Metallurgical enterprises of Rinat Akhmetov incur colossal losses

The recently published reports on the financial condition of Ukrainian metallurgical enterprises showed that the enterprises of the Metinvest group, according to the results of three quarters of this year, suffered significant losses.

At the Ilyich Mariupol Metallurgical Plant, losses doubled, and ten times on the azov. The production of metal rolling fell, respectively, 15 and 18 percent in relation to last year's indicators.

Experts see several reasons for such a negative. Firstly, the decline in production was influenced by an unfavorable situation in foreign markets. "The fall in demand in export markets has forced to reduce the loading of production capacities. A decrease in sales volumes in parallel with a decrease in market prices for metal rubles leads to a reduction in revenue from sales" explains the analyst of Altana Capital, Alexander Kushnarev. Secondly, raw materials are not yet reduced and companies lose profit by reducing their profitability.

According to EAVEX Capital experts, in addition to the situation in the steel market, the use of various kinds of schemes for pricing was an important reason for the appearance of reports with stunning losses. "Although the sales prices turned out to be higher than the market for nine months of 2012, a significantly overstated cost led to a deterioration and so weak profitability of the enterprise. So, according to the reports, the average price of the metal distribution of the production of Azovstal was at 685 dollars per ton, which is 20% higher compared to market levels. At the same time, production costs for the same period amounted to 705 dollars per dollars A ton, which is 33% higher compared to a fair level not exceeding $ 530, ”the EAVEX Capital report says.








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