Magnesita reports US$45.4m net income in 1H16

Brazil-based Magnesita Refratários SA registered net income of US$45.4m between January and June of 2016, after a US$5m loss in the first half of 2015. The performance was driven by better operational results and foreign exchange variation. The company's adjusted EBITDA reached US$80.5m, with a 16.5 per cent margin, compared to a 15.4 per cent margin in the first semester of 2015. Consolidated revenue for the period amounted to US$486.8m, a nine per cent drop in the same comparison.
 
Magnesita’s CEO, Octavio Lopes, emphasized that, even with the drop in sales caused by the smaller production of steel in Magnesita’s main markets, the company delivered consistent results. "Magnesita has been delivering noteworthy results in 2016. Even though industrial production has been very weak in some of our established markets and excess capacity still afflicts certain industries, we are reaping the benefits of self-help measures undertaken in the last couple of years. As these initiatives in procurement, cost controls and working capital mature, our margins will continue consolidating at industry-leading levels."
 
The 1H16 was marked by the drop in steel production for Magnesita in South America and western Europe. Meanwhile, in Brazil, the economic environment is still pressuring sales, particularly in the cement industry, which faces a significant utilisation drop. Despite the tough environment, Mr Lopes points out a more constructive outlook for the second half of the year in some regions, especially in the USA, Magnesita's main market. "We are positive about the momentum of our self-help initiatives and confident that we will benefit from the expected pick-up in North American steel production and a possible economic recovery in Brazil," he says.