SVST.L Regulatory News (SVST)

2 Jul 2007 07:11

OAO Severstal02 July 2007 SEVERSTAL For Immediate Release 2 July 2007 Strong first quarter results from Severstal Financial Results for the three months ended 31 March, 2007 ($ million unless otherwise stated) Q1 2006 Q1 2007 Change Q1y-o-Q1y Revenue 2,725 3,677 34.9%Profit from operations 415 635 53.0%EBITDA1 644 921 43.0%Net profit2 217 396 82.5%EPS, $ 0.24 0.39 62.5% Notes: 1 EBITDA represents profit from operations plus depreciation and amortisation, and gain (loss) on disposals of property plant and equipment 2 Net profit attributable to shareholders OAO Severstal (LSE: SVST; RTS: CHMF), today reports first quarter resultsreflecting a significant improvement compared with the same period last year anda continuation of positive Q4 trends. Q1 2007 Highlights: •Strong year-on-year growth •Favourable prices across all geographies and markets •Increases in raw materials, energy and labour costs passed on to customers €2006 investment programme yielding good returns •A record $3,677 million in revenues, up 34.9% compared with Q1 2006 •Strong EBITDA growth at $921 million in Q1 2007, up 43% from $644 million in Q1 2006 •Improved efficiency, better product mix and cost control added around $100m to EBITDA compared to Q1 2006 •Net profit up 82.5% to $396 million for Q1 2007 from $217 million in Q1 2006 •Strong Russian domestic market for steel and iron ore products •Steel prices in Russia and Europe demonstrating sustainable growth •Strong performance in the mining business: EBITDA up 50.0% year-on-year •Significant improvement in Lucchini •Q1 investment programme of $267 million in line with budget and forecast •Continuation of the positive trends seen in Q4 2006 Alexei Mordashov, CEO of OAO Severstal, said, "I am pleased to report thatSeverstal has made a positive start to the new financial year with continuedgrowth. We are building successfully on the changes we made last year to provideus with a strong platform for the future." Chief Executive's Review Compared with the same period last year, this quarter demonstrates improvedtrends in the key areas of our business. Russian Steel continued the good performance of Q4 2006 with an excellent firstquarter showing a 52.7% increase in EBITDA compared with the same period lastyear. Prices continue to be strong in both Russian and export markets and therehas also been a significant improvement in volumes compared to Q1 2006. Severstal's Mining business has also had an exceptional first quarter bothcompared to Q1 2006 and Q4 2006: EBITDA was up by some 50.0% compared with thesame period last year and by 42.7% compared with Q4 2006. Prices are up onaverage by 14% with a similar growth in volumes. Severstal's overseas business each produced improving EBITDA margins for Q1 2007over Q4 2006. Severstal North America reported a nearly 6.3% improvement in EBITDA comparedwith Q4 2006. Lucchini's EBITDA for the first quarter is up nearly 39.8%compared with the same period last year as a result of higher prices andvolumes, and favourable raw materials prices. Q1 2007 Financial Summary Severstal's consolidated revenues increased by 34.9% to $3,677 million in Q12007 from $2,725 million in Q1 2006, attributable to a stable price environmentin all geographies and product mix improvements. Consolidated cost of sales were $2,611 million in Q1 2007, compared with$1,977 million in Q1 2006. Cost of revenues as a percentage of consolidatedrevenues decreased to 71.0% (Q1 2007), from 72.6% in Q1 2006. The primarydrivers behind this change were higher growing raw material, energy and labourcosts. Gross profit has grown by 42.6% from $748 million in Q1 2006 to $1,067 millionin Q1 2007. In the first quarter of 2007, revenues from non-Russian sales amounted to $2,253million, or 61.3% of total sales. The comparable figure for the first quarter of2006 was $1,842 million, or 67.6% of total sales. Profit from operations increased by 53.0% to $635 million in Q1 2007 from $415million in Q1 2006. This increase was largely due to buoyant steel prices trend.Group operating margin went up to 17.3% in Q1 2007 from 15.2% in Q1 2006. Consolidated EBITDA increased by 43.0% from $644 million in Q1 2006 to $921million in Q1 2007. This growth is mainly attributable to the strong financialperformance of Russian Steel, and our Mining and Lucchini businesses, and thecontinuing stabilisation of steel prices in all markets. Primary drivers of this increase were sales volumes of hot-rolled strip andplate, long products and metalware products, which rose by 28.0%, 70.9% and90.4% respectively. Average sales prices for coal and coking coal concentrateswent up by 17.4%, by 39.7% for long products, and by 24.6% for metalwareproducts. Income tax charges for Q1 2007 were $168 million compared with $123 million inQ1 2006. In Q1 2007, Severstal reported consolidated net profit attributable toshareholders of$396 million compared with $217 million in Q1 2006. EPS for the first quarter of 2007 amounted to $0.39, $0.15 higher than for thefirst quarter of 2006. Net debt, calculated as the difference between financial debt and cash and cashequivalents plus short-term bank deposits, decreased for the three months endedMarch 31, 2007 from $155 million to a cash surplus of $174 million. Increase intotal indebtedness from $3,002 million to $3,008 million was offset by anincrease in cash, cash equivalents and short-term bank deposits from $2,847million to $3,182 million. This increase is mainly attributable to the resultsof operating activities. A dividend for Q1 2007 of 2.6 Rubles ($0.10) per share (one GDR represents oneunderlying ordinary share) has been approved by the EGM held in Cherepovets onJune 29 . For further information: Severstal Dmitry Druzhinin, Investor RelationsOlga Antonova, Public Relations+7 495 540 7766 Tulchan CommunicationsDominic Fry/Tom Murray+44 207 353 4200 Severstal will be holding a conference call for analysts and investors at 5 pmMoscow Time on Monday 2 July 2007. Dial-in details are: Time: 5pm (Moscow Time) , 2pm (London Time), 9am (East Coast Time) Russia dial-in: 8108 0021 651 012 UK dial-in: 0800 953 1444 US dial-in: 1866 220 1452 International dial-in for other countries: +44 (0) 1452 542 300 Participant code: 6053996 You can find 1Q 2007 financial statements and presentation on the website: www.severstal.com This information is provided by RNS The company news service from the London Stock Exchange