call.

Last week, the company issued 15 billion rubles ($509 million) in three-year notes at a coupon rate of 9.25 percent. The issue will allow the company to cover $500 million of the debt, Baizini said.

Evraz has also extended its $950 million loan with Gazprombank to five years, he said, which will also help the steelmaker meet its debt payments this year.

"We can say that almost all short-term indebtednesses for 2010 and part of 2011 are already covered," Baizini said.

The group's London-traded shares closed down 2 percent at $39.73, trailing the dollar-denominated RTS Index, which was up 0.1 percent, and the RTS Metals & Mining Index, which gained 0.2 percent. Nonetheless, the shares are up more than 380 percent from March 31, 2009.

Rob Edwards, a Renaissance Capital analyst based in London, said Evraz's results were not a big surprise for the market and did not affect the stock. The slump Wednesday was just profit taking after the past year's gains, he said by telephone.

Evraz Group is majority owned by Lanebrook on behalf of chairman Alexander Abramov, chief executive Alexander Frolov, and investors led by billionaire Roman Abramovich.