Turkey's Leading Steel Producer Eregli Demir Celik Posts Record Profit for 2011

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Researched by Industrial Info Resources (Sugar Land, Texas)--Turkey's leading steelmaker, Eregli Demir ve Celik Fabrikalari AS (ISE:EREGL) (Erdemir) (Zonguldak,Turkey) has reported a 31% increase in profit for the 2011 fiscal year. According to financial statements, the company posted a record profit of approximately $567 million.

The company's sales jumped by 34% to about $5.33 billion from $3.7 billion a year earlier. Erdemir's operating income rose by 53.8% year over year to about $976 million. Erdemir increased its EBITDA by 43% year over year to $1.21 billion and its EBITDA margin for 2011 is reported as 23%.

Separately, Erdemir management held a conference call to comment on financial results. After a high earnings performance, Erdemir management is now more cautious about the 2012 outlook due to the decline in end-user demand both in Turkey and the European Union, as well as a weaker pricing environment at the beginning of the year.

The company's finished steel production was to 6.9 million tonnes, including 6.1 million tonnes of flat steel and 794,000 tonnes of long steel, while its finished steel sales amounted to 6.6 million tonnes. Erdemir aims to produce and sell 6.1 million tonnes of flat and 900,000 tonnes of long steel in 2012, which points to a minimal ramp-up in capacity utilization.

Although the company installed a new blast furnace in August 2011, total production will not increase as much in 2012 due to a maintenance outage for one of the older furnaces between April and June. While the company refrained from giving guidance on pricing, Erdimer is targeting 16-18% EBITDA and 8-10% net margins in 2012.

Last November, London-based research firm Mergermarket reported that the world's largest steelmaker, ArcelorMittal (NYSE:MT) (Luxembourg) has considered selling its 26% stake in Erdemir, which it bought in 2008.

Turkey's finished steel production reached 34.9 million tonnes, up 21.5% year over year, exceeding the 17% growth recorded in Turkish crude steel production. According to the Turkish Iron and Steel Producers' Association (DCUD), flat steel production amounted to 9.1 million tonnes in 2011, increasing of 36.9%, while domestic production of long steel products rose 16.3% to 22.87 million tonnes, compared to 2010. DCUD predicts a 10% increase for Turkey's total finished steel production in 2012.

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