Severstal, the country's largest steelmaker, posted a surprise third-quarter net profit thanks to 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 on 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 forecasted in a Reuters 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.
Severstal's shares were up 2.04 percent to 252.5 ($8.73)rubles early afternoon Thursday, while the MICEX index of metals and mining companies lost 0.25 percent.
"They sounded relatively upbeat, and I think we are turning the corner, slowly," Morgan Stanley analyst Dmitriy Kolomytsyn said.
Third quarter sales dropped 54 percent year on year to $3.49 billion.
Steelmakers in Russia, the world's fourth-largest producer, have suffered from a slump in orders from key industrial sectors such as auto production and construction.
Recent statements from global rivals such as market leader ArcelorMittal and German producers ThyssenKrupp and Salzgitter paint a mixed picture of the sector's prospects.
ArcelorMittal last month said the operating environment remains challenging, though it expects gradual improvement through 2010.
Loss-making ThyssenKrupp and Salzgitter both expect to return to profitability in 2010, thanks to cost cuts and a rosier sector outlook.
Austrian steelmaker Voestalpine on Thursday swung back to an operating profit in the three months to September, beating all estimates in a Reuters analyst poll, and held on to its outlook, citing signs that the downturn had bottomed out.
Severstal has mills in the United States, Britain and Italy as well as in Russia.
While its domestic operations turned a profit because of 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 amortisation (EBITDA) reached $368 million, down from $2.20 billion last year.
The company cut its total debt to $7.88 billion at the end of September, from $8.26 billion at the end of last year.
It said it had agreed on a covenant amendment to an EBRD facility, which analysts earlier said was worth 600 million euros ($890 million), but the company must pay down $1.12 billion of loans in the next 12 months.
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