AUS
NZ
UK
CA
USA
IND
Highlights
- Evraz shares have been sliding due to the ongoing Russia-Ukraine conflict as well as the demerger of its coking coal business.
- Majority of Evraz’s output comes from Russia. Thus, the Russia-Ukraine tensions have raised questions about how the company would export its products.
The shares of the London-headquartered vertically integrated steel manufacturing and mining firm, Evraz plc (LON: EVR), have been swinging amid the ongoing Russia-Ukraine crisis. The multinational company, which has significant operations in Russia, also has operations in Ukraine, the US, Canada, Italy, Kazakhstan, South Africa, and the Czech Republic. Apart from the Russia-Ukraine tensions, another reason for the dip in share prices is the recent demerger of its coking coal business.
© 2022 Kalkine Media®
Demerger progress amid Russia-Ukraine tensions
On 8 February 2022, Evraz announced that the UK court had authorised the capital reduction and the company’s coking coal business Raspadskaya was demerged. With the concept of ESG gaining the attention of eco conscious investors, the move was intended to make Evraz more environmentally friendly. However, the timing of the move may have been better. Investors weren’t very positive about the demerger due to the lack of financial cover which in turn would lead to the need of raising additional funds during these unfavourable times.
Energy Supplier Stocks to Eye amid soaring gas prices
With significant operations in Russia, 29% of Evraz is owned by the Russian owner of Chelsea football club, Roman Abramovich. The majority of Evraz’s output comes from Russia, and thus the Russia-Ukraine tensions have raised questions about how the company’s iron, steel, and vanadium products would be exported to its customers across the globe. The fear of war is growing with Russian troops on the Ukraine borders and Russian state backing separatist regions in Ukraine, which has rattled the global markets.
RELATED READ: Rosneft Oil, VTB Bank: Stocks that may get hit by Russia-Ukraine crisis
© 2022 Kalkine Media®
Performance update
Even though its shares have been dipping, the overall performance of the company has improved lately. After a slump in demand due to the Covid-19 pandemic, its demand and sales again picked up in the fourth quarter of 2021. As per Evraz’s Q4 results, released on 31 January 2022, the total sale of its steel products, coking coal products, iron ore products, and vanadium products have gone up from Q3 to Q4 by 7.0%, 11.2%, 7.0%, and 33.0%, respectively.
In 2021, the prices of steel and vanadium have rocketed, and the sales of the company are expected to remain strong, according to the global manufacturing PMI (purchasing managers index), which stood at 58.7 for Europe and 55.5 for the US in January. However, the figure for China is just over 50, which doesn’t seem to be that good.
RELATED READ: 5 energy supplier stocks you may watch amid soaring gas prices
Should you buy?
The British mining company, Evraz plc, is listed on the London Stock Exchange’s main market since June 2005. With a market cap of £3,894.70 million as of 21 February 2022, the FTSE100 constituent is offering a current dividend yield of 28.9% a year. The shares in Evraz have been down in the last one year, giving a negative return of -52.03%. Evraz plc’s shares closed at GBX 256.20, down by, around 10.15 am, on 22 February 2022.
Note: The above content constitutes a very preliminary observation or view based on industry trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
