Severstal positive on 2011 after Q4 loss

Thu Mar 3, 2011 9:24am GMT

* Posts Q4 loss of $352 mln vs forecast $288 mln profit
* Says Russia and CIS steel demand to grow 8 pct in 2011
* Shares up 1.48 percent
(Adds CEO comment, detail, share price)

By John Bowker and Alfred Kueppers

MOSCOW, March 3 (Reuters) - Russia's biggest steelmaker Severstal (CHMF.MM: Quote) said growing demand in both home and overseas markets would boost sales and production in 2011 after it posted a fourth quarter 2010 loss of $352 million.

The company said on Thursday that demand in Russia and the CIS would rise 8 percent in the current year, supported by investment in new infrastructure, pipelines and real estate.

It added that global prices were also likely to be strong in the first half of the year as growth in the world economy continues to fuel industrial demand, before easing in the six-month period to end December.

"Accelerating economic growth in our key markets in 2011 should produce another strong year for Severstal as demand for steel improves and raw material prices rise," Chief Executive Alexei Mordashov said in a statement.

Steelmakers in Russia, the world's third-largest producer, are benefiting from their position as leading low-cost producers after a difficult 2009 when prices and demand collapsed.

Severstal shares, which have climbed around 55 percent in the past 12 months, were trading 1.48 percent higher at 0920 GMT, compared with a 1 percent higher broader market.

MISSED FORECASTS

Severstal's fourth quarter 2010 loss was wider than the same period the previous year and some way off analysts' forecasts for a $288 million profit.

The company said in a statement the Q4 loss figure included losses relating to closed operations in North America not included in the 2009 results.

Severstal's North American arm has been the company's problem child in recent months, with the company choosing to offload assets and focus on a smaller presence.

The company on Wednesday announced the sale of three mills in the U.S. to New-York based investment firm Renco Group in a deal valued at $1.2 billion. [ID:nLDE7211HL]

Severstal last month also postponed plans for a $1.5 billion London IPO of its fast growing Nord Gold mining unit citing market conditions, and said in the statement it would now concentrate on developing the business. "We are confident that given its strong fundamentals Nord Gold will meet our predicted growth targets," Severstal said.

Overall company revenue in the fourth quarter totaled $3.73 billion, down from $3.9 billion a year ago and below a $3.98 billion poll forecast.

Severstal's full year 2010 loss came in at $577 million, down from a restated $1.04 billion loss in the crisis-hit 2009. 2010 revenue was $13.6 billion, up 41.5 percent on 2009. (Writing by John Bowker; Editing by Hans Peters,sourced:Thomson Reuters)