Erdemir Group Showed a Higher Performance In 1Q 2008.
Erdemir Group, Turkey’s largest steelmaker, today announced its financial results for the three months ended 31 March 2008.
Net income for the first quarter, was 226.6 million TRY (189.3 million USD), denoting a 57% increase over 1Q07’s 144.0 million TRY (102.5 million USD). Group’s net profit margin was 14.9%, up nearly 4 points over 1Q07.
Operating income for the three months ended 31 March 2008, was 310.3 million TRY (259.2 million USD), up 84% compared to 1Q07 and increasing by 8 points, operating margin rose to 20.5%.
At Ereðli Plant, 425 thousand tons of cold rolled and 701 thousand tons of hot rolled flat products were manufactured, totaling to 1.126 thousand tons. Meanwhile, production at Ýskenderun Plant rose by 26% over 1Q07, reaching 737 thousand tons. The primary contributors to the production increase were the two new slab casters that have been recently started up.
Total steel shipments from Ereðli Plant were 1.106 thousand tons and total shipments from Ýskenderun Plant, including slab shipped to Ereðli Plant, were 692 thousand tons, rising by 11% and 24% compared to 1Q07, respectively.
Consolidated sales revenue amounted to 1.517,2 million TRY (1.267,5 million USD), an increase of 12% compared to 1Q07, thanks to favorable market conditions, pricing environment, increasing sales amounts and additionally higher levels of efficiency in the facilities.
Despite soaring raw material prices, gross profit increased by 70% over 1Q07, rising from 222.5 million
TRY (158.5 million USD) to 378.3 million TRY (316.1 million USD). Gross margin reached 24.9% in the first quarter of the year.
Financial performance was in line with previously communicated management expectations, with EBITDA of 382.0 million TRY (319.1 million USD), up 41% over 1Q07 while the margin moved up to 25.2% from 20.1%.
The ratio of operating expenses (including SGA and R&D expenditures) to sales revenue was 3.0%.
After March 2008, a significant development in our Group has been the start-up of the new Blast Furnace No.1, recently built in Ereðli.
International credit rating agency, Moody’s, assigned an initial Ba3 corporate family rating with a stable outlook to ERDEMÝR Group, ranking the same with the sovereign rating of Turkish Treasury.
It is cited in the report, released on September 12, 2007 by Moody’s that the rating reflects the Group’s strong market position in the Turkish flat and long steel markets, low cost production base, its strong internal cash generation ability which supports its organic expansion programmes. Moreover, Agency is of the opinion, that ERDEMÝR Group will succeed in implementation of the modernization projects with the aim of further developing high value added products which should mitigate the traditional earnings volatility.
Additionally, Moody’s stated that ERDEMÝR’s disciplined approach towards organic growth and the company’s consistency in its strategy and financial policy, which should also benefit from the ownership exercised by OYAK were considered a credit positive. Moody’s also reckons that the Group will further strenghten its financial fundamentals in the upcoming years and maintain a positive free cash flow from 2009 onwards upon completion of the investments.
ERDEMÝR Group also holds BB- credit rating with a stable outlook with S&Poor’s which is,likewise, the sovereign rating. The ratings, Group was granted, by the two agencies verify the financial soundness of our Group and the accuracy of the steps taken by OYAK following privatization.
The realized restructuring efforts and newly initiated corporate strategies have gone on to display its constructive repercussions on growth, profitability and financial results.
ERDEMIR Group’s financial results for the first half of 2007 were disclosed on Istanbul Stock Exchange. Having increased by 266% in the first half of 2007, Group’s net income rose to 375.8 Million YTL, pushing the net margin from 4,6% to 13,2%.
In the first half of 2007, ERDEMÝR Group’s consolidated sales revenue increased by 26% over the same time period of 2006 to reach 2,837.5 Million YTL. The still ongoing brisk demand conditions in the long and flat steel markets played a major role on this favorable outcome.
Despite higher input prices, the strong sales performance in the first half of the year pushed gross profit up by 57% from 363.1 Million YTL in the first half of 2006 to 571.1 million YTL. Gross margin of the Group increased by nearly 4 points from 16.2% to 20.1% over the same period.
Share of the operating expenses over net sales revenue maintained its level at 4%. Increasing by 39% Ebitda rose to 620,8 Million YTL and the margin soared by 2 points reaching 21,9%.
Group’s net financial debt balance improved by 131 million YTL, bouncing back to 1,175 Million YTL.
The modernization and transformation investments which will support our position prominently are going in conformity with the plan. 66% of the total capital expenditures worth nearly USD 3bn have been already undertaken.