Russian steel producer Magnitogorsk Iron and Steel Works (MMK) has announced its financial results for the third quarter and the first nine months of this year.
In the third quarter, MMK registered a net profit of $102 million, up 75.9 percent compared to the previous quarter. Besides, the company’s revenue increased by 23.4 percent quarter on quarter to $1.56 billion due to growth in sales volumes thanks to a recovery in business activity and a rise in steel prices due to positive market trends in Russia and globally.
In the third quarter, MMK’s EBITDA rose by 54.9 percent quarter on quarter to $350 million, reflecting the improving market environment in the third quarter and a significant growth in the share of higher-margin domestic sales. In the meantime, the EBITDA margin increased to 22.4 percent, from 17.8 percent in the previous quarter.
In the given period, the company’s free cash flow totaled $335 million. It was driven by higher sales and margins, and the management team’s effective efforts to reduce working capital amid a favorable domestic market environment.
As a result, in the first nine months of the current year MMK’s net profit declined by 62.1 percent year on year to $291 million, mainly due to worsening market conditions and growing foreign exchange losses driven by the devaluation of the rouble. MMK’s EBITDA in the January-September period of the current year decreased by 30.4 percent year on year to $1 billion, with the EBITDA margin falling to 22.4 percent versus 25 percent in the same period of the previous year. In the first nine months of this year, the company’s revenue declined by 22.3 percent year on year to $4.5 billion.
The company’s Turkey-based subsidiary MMK Metalurji’s revenue in the third quarter increased by 33 percent compared to the previous quarter to $137 million, reflecting the removal of lockdown restrictions and a recovery in business activity in Turkey. Its revenue in the first nine months declined by 13.9 percent year on year to $353 million, due to the unfavorable market environment and the EU import quotas imposed on rolled products from Turkey.
As for the future outlook, MMK expects the pent-up demand from the construction industry to bolster sales and domestic prices to remain flat in the fourth quarter. Higher utilization of the hot rolling mill 2500’s in the fourth quarter will additionally support MMK Group sales.