October 31, 2019 / 9:12 AM / 21 days ago

Weak demand to put pressure on Russian steelmaker MMK in Q4

MOSCOW, Oct 31 (Reuters) - Weak demand abroad and lower domestic consumption will put pressure on Russian steelmaker MMK’s financial results this quarter, it said on Thursday, after reporting a 22% year-on-year fall in third-quarter core earnings.

Shares in MMK, controlled by Russian businessman Viktor Rashnikov, however, rose by 2% in Moscow on Thursday after it recommended a third-quarter dividend payment of $289 million, equal to 100% of its free cash flow for the period.

MMK “is seeing a decline in demand on export markets and a seasonal weakening in the consumption of metal on the domestic market amid a correction in steel prices, reflecting unfavourable conditions on the global market”, it said in a statement.

Despite these negative trends, MMK expects the price premium on the domestic market compared with the export one to remain high which will support its fourth-quarter results, as will lower prices for key raw materials.

It said it recommended a third-quarter dividend of 1.65 roubles ($0.0259) per share, significantly higher than the previous quarterly one of 0.69 roubles a share.

MMK’s third-quarter earnings before interest, taxation, depreciation and amortisation (EBITDA) fell to $525 million from $671 million in the third quarter of 2018. MMK said its net profit fell by 32% year-on-year to $271 million. ($1 = 63.7925 roubles) (Reporting by Polina Devitt; editing by Emelia Sithole-Matarise)

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