* NLMK Q3 net profit down 40 pct to $167 mln
* Steel major expects earnings to decline further
* Company sets tone for rest of sector-analyst
MOSCOW, Nov 9 Russian steelmaker NLMK
said on Friday it expected sales and profits to fall further in
the fourth quarter after reporting that third-quarter net
earnings fell by nearly a half.
The company, run by billionaire Vladimir Lisin, said: "We
expect Q4 revenue to be down by 5 percent largely due to lower
selling prices, and profit will further decrease."
NLMK blamed lower sale prices and sluggish steel markets for
a 40 percent drop in net profits in the third quarter to $167
million compared to April-June.
Analysts polled by Reuters had expected the company to post
a third-quarter net profit of $213 million.
Steelmakers have suffered from slower growth in China, the
world's largest producer and consumer of steel, and weak demand
in Europe due to the euro zone debt crisis.
"Deterioration in the pricing environment, started in the
mid-second quarter ... continued in the third quarter, putting
significant pressure on ordinary grade products - pig iron,
slabs and hot-rolled coil," the company said.
NLMK said steel prices had hit bottom in the fourth quarter
due to weak market conditions and a seasonal consumer slowdown.
The company's shares were down 2.58 pct at 0839 GMT,
underperforming the broader MICEX market, which was down
"In our view, the results have negative read-across for
their peers, who will also likely provide negative outlook,"
said Valentina Bogomolova from Uralsib brokerage. "It's not
steelmakers' fault though, they are just going through hard and
NLMK's peers - Severstal, Evraz, MMK
and Mechel are expected to report
third-quarter results over the coming weeks.
The steel giant said steel prices in Russia slid an average
5-10 percent year-on-year in the third quarter and prices in
Europe slumped 10 percent. It said it expected its 2012 steel
production to grow 25 percent to roughly 15 million tonnes.
The company's earnings before interest, taxes, depreciation
and amortisation fell 19 percent from the previous three months
to $483 million. Its revenue dropped 8 percent to $3 billion for