Severstal is optimistic about future production

Russia's Severstal, one of the country's largest steelmakers, reported a 25% lower Q3 baseline profit year-on-year, albeit slightly below analysts' forecasts. The company's shares were stable during trading on the Moscow stock exchange.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $ 768 million, the company said in a statement. Analysts had forecast a profit of $ 773 million.

Third-quarter net income was $ 455 million, up 53 percent from last year, the company said.

However, revenue was down from the previous quarter, down 9 percent to $ 2,063 million. This was due to a decline in sales, the company said, and a decline in steel prices.

Chief Executive Officer Alexander Shevelev said the company expects global demand to support solid performance in the next quarter.

“We expect global steel demand to remain robust thanks to the strength of the global economy and continued capacity cuts in China,” Shevelev said.

The company's board of directors recommended a third-quarter dividend payout of RUB 44.39 (USD 0.6755) per share on Thursday, paying out more than 100 percent of its quarterly free cash flow, Severstal said.

Analysts at BCS Global Markets cautiously noted: “We disagree with management (Q4 2018) as steel prices decline in Russia and globally,” said Oleg Petropavlovsky, analyst at BCS Global Markets, pointing to weak sales.

Severstal reported last week that steel sales fell 5 percent from the previous quarter.