World Business

Severstal's net loss widens to $785m in Q1

(Agencies)
Updated: 2010-05-14 17:36

MOSCOW - Russia's largest steelmaker Severstal said Friday its net loss widened to $785 million in the first quarter as it wrote down the value of an Italian unit it plans to sell.

The figure compares to a $656 million loss in the same period a year earlier and a $162 million loss in the fourth quarter. Although sales were up 34 percent from a year earlier to $3.1 billion, they dropped 7 percent from the previous quarter.

The net loss includes a $855 million write-down on the value of an Italian unit, Lucchini SpA, that Severstal put up for sale.

The company, however, did not provide detail of the deal, which is yet to be completed.

"We are in a process of negotiations to divest Lucchini and expect to update the market as appropriate in the next six months," the company's statement said.

Severstal said earlier this month that it is pursuing several options for Lucchnini, including the sale to a strategic investor.

The steelmaker's first-quarter earnings before interest, taxation, depreciation and amortization dropped 20 percent compared to a quarter earlier as its exports from Russia were hit by bad weather. The company said bad weather conditions at the St. Petersburg port barred substantial amounts of steel products from being exported.

Severstal sounded upbeat about the second quarter in the view of higher steel prices but warned that it sees "significant uncertainty in the global steel marekts for the second half of the year".

Sevestal's shares at the MICEX stock exchange were 2.7 percent down at noon Moscow time (0800 GMT), underperforming the market.