Severstal reports $785M loss

Staff/wire report

OAO Severstal, the Russian steelmaker that operates a plant in Warren, reported an unexpected $785 million loss for the first quarter of 2010.

The net loss for Russia’s largest steelmaker increased from $656 million in the first quarter of 2009, the company said in a statement. Analysts had predicted a first-quarter net income of $71 million.

The loss can be attributed to a writedown of the company’s Italian unit, which it plans to sell. The Lucchini SPA unit was reclassified as a discontinued operation and incurred an $855 million loss in the first quarter after revaluation.

“We are in a process of negotiations to divest Lucchini and expect to update the market as appropriate in the next six months,” the company said in its statement.

Sales were up 34 percent from a year earlier to $3.1 billion, but they dropped 7 percent from the previous quarter.

Severstal North America saw modest growth in the first quarter, with revenue increasing 10.5 percent and sales rising 13.8 percent from the same period last year.

With the restart of the Warren plant in March, the company expects to see North American sales volumes increase gradually in the second quarter but anticipates uncertainty in the global steel markets.