Magnitogorsk Iron & Steel Works posted a $219 million net profit for 2009, the company said Monday, as increased steel prices pushed up the fourth quarter figures, beating expectations.
Fourth quarter profits matched the year-end figures, rising to $219 million from $76 million in the third quarter, while sales for the period rose to $1.67 billion, said Magnitogorsk, or MMK. Revenue for the year dropped by half to $5.08 billion, while operating profit dropped by 75 percent to $288 million.
"The company's results beat our expectations because of good operating results," Metropol analyst Denis Nushtayev said. Prices for raw materials, including coking coal and iron ore, were very low during the fourth quarter, while steel prices increased, he said.
Increased profits were also driven on in part by MMK's acquisition in October of Siberian coal miner Belon. The steelmaker spent $543 million to double its stake in Belon to 82.6 percent to secure stable raw material supplies.
MMK will increase its total production by 30 percent in 2010, with the addition of Belon enhancing the company's performance, the company said.
The company was able to make significant strides in reducing its debt load, paying off 36 percent of its short-term debt last year to leave its total debt load at $2.12 million.
A huge drop in demand from the construction and automotive sectors last year left the steel sector with a shortage of orders, forcing steelmakers to cut back production. But a revival in demand and increasing prices prompted many to reopen idled capacity.