May 8, 2018 / 7:24 AM / a year ago

UPDATE 1-Russian steelmaker MMK's earnings rise, but miss forecasts

(Adds details, quotes, analyst comment)

MOSCOW, May 8 (Reuters) - Russian steelmaker MMK on Tuesday reported core first-quarter earnings of $560 million, up 23.9 percent compared with the same period last year, missing analysts’ forecasts.

Analysts in a Reuters poll had expected MMK, controlled by Russian businessman Viktor Rashnikov, to report a 26 percent rise in earnings before interest, taxation, depreciation and amortisation (EBITDA) to $571 million.

On a quarterly basis, EBITDA fell 5.4 percent, as higher raw material prices and a stronger rouble drove up the cost of sales, MMK said.

MMK said rising sales volumes and prices helped to boost revenues by 23.8 percent year-on-year to $2.06 billion in the first quarter of 2018.

MMK’s board on Tuesday recommended dividends of 0.801 roubles per share for the first quarter, which amounts to approximately $145 million or 100 percent of free cash flow for the period, the company said.

“Dividends are stronger than expected, but lower versus peers, so they will not be a driver for the street to shift attention to MMK,” BCS Global Markets analyst Oleg Petropavlovsky said.

Looking ahead to the next quarter, MMK said it expected healthy domestic demand, but sales could be restrained by scheduled equipment maintenance.

“The company’s financial performance will be driven by higher prices for steel on the domestic market amid the seasonal recovery in demand and devaluation of the rouble, along with correction in prices for key raw materials,” MMK said.

Reporting by Polina Ivanova; Editing by Louise Heavens and Jane Merriman

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