Russian steel producer Magnitogorsk Iron and Steel Works (MMK) has announced its financial results for the fourth quarter and the full year of 2016 according to International Financial Reporting Standards (IFRS).
In the fourth quarter, MMK registered a net profit of $208 million, compared to a net profit of $417 million in the third quarter of the year, while the company's revenues increased by 4.9 percent quarter on quarter to $1.55 billion, due to stable finished products sales volumes (despite seasonally weaker business activities) against the backdrop of higher average prices. In the fourth quarter, MMK's EBITDA decreased by 30.2 percent to $456 million, with the EBITDA margin declining from 44.2 percent in the third quarter to 29.4 percent.
Meanwhile, in 2016 the company recorded a net profit of $1.11 billion compared to a net profit of $421 million in 2015, while its revenues decreased by 3.6 percent year on year to $5.63 billion, due to lower sales prices in 2016. In the same year, MMK’s EBITDA increased by 17.3 percent year on year to $1.95 billion, with the EBITDA margin rising from 28.6 percent in 2015 to 34.7 percent.
According to MMK, its financial performance in the first quarter of the current year is expected to come under pressure from the high base of coking coal prices and seasonal growth in prices for scrap. In general, MMK believes that, in the current year, demand for steel in Russia may be 1-2 percent higher year on year, making it possible for the company to maintain sales volumes. Following the completion of the investment cycle, MMK plans to increase coking coal production at its Belon mines by 600,000 mt this year.