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High Coal Prices Hit Magnitogorsk
High raw materials prices have had their effect on the profit growth of metals manufacturers. Magnitogorsk Iron & Steel Works has become the first Russian smelter to provide its accounts in US GAAP standard. Between January and June of this year, the company received $1.031 in net profit, up 19 percent over the same period of last year, when its profit rise was 47 percent. Receipts grew 41 percent to $5.653 billion. EBITDA was $1.5 billion, which was higher than in the same period of last year by 25 percent (when it showed 30-percent growth).
The volume of steel smelted in the first half year at Magnitogorsk rose 8.3 percent over last year to 7015 tons and production of rolled stock rose 8.1 percent to 6434 tons. Sixty-nine percent of its sales were on the domestic market. Its sales prices rose 45 percent in the second quarter. Investors were favorably impressed with those indicators. Magnitogorsk stock rose 7.14 percent on the LSE and 3.8 percent on MICEX yesterday. Magnitogorsk chairman of the board Viktor Rashnikov owns 87 percent of the company’s shares. The remaining shares are in free float on the London and Moscow markets. Its capitalization on the RTS yesterday was 264.8 billion rubles (about $10.777 billion).
Magnitogorsk’s profits are rising more slowly due to the high cost of raw materials. Magnitogorsk and Novolipetsk Steel were the initiators of the complaint against Mechel that led to Russian Prime Minister Vladimir Putin’s criticism of the company. Magnitogorsk vice president for economics and finance Vladimir Shmakov did admit, however, that the average cost of coking coal in the first half year was comparatively low at $171 per ton. The company si now paying $250-260 per ton.
www.kommersant.com
All the Article in Russian as of Aug. 21, 2008
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