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Stellar performance of MSC in first half

Stellar performance of MSC in first half
As the biggest steelmaker in the Middle East and North Africa (MENA), Mobarakeh Steel Company (MSC) has set its sights on producing around 7 million tons of various hot, cold and coated products, 14.4 trillion tomans in revenues and 4 trillion tomans in net profits – the largest since the steel giant was founded – this year [started March 20, 2017], MSC Chief Financial Officer Amir Hossein Naderi said.
He described the performance of MSC in the first half of the current year as “stellar” and said during the 6-month period MSC sold 3.211 million tons of various products worth 6.7 trillion tomans, 2.236 trillion tomans of which was net profits. That translates into 298 rials in net profits for each MSC share, up by a staggering 243 over corresponding period last year.
The CFO of the steel giant went on to say in the first six months of the year operating revenues hiked by 43 percent over the similar period last year. Other increases in the first half include: cost price (5 percent), net profits (140 percent), operating costs (215 percent) and net profits (243 percent).
Graph: Predicted increase in MSC dividend per share
Actual figure of last year
First prediction of this year
This year’s prediction based on 1st Q performance
This year’s prediction based on 1st half performance
Naderi credited the following for the spike in MSC revenues: inauguration of the company's expansion projects, including the launch of Casting Machine No. 5 with a capacity to produce 1.8 million tons of slabs and completion of an expansion project which sees the capacity of Saba Steel Complex rise from 750,000 tons to 1.6 million tons.
He said inauguration of Casting Machine No. 5 last year resulted in a considerable increase in the company's capacity to produce and sell slabs; sales of slabs produced by the new machine alone brought in 734 billion tomans in revenues in the first half alone; the figure is expected to rise to 1.6 trillion by the end of the year [March 20, 2018].
In line with a comprehensive development plan which envisions annual production of 25 million tons of steel products by 2025, MSC has placed sustainable supply of raw materials at a competitive price in its strategies, the MSC financial chief said, adding to that end the company has made huge investment in mining giants such as Gol Gohar, Chadormalu and Mines and Metals Development Investment Company (MMDIC). Investment in an expansion project at Sangan Pelletizing and Concentrate Plant with a total capacity of 5 million tons meets much of MSC's need for local supply of raw materials at a competitive price.
Sangan Pelletizing Plant has already become operational and as much as 1.53 million tons of pellets is expected to be sold by the company by yearend, Naderi said, adding with the launch of the expansion project at Saba which sees the capacity of the facility rise from 750,000 tons to 1.6 million tons of hot-rolled products, 830,000 tons of the production goal in question will be met.
He then recalled the favorable profitability level of Mobarakeh Steel Group's subsidiaries and said Hormozgan Steel Company, which is one of the biggest subsidiaries of MSC and has 1.5 trillion tomans in capital, produced 706,000 tons of slabs valued at 1.19 trillion tomans in the first half. Its net profits stood at 128 billion tomans (85 rials for each share). It came despite the fact that in corresponding period last year the company suffered 134 billion tomans in net losses. It should be noted that Hormozgan Steel Company eyes sales of 1.456 million tons of slabs by the end of the current year.
He described the purchase of a 17 percent-block share of Mines and Metals Development Investment Company as a major step by MSC in line with optimal management of the corporate investment basket and control over mining companies and said the market value of MSC investment basket, for which 4 trillion tomans has been paid up, stands at 7 trillion tomans. Creation of the investment basket was in line with the macro-strategy of the company and investment in upstream steel companies such as mines and steelmakers. Each year the dividends of these companies add around 250 billion tomans to MSC coffers.
He described fiscal discipline and transparency of Mobarakeh Steel Group and timely handover of reports required by the Securities and Exchange Organization as a major achievement of the company and said provision of reliable and timely financial and economic reports to shareholders is a major goal of the company and MSC top managers have always attached importance to measures to promote the company's ranking when it comes to the dissemination of information to shareholders.        
He said replacement of high-interest loans with loans that come with 18-percent interest is one of the major steps the company has taken to cut costs this year and added another such measure is the management of inventory, both products and raw materials, proportionate to production volume to prevent unnecessary accumulation.
In conclusion, he thanked all MSC staff for their contribution and said he hopes the company can achieve all of its stated goals this year thanks to their endeavors and steely determination.

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