SGOK net income declines 11% qoq in 3Q13

SGOK net income declines 11% qoq in 3Q13



28 жовтня 2013 года
Конкорд Капитал

Северный ГОК (SGOK)


Northern Iron Ore (SGOK UK) increased its revenue 8% yoy to USD 1.256 bln in 9M13, while iron ore production grew only 2% yoy during the period. EBITDA advanced 11% yoy to USD 705 mln, while net income rose 8% yoy to USD 433 mln (EPS of USD 0.19/share).



In 3Q13 alone, the company’s revenue dipped 9% qoq to USD 409 mln, against flat qoq production of iron ore products at 3.4 mmt. EBITDA declined 11% qoq to USD 236 mln in 3Q13, while net income dwindled 14% qoq to USD 143 mln.



Roman Topolyuk: Northern Iron Ore experienced a dip in profitability in 3Q13, along with a 9% qoq decrease in average quarterly selling price (market prices declined 3% on average). The plunge in selling price happened after the unusual 12% qoq growth of selling price in 2Q13, still driving Northern Iron Ore earnings upwards YTD. This growth in 2Q13 occurred contrary to the market downward trend. Factoring in the 3% qoq price decline in the local Ukrainian market and export prices decline for iron ore products in 4Q13, as well as expected stable production, we project Northern Iron Ore to report a 30% yoy increase in net income to USD 564 mln for 2013, implying EPS of USD 0.25/share.



However, there is a risk of a one-off item slashing profit in 4Q13, as was the case in 4Q12. As long as the market outlook didn’t improved materially since the beginning of the year, we see little incentive for Metinvest, the parent company of Northern Iron Ore, to re-establish a high-dividend payout policy at SGOK’s next AGM in spring 2014.

Источник: Конкорд Капитал

Аналитик: Роман Тополюк
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