PAO Severstal
Severstal reports Q4 & FY2019 financial results
PAO Severstal (SVST)
Severstal reports Q4 & FY2019 financial results – Demonstrating strong profitability in challenging macro conditions–
Moscow, Russia – 31 January 2020 – PAO Severstal (MICEX-RTS: CHMF; LSE: SVST), one of the world’s leading steel and steel-related mining companies, today announces its Q4 & FY2019 financial results for the period ended 31 December 2019.
CONSOLIDATED FINANCIAL RESULTS FOR THE FOURTH QUARTER ENDED 31 DECEMBER 2019
Notes:
Q4 2019 vs. Q3 2019 ANALYSIS:
FY2019 vs. FY2018 ANALYSIS:
FINANCIAL POSITION HIGHLIGHTS:
Alexander Shevelev, CEO of Severstal Management, commented:
“The fourth quarter of 2019 was challenging for steel producers globally, with both steel demand and prices in decelerating and recovery only starting in December 2019. In this environment, Severstal’s vertically integrated business model, combined with the flexibility of our multiple distribution channels, successfully supported our EBITDA margin, which was 33% in Q4 2019. We are proud of our operational results for 2019 with 38% growth in coking coal and 14% growth in iron ore concentrate sales volumes.
Our overall safety performance improved in 2019 and our LTIFR decreased by 36% to 0.61 (2018: 0.95), which is 27% below our goal for the year of 0.84. However, we deeply regret that during the year there were two fatalities among our staff and three among our contractors.
On the environmental side the amount of atmospheric emission of pollutants per tonne of steel products fell by 7% in the year. In Q4 2019, we set ourselves a target to increase the share of own energy generation using secondary sources to 95% by 2025, which is an example of minimising both costs and our environmental impact.
I am pleased that our efforts to transform the company which we started in 2018 in line with our 5-year strategy continue brining fruits. In 2019, we earned additionally $224 million at the EBITDA level and are remaining one of the lowest costs steelmakers globally.
Positive momentum continues with our investments in new technologies. Our division Severstal Ventures made three new investments recently which should enable us to offer our customers new materials with unique properties in the future.
The Board remains confident in its outlook and is recommending a dividend of 26.26 roubles per share for Q4 2019.”
SEVERSTAL RUSSIAN STEEL (RSD)
RSD steel product sales declined by 6% q/q to 2.66 mln tonnes in Q4 2019 (Q3 2019: 2.85 mln tonnes).
The Company increased its share of steel export shipments to 41% (Q3 2019: 33%) as a result of seasonal slowdown in domestic demand.
The share of high value-added (HVA) products within the sales portfolio remained flat at 45% (Q3 2019: 45%).
LDP sales volumes declined by 20% q/q, reflecting changes in the product mix, while at the same time sales volumes of thick plate increased 4% q/q. The Izhora Pipe Mill maintained its 100% utilisation rate in Q4 2019.
The weighted average selling price for the whole range of rolled steel products declined in Q4 2019 in line with global benchmarks and due to seasonal slowdown in local demand. RSD topline declined by 14.1% q/q to $1,806 million (Q3 2019: $2,102 million). EBITDA declined by 30% q/q to $303 million (Q3 2019: $433 million). The EBITDA margin was 16.8% (Q3 2019: 20.6%).
The total non-integrated cash cost of slab production per ton at the Cherepovets Steel Mill in Q4 2019 declined by $40/t q/q to $306/t (Q3 2019: $346/t) as a result of lower raw material expenses q/q. The integrated cash cost of slab in Q4 2019 totalled $227/t due to lower profitability of the Resources division.
SEVERSTAL RESOURCES
Coking coal concentrate sales volumes from Vorkutaugol declined by 1% q/q reflecting a decrease in run-of-mine production q/q.
Iron ore pellet sales grew by 14% to 2.81 mln tonnes (Q3 2019: 2.46 mln tonnes) reflecting higher production of pellets at Karelsky Okatysh.
Iron ore concentrate sales volumes declined by 17% to 1.60 mln tonnes (Q3 2019: 1.93 mln tonnes) driven by a decline in iron ore concentrate volumes at Karelsky Okatysh.
Revenue at the Resources Division decreased by 34.0% q/q to $402 million (Q3 2019: $609 million), mainly affected by weaker pricing dynamics for iron ore and coal products. EBITDA fell by 59.4% q/q to $155 million (Q3 2019: $382 million) due to the revenue decline q/q. The EBITDA margin amounted to 38.6%.
At Vorkutaugol, cash costs of coal concentrate per ton fell to 60$/t (Q3 2019: $66/t) reflecting positive changes in finished good and work-in-progress cost structure. Сash costs of iron ore pellets per tonne at Karelsky Okatysh increased to $27/t (Q3 2019: $24/t) as a result of higher repair expenses. At Olcon, cash costs of iron ore concentrate per tonne at Olcon increased to $29/t (Q3 2019: $26/t) due to seasonal factors.
DIVIDEND
The Board of Directors has recommended a dividend of 26.26 roubles per share for Q4 2019. Approval of the dividend is expected to take place at the Company’s AGM on 5 June 2020. The record date for participation in the AGM is 11 May 2020. The recommended record date for the dividend payment is 16 June 2020. Approval of the record date for the dividend payment is also expected to take place at the Company’s AGM on 5 June 2020.
OUTLOOK
The Phase 1 agreement between China and the USA and progress with the Brexit deal in Europe have reduced global economy risks and boosted market optimism which should support steel demand in the long term. After the sharp drop in Q4 2019 global steel prices seem to be turning the corner in Q1 2020 thanks to restocking and production cuts.
In Russia, the construction sector will again remain a key steel demand driver in 2020, supported by the expected implementation of the National projects. Good pricing in the Russian market is attributable to the appreciation of the rouble and limited steel supply due to current reconstruction works at some mills.
Despite a number of potential headwinds on both the export and domestic markets, Severstal’s low cost position allows us to remain competitive in the market. The Board remains confident in the resilience of the Company’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 vladimir.zaluzhsky@severstal.com
Severstal Public Relations Anastasia Mishanina T: +7 (495) 926-77-66 anastasia.mishanina@severstal.com
Vladimir Zaluzhsky T: +7 (495) 926-77-66 vladimir.zaluzhsky@severstal.com
Severstal’s financial communications agent – Hudson Sandler Andrew Leach / Emily Dillon T: +44 (0) 20 7796 4133
A conference call on Q4 2019 results for investors and analysts hosted by Alexey Kulichenko, Chief Financial Officer, will be held on 31 January 2020 at 09.30 (London)/ 12.30 (Moscow).
Conference ID: 2857830 +44 (0) 330 336 9411 Russian Dial:
The call will be recorded and there will be a replay facility available for seven days as follows:
Replay Passcode: 2857830 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 $8,157 million and EBITDA of $2,805 million in 2019. Severstal’s crude steel production in 2019 reached 11.8 million tonnes. www.severstal.com |
ISIN: | US8181503025 |
Category Code: | FR |
TIDM: | SVST |
LEI Code: | 213800OKDPTV6K4ONO53 |
Sequence No.: | 43854 |
EQS News ID: | 965061 |
End of Announcement | EQS News Service |