By Jack Stubbs
MOSCOW, March 1 Russia's No.2 steelmaker Evraz
said on Wednesday its core earnings rose 7 percent in
2016, benefiting from a rebound in steel prices and an improving
The company's earnings before interest, taxation,
depreciation and amortisation (EBITDA) totalled $1.54 billion,
up from $1.44 billion the previous year, it said in a statement.
Analysts in a Reuters poll had forecast that Evraz,
part-owned by Chelsea soccer club owner Roman Abramovich, would
report full-year 2016 EBITDA of $1.5 billion.
Russian steelmakers have suffered over the past two years as
world steel prices plumbed 11-year lows and the country's
economic crisis sapped domestic demand.
But they expect a stronger 2017 as Russia's economy
improves, buoyed by higher oil prices, and by loftier steel
prices supporting profits.
"Overall, thanks to favourable market conditions and
numerous improvement initiatives, we delivered fairly strong
financial results," Chief Executive Alexander Frolov said.
Evraz narrowed its net loss to $188 million, versus a loss
of $719 million in 2015, it said. Revenue slipped 12 percent to
The company's net debt to EBITDA ratio fell to 3.1, it said
in a presentation for investors. Analysts at VTB Capital have
said Evraz could reduce the ratio to below two in the first half
of 2017, its lowest since 2008, creating room for dividend
"We are confident enough that the (net) debt/EBITDA ratio
will be less than three, but nevertheless, I think it is too
early to speak about dividends right now," Frolov told a
conference call with reporters.
Frolov said the company was "cautiously optimistic" about
market conditions in 2017 and hoped efficiency measures would
help it boost free cash flow and reduce its debt burden. Evraz's
2017 steel production was seen flat, he added.
Efforts to raise money by some of Evraz's competitors
further point to increased confidence in the sector.
Russia's biggest steel producer, NLMK, said in
December it could issue Eurobonds this year and TMK,
the country's largest maker of steel pipes for the oil and gas
industry, sold a 13 percent stake through a secondary public
offering in February.
Banking sources have previously told Reuters Evraz is also
considering a convertible bond issue this year.
"At the moment, we are flexible enough and considering all
possible options for debt refinancing," Chief Financial Officer
Nikolai Ivanov said.
"The market is currently extremely good, the recent issues
we have seen ... were quite impressive. The market is very good
and we have our finger on the pulse."
(Reporting by Jack Stubbs; Editing by Dale Hudson)