Evraz's revised dividend policy dependant on debt targets

Russian group Evraz widened its losses, and revised its dividend policy on Wednesday, with a 2013 net loss of $572 million (£341.67 million) which was 35% worse than in the previous year. It also revised its overall dividend policy to pay out only if a key debt target is reached.

The company, partly controlled by Chelsea FC owner Roman Abramovich, said revenue fell 2.1% to $14.4 billion, while consolidated earnings before interest, taxes, depreciation and amortisation (EBITDA) fell 10% to $1.8 billion.

While its board had earlier recommended a dividend of 6 cents following its sale on Friday of Czech unit Vitkovice for an enterprise value of $287 million, it has quickly revised its policy and will now only pay regular dividends when its net debt to EBITDA ratio is below 3.0.

The firm has been busy re-shaping its profile and also disposed of structurally high-cost assets in iron ore and coal mining Evraz Vgok, Abakan and Teya mines of Evrazruda and the Gramoteinskaya steam coal mine. During the period, it completed the acquisition of an interest in OJSC Raspadskaya, bringing effective interest to 81.95% for $964 million together with a 51% stake in Timir iron ore project for $159 million.

In what it described as a "challenging year for the global steel and mining industry", it said it had nonetheless increased external steel sales by 1% to 15.5 million tonnes and substantially grew the output of coking coal by 22% to 18.9 million tonnes.

Evraz Vitkovice Steel was sold to a group of private investors - Martinley Holdings, Nabara Holdings, Vitect Services, Hayston Investments and Dawnaly Investments - who believe they can develop it as an independent player in the market for rolled products through synergies arising out of the opportunity to buy raw materials from independent suppliers.

The trade union for the third biggest steel company in the Czech Republic has put its members on a strike alert for about a year, and welcomed the new owners, claiming the company had not been well managed and lacked orders.

The company's Nakhodka Commercial Sea Port in the eastern Gulf of Peter the Great recently announced strong trading with cargo handling up 22% year-on-year in the period January to March 2014.

Despite the losses and the abandonment of the dividend, the shares rose 7.4% to 84.80p by mid-morning, as investors looked for a real improvement in the wake of the restructuring of the business.