July 19, 2018 / 11:37 AM / 5 months ago

RPT-Shares in Russia's Severstal rise as jump in earnings beat forecast

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MOSCOW, July 19 (Reuters) - Severstal, one of Russia’s top steelmakers, reported a 39 percent jump in second-quarter core earnings due to higher steel prices, beating analysts’ forecasts and sparking a jump in the share price.

The report comes as steel markets grapple with the impact of a global trade war between the United States and China. On Thursday, the EU will set the tariff quotas for steel imports, which Severstal and other Russian steel producers have played down.

“Severstal remains well positioned to adapt quickly to changing conditions and capture attractive pricing both domestically and globally,” it said in a statement.

The company, controlled by billionaire Alexei Mordashov, was the top performer in Moscow’s benchmark MICEX index on Thursday. Its shares rose 1.7 percent by 0723, while the index was down 0.3 percent.

Severstal, which attributed 60 percent of revenue to sales in Russia and 28 percent to sales in Europe in April-June, expects global steel demand to remain strong, with prices supported by the construction season.

Its second-quarter earnings before interest, taxation, depreciation and amortisation (EBITDA) totalled $874 million, up from $629 million in the same period a year ago. Analysts polled by Reuters had forecast EBITDA of $842 million.

Severstal’s revenue rose 17 percent to $2.3 billion, while net income jumped to $557 million from $136 million a year ago. The latter included a forex loss of $343 million following the company’s sale of an Italian subsidiary.

Alongside a better-than-expected financial report it said it recommended a dividend payment of 45.94 roubles ($0.7) a share, up from 22.28 roubles a share for the second quarter in 2017.

It also said its net debt fell 80.5 percent from the end of March to $153 million at the end of June due to growth in cash balances on the back of free cash flow generation. The gross debt remained at $1.5 billion.

Its capital expenditures rose 17.6 percent from the first quarter to $160 million due to seasonal factors, Severstal said, adding that the 2018 capex programme was on track to reach 49.5 billion roubles ($782 million), with a focus on upstream investments. ($1 = 63.2600 roubles) (Reporting by Polina Devitt; editing by Jan Harvey)

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