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(Alliance News) - Evraz PLC on Thursday reported a sharp fall in half-year profit and skipped its dividend, as a stronger ruble and a USD exchange rate led to a rise in foreign exchange losses.
For the first half of 2022, the London-based steelmaker posted a pretax profit of USD353 million, down 78% from USD1.63 billion a year before.
Foreign exchange losses jumped to USD1.79 billion from USD30 million.
More positively, consolidated revenue grew 31% to USD8.10 billion from USD6.18 billion. The company attributed this to a strong start to the year.
Nonetheless, it noted that demand started to decrease, following rising concerns over the global economy and persistent supply chain challenges.
Further, lockdowns in China, a strong ruble, and increased competition on its traditional markets presented additional headwinds.
"These factors caused a pullback in steel prices from recent highs in all key markets, especially in China, Europe and India," Evraz stated.
Evraz suspended its dividend to create a cash cushion of USD793 million, "adding to the company's resilience in these turbulent times." Last year, Evraz declared an interim dividend of USD0.55 per share.
Looking ahead, Evraz warned that "things" have become quite challenging with the unusually high volatility of the USD exchange rate.
Additionally, it said that the sanctions on Russia have "significantly" reduced the country's export potential, partly due to logistics constraints and transport infrastructure issues.
"In addition, the sanctions pressure caused Russian-made steel products to sell at a discount and hindered settlements with foreign customers. Following these Evraz was affected by a surge in working capital due to an increase in inventory and receivables amid hindered exports," the company said.
Nonetheless, Evra insisted that it navigated the first half "well" as its key markets are historically located in Southeast Asia.
By Abby Amoakuh; abbyamoakuh@alliancenews.com
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