Severstal on Thursday posted a surprise third-quarter net profit thanks to a strong performance at its domestic mills and said it was increasingly optimistic about the future.
“Greater stability in our primary markets has made us more optimistic on the prospects for the remainder of 2009 and 2010,” chief executive Alexei Mordashov said in a statement Thursday. “While a Q4 seasonal correction cannot be ruled out, we believe further measured recovery in 2010 is now more likely.”
Severstal said third-quarter net profit was $66 million, compared with a year-earlier profit of $1.31 billion but well ahead of the $131 million net loss forecast in a poll of analysts.
A construction-led upturn in Russia, where recession hit late last year, was offset by continued losses in the United States, where they narrowed sharply from the previous quarter, and in Italy.
“They sounded relatively upbeat, and I think we are turning the corner, slowly,” Morgan Stanley analyst Dmitry Kolomytsyn said.
Third quarter sales dropped 54 percent year on year to $3.49 billion.
Severstal has mills in the United States, Britain and Italy as well as in Russia.
While its domestic operations turned a profit thanks to low production costs and a seasonal uptick in construction demand, the U.S. operations lost $78 million at the operating level.
This represents a significant improvement from the second quarter, when the U.S. plants lost $236 million. Severstal’s overall third-quarter earnings before interest, taxation, depreciation and amortization reached $368 million, down from $2.20 billion last year.