Mittal Steel Kryvy Rig Posts 9.4% Increase In Sales And 20.3% Decrease In Net Income For 2005.

The company’s (KSTL: BUY) revenue last year totaled USD 2,158.1 mln and net income comprised USD 313.4 mln (net margin of 14.5%). Concorde Capital: The company’s sales came out 1.4% below our estimates, but net income was 12.5% above our projections.We believe the key factor that led to the bottom line deterioration at KSTL was transfer pricing practiced by the mill’s previous owners before it was re-privatized in October 2005 by Mittal Steel. The new owner’s strategy to eliminate steel product distribution by various trading companies and instead carry out all sales through the mill itself should result in profit improvement this year despite rising costs. In fact, the company managed to reach improvements in its financials already in 4Q05, as indicated by the fact that actual net income beat our estimates which we based on 9M05 reported numbers.