Daily analyst comments
MMK publishes 1Q 2009 IFRS financials
15.06.09 12:00
A rally in demand on steel markets and a decline in production costs are having a positive effect on MMK results.
On June 11, the Magnitogorsk Iron & Steel Works (MMK) released IFRS financials for 1Q 2009. Revenue fell 29% q-o-q to USD 965 million and operating losses shrank to USD 45 million from USD 659 million. In 1Q, the company achieved an EBITDA margin of 12%. The quarter ended with a net loss of USD 110 million, also sharply down from the net loss of USD 469 million in 4Q 2008.
We expect the steelmaker to post better financial results for the second quarter, as steel market conditions improve with a gradual increase in steel prices and shipment volumes, and production costs decline. The company, which does not have a resource base of its own, has so far gained from stable prices on the domestic market for metallurgical raw materials. Another positive factor for the steelmaker, which could help to improve its operating results in 2H 2009, is the opening of steelmaking facilities in July, including the start of the ‘5000’ hot-rolling mill (with a capacity of 1.5 million tons annually) and a polymer coating facility (200,000 tons a year).
Our target price for ÌÌÊ is USD 0.43 per share as of year-end 2009.