Alexei Mordashov, who controls 82.6% of Severstal, said the company's 2006 results were "a good basis for further growth" and was optimistic about its performance in 2007.
"Severstal has a positive outlook for 2007 due to expected high prices for steel in the main [sales] regions," Mordashov said. "We will continue influencing prices through a sustainable and smooth development and a balanced approach to mergers and takeovers."
Severstal sought a merger with the world's second-largest steelmaker, Arcelor, but the deal fell through when it was rejected by Arcelor shareholders in June to clear the way for a takeover of the Luxembourg-based company by the world's largest steel company, Mittal Steel. Arcelor paid Severstal 140 million euros (about $180 million) in compensation.
Mordashov said Serverstal had paid $1 million for the Victory Industries machine-building company, based southwest of Detroit in Michigan, the Russian producer acquired in early March. Mordashov said the company would service Severstal North America, another U.S. asset acquired in 2004, and ensure access to foreign expertise.
Mordashov said Severstal's net profit had declined in 2006 over an asset revaluation, increased depreciation and investment in several modernization projects. He said the company had invested $1.244 billion in programs to raise production, improve productivity and the range of products in 2006.
Severstal said earlier Monday its net profit, calculated to International Financial Reporting Standards (IFRS), declined 30.4%, year-on-year, in 2006, to $1.18 billion.
The steel producer said its sales increased 19.1% in the reporting period, to $12.42 billion, while operating income fell 15.8%, year-on-year, to $1.95 billion. Earnings before interest, taxes, depreciation and amortization (EBITDA) went up 4.7%, to $2.98 billion.
The company's net profit, calculated to Russian Accounting Standards (RAS), grew 2.3%, year-on-year, in 2006, to 35.93 billion rubles (about $1.35 billion).
