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Evraz 2011 Profit Declines - Update

3/28/2012 5:23 AM ET

Steel production and mining firm Evraz Plc (EVR.L) reported Wednesday a decline in profit for full year 2011, reflecting higher tax expenses and one-off items, despite about 22 percent growth in revenues. The company said increases in both prices and volumes contributed to the revenue growth.

Evraz, with operations mainly in Russia, noted that in the near-term, outlook for the global steel industry is likely to continue to be challenging in 2012.

Chief financial officer Giacomo Baizini said, "Notwithstanding our growth in EBITDA, our net profit contracted by 3% in 2011 as it was negatively affected by a number of one-off items. In H1 it was negatively impacted by US$161 million relating to the incentivised conversion of our 2014 convertible bonds. In H2 we incurred US$19 million of expenses for the move to the Premium Listing on the London Stock Exchange."

Without these items the company's net profit for the year would have been $633 million.

Announcing its preliminary results, the company said its profit before tax increased to $873 million from $633 million in the previous year.

Profit for the year attributable to equity holders of the parent entity declined to $461 million or $0.36 per share from $486 million or $0.39 per share in the previous year. The results reflect a sharply higher tax expense, which increased to $420 million from $163 million a year ago.

The company noted that the financial statements for the year ended December 31, 2011 are the first since its incorporation as a public company on September 23, 2011. As the Group has been formed through a reorganization in which Evraz plc became a new parent entity of the Group, the consolidated financial information has been prepared as a continuation of the existing group.

Consolidated revenue for the year jumped 22.4 percent to $16.4 billion from $13.39 billion a year ago, driven mainly by price increases and higher volumes. Price increases accounted for about 92 percent of the revenue growth, while volume increases accounted for nearly 8 percent of the revenue growth.

The steel segment accounted for the majority of the increase in revenue due to higher average prices of steel products. The segment revenues were up 21.4 percent.

Sales in Russia grew 41.3 percent, helped by demand for its construction products. Revenues from non-Russian sales also increased 12.3 percent.

The company also declared a final dividend of $0.17 per share, to share holders of record on June 8, 2012, payable on July 9.

EVR.L is currently trading at 368.09 pence, down 12.71 pence or 3.34 percent, on a volume of 316 thousand shares on the LSE.

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by RTT Staff Writer

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