Severstal reports Q3 & 9M 2019 financial results
PAO Severstal (SVST)
Severstal reports Q3 & 9M 2019 financial results - Exceptional margins supported by vertical integration-
Moscow, Russia - 18 October 2019 - PAO Severstal (MICEX-RTS: CHMF; LSE: SVST), one of the world's leading steel and steel-related mining companies, today announces its Q3 & 9M 2019 financial results for the period ended 30 September 2019.
CONSOLIDATED FINANCIAL RESULTS FOR THE THIRD QUARTER ENDED 30 SEPTEMBER 2019
Notes:
Q3 2019 vs. Q2 2019 ANALYSIS:
9M 2019 vs. 9M 2018 ANALYSIS:
FINANCIAL POSITION HIGHLIGHTS:
Alexander Shevelev, CEO of Severstal Management, commented:
"We delivered a strong performance in the third quarter of 2019 overall in spite of volatility in the global steel and raw material markets. An anticipated deceleration in global steel demand led to falling steel prices, which contributed to negative iron ore and coking coal dynamics of in Q3 2019. In this environment, Severstal's vertically integrated business model and the flexibility of our multiple distribution channels supported our EBITDA, which increased by 4.5% to $787 mln, and our EBITDA margin, which was 37.3% in Q3 2019. This is one of the highest quarterly margins we have achieved for several years. In Q3 2019, we completed the sale of Balakovo mini-mill for $215 million and will now focus on the HVA products within our portfolio. In September, we announced the placement of an $800 mln Eurobond due in 2024 at 3.15%, which is one of the lowest coupon rates amongst Russian companies and steel companies globally. Our ESG performance is a key focus. Severstal is one of the very first companies to pilot the World Steel Association's (WSA) Step Up methodology for reducing greenhouse gas emissions from steel production. At Severstal we have agreed on a methodology for estimating our СО2 impact and are now developing a programme of initiatives to support a reduction of emissions. The Board remains confident in the outlook and is recommending a dividend of 27.47 roubles per share for Q3 2019."
SEVERSTAL RUSSIAN STEEL (RSD)
RSD steel product sales remained flat q/q at 2.85 mln tonnes in Q3 2019 (Q2 2019: 2.85 mln tonnes).
The total share of domestic sales declined 3 ppts, to 67%, but remained at historically high levels due to the favourable domestic pricing environment (Q2 2019: 70%).
The share of high value-added (HVA) products within the sales portfolio remained at 45% (Q2 2019: 46%).
LDP sales volumes declined 6% q/q, reflecting changes in the product mix. Izhora Pipe Mill maintained its 100% utilisation rate in Q3 2019.
The weighted average selling price for the whole range of rolled steel products remained almost flat in Q3 2019, reflecting the flexibility of Severstal's distribution channels as well as the favourable pricing environment in the domestic market. RSD topline declined by 2.3% q/q to $2,102 million (Q2 2019: $2,151 million). Decreased raw material expenses resulted in EBITDA growth of 9.1% q/q to $433 million (Q2 2019: $397 million). The EBITDA margin increased to 20.6% (Q2 2019: 18.5%).
The total non-integrated cash cost of slab production at the Cherepovets Steel Mill in Q3 2019 decreased $9/t and totalled $346/t (Q2 2019: $355/t) as a result of lower raw material expenses q/q. The integrated cash cost of slab in Q3 2019 totalled $208/t due to a decline Resources EBITDA.
SEVERSTAL RESOURCES
Coking coal concentrate sales volumes from Vorkutaugol surged 41% q/q reflecting the 42% increase q/q in production of run-of-mine coal.
Iron ore pellet sales declined 15% to 2.46 mln tonnes (Q2 2019: 2.90 mln tonnes) reflecting higher production of iron ore concentrate at Karelsky Okatysh.
Iron ore concentrate sales volumes increased 35% to 1.93 mln tonnes (Q2 2019: 1.43 mln tonnes) driven by production volumes growth at Karelsky Okatysh.
Revenue at the Resources Division decreased 5.9% q/q to $609 million (Q2 2019: $647 million) mainly affected by weaker price dynamics at the division's iron ore segment. EBITDA was down 8.2% q/q to $382 million (Q2 2019: $416 million) due to the revenue decline q/q. The EBITDA margin totalled 62.7%.
Sales volumes increase at Vorkutaugol brought Q3 2019 cash costs down to 66$/t (Q2 2019: $87/t). Сash costs per tonne at Karelsky Okatysh stood at $24/t (Q2 2019: $23/t). Cash costs per tonne at Olcon declined to $26/t (Q2 2019: $28/t).
DIVIDEND
The Board of Directors has therefore recommended a dividend of 27.47 roubles per share for Q3 2019. Approval of the dividend is expected to take place at the Company's EGM on 22 November 2019. The record date for participation in the EGM is 28 October 2019. The recommended record date for the dividend payment is 3 December 2019. The approval of the record date for the dividend payment is also expected to take place at the Company's EGM on 22 November 2019.
OUTLOOK
Growth in global steel demand in 2019 is supported by China, while outside China steel demand was weak, particularly in Europe and in the MENA region. The deficit in the iron ore market is gradually disappearing. The coking coal market is well-supplied, with weak demand having resulted in coal producers margins decline. Global export steel prices are under the pressure of weak economic sentiment and declining raw material prices.
Despite a number of potential headwinds on both the export and domestic markets, our low cost position allows us to stay competitive on the market. The Board remains confident in the resilience of Severstal's business model relative to its local and global peers.
For further information, please contact:
Severstal Investor Relations Evgeny Belov T: +7 (495) 926-77-66
Vladimir Zaluzhsky T: +7 (495) 926-77-66
Severstal Public Relations Anastasia Mishanina T: +7 (495) 926-77-66
Vladimir Zaluzhsky T: +7 (495) 926-77-66
Severstal's financial communications agent - Hudson Sandler Andrew Leach / Emily Dillon T: +44 (0) 20 7796 4133
A conference call on Q3 2019 results for investors and analysts hosted by Alexey Kulichenko, Chief Financial Officer, will be held on 18 October 2019 at 10.00 (London)/ 12.00 (Moscow).
Conference ID: 9531031 +44 (0) 330 336 9125 Russian Dial:
The call will be recorded and there will be a replay facility available for 7 days as follows:
Replay Passcode: 7829368 International Dial: +44 (0) 207 660 0134 (Local access) Russian Dial:
*** PАО Severstal is one of the world's leading vertically integrated steel and steel related mining companies, with assets in Russia, Latvia and Poland. Severstal is listed on RTS and MICEX and the company's GDRs are traded on the LSE. Severstal reported revenue of $8,580 million and EBITDA of $3,142 million in 2018. Severstal's crude steel production in 2018 reached 12.0 million tonnes. www.severstal.com |
ISIN: | US8181503025 |
Category Code: | QRT |
TIDM: | SVST |
LEI Code: | 213800OKDPTV6K4ONO53 |
Sequence No.: | 23871 |
EQS News ID: | 892303 |
End of Announcement | EQS News Service |
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