Evraz first-half profit rises on cost-cutting measures

27th Aug 2015 08:16

(ShareCast News) - Evraz posted a 21% jump in interim pre-tax profit despite a drop in revenue, as the steelmaker cut costs and benefited from the devaluation of the Russian rouble.First-half pre-tax profit was $120m, up from $99m in the same period last year, despite a decline in revenue to $4.79bn from $6.63bn.The company said it reduced costs by $149m in the first half and cut capital expenditure by almost a third to $251m to combat declining steel prices.Chief executive officer Alexander Frolov said: "In the first half of 2015, sales volumes in our core Russian and North American markets contracted significantly, compounded by continued pressure on global steel prices."On the positive side, we have managed to maintain our market share and reallocated part of our Russian sales to export markets in response to changing demand for steel products."He said the company continues to execute its strategy, which focuses on low-cost production, customer care, cost-cutting and targeted, performance-enhancing capital expenditures.Looking ahead though, Evraz said it expects its results to continue to be affected by weak steel and raw material markets. It forecasts a moderate decline in demand for its steel products due to instability on the Russian market, driven by a decrease in investment activity, which will constrain performance in priority market segments."If current market conditions persist into H2 2015, steel prices will continue to decline, as input costs slide and key currencies decline against US dollar," it said. "In contrast, the Russian rouble devaluation will have a positive effect on operating expenses, helping EVRAZ to maintain healthy profitability.