Russian steelmaker Severstal has announced its financial results for the first quarter of the current year. Accordingly, in the given quarter Severstal registered a net profit of $72 million, decreasing by 83.2 percent compared to $428 million recorded in the same quarter of the previous year.
In the first quarter, Severstal's sales revenues fell by 12.5 percent year on year to $1.78 billion, as a result of weaker pricing for steel and lower steel sales volumes on year-on-year basis.
Severstal's EBITDA declined by 16.3 percent to $555 million in the first quarter when compared to the same quarter of 2019, primarily reflecting the lower revenues which were partially offset by a lower cost of sales. Meanwhile, the company’s EBITDA margin in the first quarter was 31.2 percent, down from 32.6 percent recorded in the first quarter of 2019.
Severstal redirected part of its sales to the export market due to the seasonal slowdown and the national currency devaluation in Russia and increased the share of steel export shipments to 45 percent in the first quarter this year.
The company stated that the spread of the coronavirus affected global steel demand in the first three months of this year. According to Severstal’s statement, steel inventories accumulated considerably due to strong restrictions on economic activity in China in February. However, steel market sentiment was supported by a gradual restart of activities in March. In Russia, domestic steel demand was growing year on year at the start of 2020, but it will possibly get worse by the reason of Russia’s GDP contraction and the stricter measures aimed at tackling the coronavirus pandemic.
Severstal said that its low-cost position helps the company to sustain competitiveness in the market despite many challenges in both export and domestic markets, and that it remains confident in the resilience of the company’s business model relative to its local and global peers.