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Evraz swings to FY'17 profit on strong steel, coal prices

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Evraz swings to FY'17 profit on strong steel, coal prices

On the back of strong steel and coal prices, Evraz Plc swung to a net profit of US$759 million, or 48 U.S. cents per share, in 2017, from the year-ago net loss of US$188 million, or 15 cents per share.

The company declared a formal dividend policy and now plans to declare at least US$300 million of dividends per annum, to be paid semiannually; however, no dividends will be paid out if the net debt/EBITDA ratio is above 3.0x.

Meanwhile, Evraz declared a second interim dividend of 30 cents per share, or US$429.6 million in total; same as the dividend declared for the first half.

Revenues in the full year jumped 40.4% year over year to US$10.83 billion on the back of higher sales volumes and prices, according to the March 1 results. EBITDA in 2017 surged 70.2% year over year to US$2.62 billion on improved market conditions and efficiency initiatives.

Revenue from the steel segment rose 40.9% to US$7.74 billion; North American steel segment revenue increased 27.3% to US$1.86 billion and coal revenues swelled 67.5% to US$2.21 billion, on a yearly basis.

In 2017, Evraz's CapEx increased to US$603 million, compared with US$428 million in 2016, due to significant expenses on major projects and the strengthening of the Russian ruble's exchange rate against the U.S. dollar.

The company's consolidated output of steel products, net of rerolled volumes, increased 5.7% quarter over quarter to 3.3 million tonnes in the fourth quarter of 2017, and crude steel output improved 1.4% to 3.5 million tonnes.

In a separate statement, the company said subsidiary Fegilton Ltd. agreed to divest its entire share in Evraz DMZ's holding company Drampisco Ltd. to DCH Group unit Senalior Investments Ltd.

The company will receive about US$106 million for the sale of the integrated steel mill, with US$25 million payable within five business days of the agreement. The full payment will be received before Dec. 15. Proceeds will be applied to general corporate purposes.

In 2017, Evraz DMZ produced about 1 million tonnes of pig iron, 918,000 tonnes of crude steel, and 785,000 tonnes of steel rolled products, and generated US$586 million of revenue.