Higher prices and lower costs see EVRAZ soar in first half
EVRAZ reported a significant improvement in its free cash flow in its unaudited interim results for the six months to 30 June on Thursday, rising to $549m from $102m in the first half of last year.
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The FTSE 250 firm also saw a “continued reduction” in net debt to $4.3bn, from $4.8bn, with a cost saving of $63m made during the period, which the board put down to ongoing productivity improvements and cost-cutting initiatives.
Consolidated EBITDA stood at $1.15bn, up 99.7% from the first half of 2016, driving the EBITDA margin to 22.6% from 16.3%, which EVRAZ said was due to higher coal and steel products prices, accompanied by the effects of cost-cutting initiatives.
Net profit was $86m, compared to $7m a year ago.
“EVRAZ performed well during the first half of 2017, reflecting the anticipated positive momentum in the market and our continuous focus on efficiency improvements,” said chief executive Alexander Frolov.
“Coal and steel prices remained strong during the reporting period and account for much of the improvements in the results.
“However, there were other contributors, our disciplined cost-cutting program and our customer focus initiatives which together generated additional $111m of EBITDA.”
On the operational front, EVRAZ said the cash cost of steel and raw materials in Russia increased mostly as a result of rouble appreciation.
The board said the cash cost of slabs increased to $254/t from $183/t the 2016 full year, while the cash cost of washed coking coal increased to $42/t from $30/t and the cash cost of iron ore products of 58% Fe content increased to US$32/t from US$26.
An interim dividend of $429.6m, or 30 cents per share, was declared, which the board said reflected its confidence in the group's financial position and outlook.
“As always, our top priority is safety,” Frolov added.
“We remain committed to achieving our goal of zero incidents and are working with every employee to deliver this.”
Frolov said debt reduction also remained of paramount importance, and the company was now in a “much stronger” position than a year ago.
“Looking ahead, we expect the results for the year to also reflect the positive trends on the global steel market, while we will remain focused on our strategic priorities: development of product portfolio and customer base, retention of low-cost position, prudent CAPEX strategy and debt reduction.”