Eurasian Natural Resources Corporation PLC (LSE: ENRC) released its production report for the third quarter ended September 30, revealing a return to production levels last seen before the financial crisis. At the end of the period the company’s primary Kazakhstan based operations were reaching capacity.
In the statement, Eurasian reported a continued successful control of unit costs and said that it had maintained a strong balance sheet, with gross funds of US$1.9 billion at the end of the period.
Eurasian's business is divided into three divisions: Ferroalloy, Iron Ore and Aluminium.
The company said the recovery in its businesses reflects the company’s cost control measures and an improvement in market conditions. One such improvement is the building momentum in metal pricing which has been buoyed recently due to weakness in the dollar. Eurasian has benefited from increased quarter-on-quarter ‘principle product prices’ in Q3 although prices are still lower than in 2008.
According to Eurasian, revenues in H2 2009 will reflect higher sales volumes and prices. For the remainder of the year the group expects the businesses in Kazakhstan and Tuoli to run at about capacity, group production volumes for full year 2010 are anticipated to be similar to 2008.
The group believes that the industry outlook into 2010 remains uncertain, with the risk of further volatility in volumes and prices. Although Eurasian said that the sustainability of the Chinese economic recovery is now more convincing, while the United States, Europe and Russia are showing signs of stability and even some initial recovery.
Eurasian Natural Resources CEO, Felix Vulis commented on the company’s outlook for the full year: “An economic recovery is now looking more convincing, but we see some uncertainties for the industry into 2010. Management will look to leverage our low cost advantage to sustain production. In addition, we continue to look to develop the Group through capital expenditure and selected acquisitions."