InvestCafe: MMK Proves the Only Metallurgical Company with Stable EBITDA

22 April 2013 (14:46)

April 22, 2013. In 2012, Magnitogorsk Iron & Steel Works (MMK) proved the only Russian metallurgical enterprise that managed to keep its EBITDA at the same level as a year earlier. The figure came to $1.36bn. On the one hand, this was just 1.5% more than in 2011. On the other hand, all the other companies in this sector are doing much worse, InvestCafe analyst Pavel Yemelyantzev said when commenting on MMK’s financial report for 2012.

He pointed out that NLMK and MMK were the only businesses that managed to increase their revenues last year. The former’s increase amounted to 3.6% and the latter’s to only 0.2% (to $9.33bn).

‘There were three primary reasons for MMK to improve its performance indicators.
Firstly, the company’s production outputs went up noticeably: its steel output reached 13.04m RUR, which was 6.9% more than before. The total metal goods output rose by 7% and came to 11,940 tons.
Secondly, the company managed to raise the share of its value-added goods (hot- and cold-rolled stock, galvanized rolled products, and rolled products with polymeric coating) from 36.45% in 2011 to 41% in 2012. This is 20% more in terms of physical volume.
Thirdly, MMK’s low-scale vertical integration played a part, too. A nearly 33% drop in coke coking coal prices throughout the year resulted in the lower prime cost of the slabs,’ Yemelyantzev explains.

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