Russia Evraz revives dividends, shares soar

Wed Oct 12, 2011

* H1 net $263 mln, Reuters poll forecast $614 mln

* H1 EBITDA $1.62 bln, poll forecast $1.65 bln

* Shares up more than 10 percent in London

* Will pay interim, special dividend

Oct 12 (Reuters) - Russian steelmaker Evraz on Wednesday announced its first interim dividends since the global financial crisis hit in 2008, sending its shares sharply higher despite missing estimates with its first half results.

"As a result of the 1H 2011 performance and the strength of our balance sheet the directors have decided to resume the payment of dividends to shareholders," chief financial officer Giacomo Baizini said in a statement.

"We are declaring an interim dividend of US$89 million or 34 percent of our net income in 1H 2011. We are also declaring the payment of a special dividend of $402 million."

The payout is equivalent to $0.60 a share, and the special dividend equals $2.70 a share.

At 1656 GMT, the shares were up 10.4 percent or $1.63 at $17.25.

Evraz, part-owned by billionaire Roman Abramovich, has improved its liquidity position this year by reducing total debt to $6.04 billion at the end of the first half, compared to $7.81 billion at the end of 2010.

Fitch Ratings last month upgraded Evraz's debt rating to 'BB-' from 'B+' on the back of the company's successful refinancing and debt reduction efforts.

"All in all, the much improved balance sheet with no significant short-term maturities makes the results decent and the company less vulnerable in case of weak market conditions," VTB analysts wrote in a note.

Although the shares surged, the company's first-half net profit and earnings before depreciation, taxation and amortisation (EBITDA) came in below market expectations.

First half net profit was $263 million, while analysts polled by Reuters expected $614 million, up from a year-earlier loss of $270 million.

Evraz also said one-off losses related to the conversion of debts had reduced the figure from $494 million.

First half EBITDA was $1.63 billion, up from $1.15 billion in the year-earlier period and just below the $1.65 billion poll forecast.

Sales were $8.4 billion, up from $6.38 billion and more than the $8.14 billion poll forecast.

CHALLENGING MARKET

Evraz also warned that it has experienced weaker trading in recent weeks due to lower production and export prices in part caused by the challenging global economic environment.

"The group's recent trading has been impacted by scheduled repairs, lower production volumes, a weak market environment in the Czech Republic and a change in product mix in South Africa," Chief Executive Alexander Frolov said in a statement.

"In addition, in recent weeks, there have been some decreases in export prices," he added.

In China, the world's leading steel producer, Shanghai rebar prices dropped 11 percent in September.

The company, which does not ship significant volumes there, earned 34 percent of its revenues in Russia last year and 24 percent in the Americas, with another 10 percent of sales to the European market.

In a separate interview with Reuters Insider, Baizini said the company is prepared for any market slowdown.

"We make sure that we are not producing any steel which is unsold," he said.

"We do keep monitoring the situation, early days, but we're ready for it."
(sourced Reuters)