ENRC first-half profit falls by half on ferroalloy prices, costs

16:36, 14 August 2013

LONDON. August 14. KAZINFORM Eurasian Natural Resources Corp., subject of a takeover bid by its founders and Kazakhstan, said first-half profit fell 55 percent on lower prices for ferroalloy used in steelmaking and the higher cost of financing.

Net income dropped to $221 million from $492 million a year earlier, ENRC said today in a statement. Sales slid 1.1 percent to $3.2 billion. The price of ferroalloys it sold declined by 11 percent from the previous year, while the cost of sales rose 9 percent to $1.92 billion. ENRC won't pay a dividend.

ENRC sank by as much as 4.3 percent, the biggest slide since June 28, and was down by 2.8 percent at 229.8 pence as of 9:09 a.m. in London trading. Nomura Holdings Inc. said in a note to clients that the results were "below expectations."

Mining company profits are being squeezed by slowing growth in China, the biggest consumer of commodities and the world's largest producer of steel. Ferroalloys made up 38 percent of ENRC's sales and iron ore 30 percent, the company said today.

Net debt rose 60 percent to $5.5 billion, it said. "Net finance costs increased by 89 percent to $164 million as a result of increased borrowings," ENRC said in the statement, Kazinform refers to Bloomberg.

The company increased output of saleable ferroalloys, used in steelmaking, 2.4 percent to 386,000 tons in the quarter from 377,000 tons a year earlier, while production in the first half was little changed at 750,000 tons. Saleable iron-ore output in the second quarter advanced 21 percent to 4.3 million tons.

Business, companies News Business Economy