Alchevsk Steel deepens net loss 4.7x yoy in 1H13

Обзоры по компаниям и отраслям 24.07.2013 Alchevsk Steel (ALMK UK) reported on July 23 its net loss deepened 4.7x to USD 82 mln in 1H13 and EBITDA turned negative to a USD 25 mln loss, while revenue remained flat at USD 937 mln and rolled products output rose 15.5% yoy to 1.977 mmt. In 2Q13, net loss doubled qoq to USD 55 mln and its EBITDA loss worsened qoq to USD 23 mln from USD 1.9 mln. Roman Topolyuk: Alchevsk has reported disappointing results in an environment in which the enterprise should have improved its bottom line: raw materials prices declined more steeply than prices for finished steel products. Average iron ore concentrate prices plunged 15% yoy to USD 87/t in 6M13, pellet prices dropped 23% yoy to USD 97/t, and coke prices decreased 16% yoy to USD 236/t. At the same time, heavy plate prices (25% of ALMK’s output) declined 14% yoy to USD 550/t and slab prices (53% of total output) slid 13% yoy to USD 484/t in 6M13. The spread between Alchevsk’s selling price and total production cost (depreciation included) was at breakeven in 1H13, compared to a positive spread of USD 11/t in 1H12. This can be attributed either to a negative scale effect, or the company’s inability to purchase raw materials at market prices. The company’s 1H13 net loss was deeper due to doubled yoy total debt (to USD 1.7 bln as of end-June 2013), which inflated finance expenses 75% yoy to USD 39 mln.