MMK posts 1H 2011 net profit of $147 million as Forex hit bites bottom line

MMK posts 1H 2011 net profit of $147 million
Russian steelmaker, MMK, has posted a 1H 2011 net profit of $147 million under IFRS.

The net result is unchanged from the $147 million posted for 1H 2010,  with 1H 2011 EBITDA down 3% year on year to $783 million, as sales rose 25% year on year to $ 4.633 billion, from $3.720 billion a year earlier.

The 1H posting saw 2Q net profit fall to $13 million from $134 million posted a quarter earlier, with EBITDA also down 6% quarter on quarter to $380 million, despite sales rising 9% quarter on quarter to $2.417 billion from $2.216 in the 1Q 2011.

The company said the slump in 2Q net profit reflected a foreign exchange loss of $25 million and $20 million fixed assets impairment.   It noted that higher value added products sales increased 12% in 2Q, and 33% over the half despite sharp increases in raw material prices, with Iron ore up 30%, coal up 15% and scrap up 5%.

MMK noted that upcoming completion of key investment projects, including  the MMK plant in Turkey and Mill 2000 in Magnitogorsk,which will see MMK add to its higher value added product mix in the key Turkish and Russian markets.  It is expecting Russian steel consumption to grow 10% this year on the back of auto demand, machinery construction and construction.