Evraz's 2016 earnings rise following cost cutting programme

Evraz’s earnings for 2016 rose following a cost-cutting programme, while the Russian steel miner remains “cautiously optimistic” about the future of the commodity market.

Although consolidated revenue fell 12% to £7.71m, earnings before interest, tax, depreciation and amortisation (EBITDA) rose 7.2% to $1.54m in 2016 as the EBITDA margin increased to 20% from 16.4%.

Losses per share narrowed 66.7% to 0.15p as net loss dropped to $188m from $719m in 2015, due to impairment of assets worth $465m.

Free cash flow shrank to $659m from $799m the previous year as the company continued to reduce its net debt, which narrowed to $4.8bn from $5.3bn.

The FTSE 250 company, which is 31% owned by Chelsea football club owner Roman Abramovich, embarked on a cost-cutting programme last year saving $316m due to ongoing improvements in productivity.

Ezraz claims that it is one of the lowest-cost producers of steel and raw materials in Russia as the cash cost of slabs decreased to $183 per tonne from $193, the cost of washed coking coal fell to $30 per tonne from $31 and the cost of iron ore products slid to $26 per tonne from $30.

Chief executive Alexander Frolov said: "In 2016 our cost-cutting programme brought an overall effect of $316m which helped us to further solidify our low-cost steel and coking coal positions globally. An additional effect of $169m was realised through our customer focus initiatives largely associated with our product portfolio development.

“As we progress into 2017, we remain cautiously optimistic about the market environment and expect that our continuous cost improvement initiatives along with moderate capital expenditure will enable us to generate resilient free cash flow and further decrease leverage."

Shares in Evraz were up 4.6% to 241p at 0900 GMT.