Ratings

Fitch Ratings has revised the outlook for Russia's second largest steel producer Severstal's issuer default and national long-term ratings to positive from stable, the international ratings agency said Friday.

"In addition, Fitch has affirmed Severstal's ratings at Issuer Default 'BB-' (BB minus), senior unsecured 'BB-' (BB minus), Short-term 'B' and National Long-term 'A+(rus)'," Fitch said on its Web site.

"The Positive Outlook reflects Severstal's corporate governance improvements that were undertaken in view of its IPO in November 2006 and Fitch's expectations that the company will continue to adhere to best international practice.

"Severstal appointed an independent Chairman of the Board of Directors, changed the Board's composition (10 members with five being independent) and established board committees. However, as these initiatives have only recently been implemented, it remains to be seen how committed the company will be to the new practices," the agency said on its Web site.

Severstal said in early April its net profit, calculated to International Financial Reporting Standards (IFRS), declined 30.4%, year-on-year, in 2006, to $1.18 billion.

The steel producer said its sales increased 19.1% in the reporting period, to $12.42 billion, while operating income fell 15.8%, year-on-year, to $1.95 billion. Earnings before interest, taxes, depreciation and amortization (EBITDA) went up 4.7%, to $2.98 billion.

The company's net profit, calculated to Russian Accounting Standards (RAS), grew 2.3%, year-on-year, in 2006, to 35.93 billion rubles (about $1.35 billion).