CEO: Russia’s MMK plans to have 2015 net profit, keep output flat

MOSCOW, Jul 16 (PRIME) -- Russia’s Magnitogorsk Iron and Steel Works (MMK) is unlikely to increase production in 2015, but the company expects to receive a net profit this year, CEO Pavel Shilyayev told PRIME on Thursday.

“The Russian market is under significant pressure now. That is why our strategic task is to maintain production volume. Production figures are unlikely to improve in current conditions. And even maintaining results of 2014, taking into account the first half of the year, is quite a difficult task,” he said.

But given MMK’s higher exports, the metals company is likely to keep financial results flat on the year and even earn a net profit in 2015.

MMK is still focused on the national market, but foreign markets secure a higher demand for the company’s products, Shilyayev said. MMK’s exports 25% of its products and this share may rise to 30% by the end of 2015.

At the moment the company uses about 90% of its production facilities.

Demand for metals in Russia and CIS countries is likely to fall 15% in 2015 due to the situation in the construction and car industry, CEO said, adding that MMK plans to partially offset this fall by increasing exports.

MMK has no plans to leave the car industry and wants to provide additional services for its clients. The company’s key customers include top Russian car maker AvtoVAZ, light commercial vehicle (LCV) producer GAZ, leading truck manufacturer Kamaz and car maker UAZ.

Shilyayev believes that these car makers are less affected by the downturn in the car industry in comparison with other makers and the car output of UAZ may even rise in 2015.

The car makers are also developing new models to create significant competitive advantages before demand revives, he said.

In 2014, MMK’s revenue fell 2.9% on the year to U.S. $7.952 billion, while its net loss narrowed 98.2% to $44 million, as calculated under International Financial Reporting Standards (IFRS).

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