Steel Mills

Severstal NA Reports Utilization Rates Close to 100%

August 29, 2013

Severstal NA revenue for Q2 rose to $953 million from $930 million in the first quarter 2013. Demand growth was led by U.S. automotive, construction and pipe and tube industries. First half 2013 revenue, however, fell to $1,883 million from $2,158 million in H1 2012—a 12.7 percent loss. Severstal reported a utilization rate of almost 100 percent compared to the average of 78 percent for the US steel industry, but lower prices impacted increased production gains. A decrease in EBITDA to $44 million was attributed to a cash settlement with a coking supplier, resulting in a $12 million charge.

For the company overall, Severstal reported a second quarter loss of $44 million compared to a net profit of $44 million in the first quarter. The loss was primarily due to $226 million foreign exchange loss (FX) in the second quarter. Excluding FX losses the company’s profit would be $182 million.

Revenue increased by 2.8 percent quarter over quarter to $3,414 million. Earnings improved due to higher sales volumes and cost control measures.

Severstal expects steel demand to remain strong for Q3 in both Russia and the USA with moderate pricing increases. The industry forecast over the medium to long term is expected to remain challenging.