Hylsamex on track for US$1.49bn sales

Mexican steelmaker Hylsamex (BMV: HLYSAMXB) is on track to reach US$1.49bn in sales this year as projected by Merrill Lynch, despite a lackluster third quarter, Juan Carlos Maussan, an analyst at the financial management company, told BNamericas. In fact, Hylsamex sales could exceed by 10-15% the figure Merrill Lynch forecasted in its October report on Hylsamex parent company Alfa. "Although our projections logically included a recovery, it has been stronger than expected," he said. However, the 10-15% increase is not an official forecast. Though energy prices, which drove down Hylsamex' third quarter earnings, are unlikely to subside, a growth in sales volume this quarter - based largely on economic recoveries in Mexico and the US - will compensate and keep margins relatively strong, Maussan said. Merrill Lynch projects Hyslamex' Ebitda will fall US$5mn this year to US$193mn. Hylsamex posted US$44mn Ebitda in the third quarter, down 32% on same-period 2002 due largely to a drop in sales volumes and higher materials costs, the steel company said. During that period, steel shipments fell 3% to 723,000t while the company reported a consolidated net loss of US$24mn, compared to a US$3mn loss in 3Q02. With production of nearly 3Mt a year, the Nuevo Leon-based company is composed of a flat products division, a bar and rod unit, Galvacer (coated and galvanized steel), HYL (direct reduced iron) and Acerex (service center). It also encompasses support subsidiaries in the mining, scrap metal processing, transportation, and steel marketing fields, and has a stake in Venezuelan steelmaker Sidor.