Turkey's Eregli Demir Celik Plans Iron Ore & Steel Mill Investments Amid First-Quarter Profit Drop

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Researched by Industrial Info Resources (Sugar Land, Texas)--Eregli Demir Celik (ISE:EREGL) (Erdemir) (Zonguldak, Turkey), Turkey's biggest flat steel maker, said first-quarter profit decreased 52.4% from the same period last year to $69.3 million, due to a decline in steel prices. In the same period, Erdemir's sales rose 20% to $1.4 billion.

Erdemir's total steel production increased 2% to 1.8 million tons in the first quarter. The company's total sales volumes increased 15% to 1.85 million tons. Despite weak industrial activity, the company sold 1.56 million tons of flat steel and 280,000 tons of long steel.

Erdemir posted a net profit of $567.4 million last year, up 31% from a year earlier, and the company's sales jumped 34% to $5.33 billion in 2011 from the previous year. For additional information, see February 20, 2012, article - Turkey's Leading Steel Producer Eregli Demir Celik Posts Record Profit for 2011.

The company will start a $700 million investment to develop an iron-ore plant in Malatya by 2016, Erdemir Chairman Tar said on April 27. The company is upgrading a furnace at a cost of $45 million, as part of a plan to increase production capacity and modernize facilities with a total investment of between $300 million and $400 million. Erdemir plans to produce 1,800-millimeter-wide steel sheets for the Turkish automotive industry, in addition to the 1,525-millimeter sheets it makes. Erdemir already supplies 40% of the automotive sector's total flat steel needs.

ArcelorMittal (NYSE:MT) (Luxembourg) completed its sale of 134.3 million shares and the same number of warrants in Erdemir last March as part of its plans to cut debt. The sale raised $267.5 million, the company said in a statement. For additional information, see March 28, 2012, article - ArcelorMittal to Sell Up to 25% of Stake in Turkish Steelmaker Erdemir.

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