AI assistant
Severstal - ao — Earnings Release 2014
Oct 15, 2014
6426_rns_2014-10-15_d551f20f-9881-44eb-88f0-081e313fab81.html
Earnings Release
Open in viewerOpens in your device viewer
National Storage Mechanism | Additional information
You don't have Javascript enabled. For full functionality this page requires javascript to be enabled.
RNS Number : 3458U
OAO Severstal
15 October 2014
Severstal reports Q3 2014 and 9M 2014 operational results
Moscow, Russia - October 15, 2014 - OAO Severstal (MICEX-RTS: CHMF; LSE: SVST), one of the world's leading vertically integrated steel and steel-related mining companies, today announces its operational results for Q3 2014 and 9M 2014.
Q3 2014 GROUP HIGHLIGHTS
● On 19 August 2014, Severstal announced that it has completed the sale of PBS Coals Inc., a metallurgical coal producer located in Pennsylvania, USA., to Corsa Coal Corp., a Canadian public company. In regard to the sale and in full accordance with IFRS standards Severstal continues to report operational results of PBS Coals Inc. till 19 August 2014- the disposal date, which are included in the Group's Q3 2014 and 9M 2014 consolidated operational results
● On 16 September 2014, Severstal announced that it has completed the sale of its Severstal Columbus, LLC and Severstal Dearborn, LLC subsidiaries, collectively known as Severstal North America (SNA), to Steel Dynamics, Inc. and AK Steel Corporation, respectively. In regard to the sale and in full accordance with IFRS standards Severstal has fully ceased reporting operational results of SNA and made restatements to consolidated operational results of the Group for the previous periods
● Crude steel production increased 1% q/q to 2.86 mln tonnes (Q2 2014: 2.83 mln tonnes), which coupled with 3% q/q increase in hot metal production suggests lower consumption of scrap material in steelmaking process in Q3 2014
● Consolidated sales of steel products decreased by 1% q/q reflecting decrease in semi-finished products sales
● The share of high value-added products in the sales portfolio increased by 6 bpts to 53%
● Steel assets ran at near to full capacity in Q3
SUMMARY OF KEY PRODUCTION, SALES VOLUMES AND SELLING PRICES DATA*
| Production, tonnes | Q3 2014 | Q2 2014 | Change, % | 9M 2014 | 9M 2013 | Change, % |
| Crude steel (Russian Steel) | 2 862 204 | 2 834 277 | 1 % | 8 410 240 | 8 203 352 | 3 % |
| Hot metal (Russian Steel) | 2 282 592 | 2 226 364 | 3 % | 6 755 320 | 6 577 004 | 3 % |
| Sales volumes, tonnes | Q3 2014 | Q2 2014 | Change, % | 9M 2014 | 9M 2013 | Change, % |
| Coking coal concentrate | 1 288 727 | 1 220 431 | 6 % | 3 900 648 | 5 439 688 | (28) % |
| Iron ore pellets | 2 741 006 | 2 539 568 | 8 % | 7 863 134 | 7 649 659 | 3 % |
| Iron ore concentrate | 1 138 772 | 1 211 144 | (6) % | 3 449 213 | 3 508 320 | (2) % |
| Total steel products (Consolidated) | 2 662 173 | 2 698 458 | (1) % | 7 766 056 | 7 825 409 | (1) % |
| Total steel products (Russian Steel) | 2 745 261 | 2 739 100 | 0 % | 7 938 292 | 7 968 141 | (0) % |
| Average price, $/tonne | Q3 2014 | Q2 2014 | Change, % | 9M 2014 | 9M 2013 | Change, % |
| Coking coal concentrate, Vorkutaugol | 94 | 93 | 1 % | 95 | 110 | (14) % |
| Iron ore pellets, Karelsky Okatysh | 73 | 89 | (18) % | 89 | 105 | (15) % |
| Iron ore concentrate, Olkon | 49 | 63 | (22) % | 61 | 74 | (18) % |
| Hot-rolled coil (RSD) | 517 | 501 | 3 % | 496 | 525 | (6) % |
| High value added steel products, % | Q3 2014 | Q2 2014 | Change, % | 9M 2014 | 9M 2013 | Change, % |
| Severstal (Consolidated) | 53% | 47% | 6 ppts | 49% | 47% | 2 ppts |
| Severstal Russian Steel | 52% | 47% | 5 ppts | 49% | 46% | 3 ppts |
SEVERSTAL RESOURCES
●Iron ore pellets sales increased 8% q/q on the back of higher demand on export markets. Moreover, we note that internal pellets consumption decreased q/q, which is a function of higher Fe content pellets from Karelsky Okatysh being used at CherMK.
●Prices for iron ore pellets at Karelskiy Okatysh decreased by 18%, while prices for iron ore concentrate at Olkon decreased by 22%. That said, due to shattered profitability of third party iron ore concentrate sales we have fully reduced external shipments in Q3 2014, which is the key reason of 6% q/q decrease in iron ore concentrate sales volumes.
● We note that Severstal Resources division coking coal concentrate sales volumes increased by 6% q/q. Meanwhile, consolidated numbers have been distorted by PBS Coals performance, with sales volumes being artificially down 51% q/q (on the back of the asset sale deal being closed in August). Nevertheless, coking coal concentrate sales volumes at Vorkutaugol increased by 18% q/q as quite a remarkable outcome has been achieved in terms of long wall repositioning progress. A new face at Severnaya mine has been commissioned at the very beginning of August as well as a new face at the Troynoi seam (Vorkutinskya mine) at September. To recap, in 2014, Vorkutaugol will commission 11 new coalfaces across all five of its mines, with two faces left to be commissioned till the year end at Komsomolskaya mine.
● Following the capacities increase at Pechorskaya beneficiation plant, we have started to reprocess all the amount of raw coking coals. Steam coal sales at Vorkutaugol were down 31% q/q reflecting temporary engineering constraints at several coal faces.
| Sales volumes, tonnes | Q3 2014 | Q2 2014 | Change, % | 9M 2014 | 9M 2013 | Change, % |
| Coal: | 1 606 854 | 1 712 435 | (6) % | 5 188 816 | 7 734 678 | (33) % |
| Coking coal concentrate, including: | 1 288 727 | 1 220 431 | 6 % | 3 900 648 | 5 439 688 | (28) % |
| Vorkutaugol | 1 181 004 | 1 002 645 | 18 % | 3 376 360 | 4 190 693 | (19) % |
| PBS Coals | 107 723 | 217 786 | (51) % | 524 288 | 1 248 995 | (58) % |
| Raw coking coal, Vorkutaugol | - | 25 967 | n.a. | 57 999 | 516 128 | (89) % |
| Steam coal, including: | 318 127 | 466 036 | (32) % | 1 230 169 | 1 778 862 | (31) % |
| Vorkutaugol | 318 127 | 457 807 | (31) % | 1 208 717 | 1 669 264 | (28) % |
| PBS Coals | - | 8 229 | n.a. | 21 452 | 109 598 | (80) % |
| Iron ore: | 3 879 778 | 3 750 712 | 3 % | 11 312 347 | 11 157 979 | 1 % |
| Iron ore pellets | 2 741 006 | 2 539 568 | 8 % | 7 863 134 | 7 649 659 | 3 % |
| Iron ore concentrate | 1 138 772 | 1 211 144 | (6) % | 3 449 213 | 3 508 320 | (2) % |
| Sales price, $/tonne | Q3 2014 | Q2 2014 | Change, % | 9M 2014 | 9M 2013 | Change, % |
| Coking coal concentrate, Vorkutaugol | 94 | 93 | 1 % | 95 | 110 | (14) % |
| Coking coal concentrate, PBS Coals | 96 | 103 | (7) % | 105 | 113 | (7) % |
| Raw coking coal, Vorkutaugol | n.a. | 60 | n.a. | 58 | 53 | 9 % |
| Steam coal, Vorkutaugol | 35 | 36 | (3) % | 35 | 38 | (8) % |
| Steam coal, PBS Coals | n.a. | 51 | n.a. | 68 | 50 | 36 % |
| Iron ore pellets | 73 | 89 | (18) % | 89 | 105 | (15) % |
| Iron ore concentrate | 49 | 63 | (22) % | 61 | 74 | (18) % |
SEVERSTAL RUSSIAN STEEL
●Severstal Russian Steel (RSD) steel products sales remained flat q/q at 2.7 mln tonnes. Meanwhile, we highlight that notwithstanding sharp decline in semi-finished products sales (down 91% q/q) due to BOFs scheduled maintenance, sales volumes of rolled products and downstream products increased by 4% q/q and 16% q/q respectively reflecting seasonally robust domestic market and strong demand on the export markets
●Solid growth has been largely driven by sales of hot-rolled plates (up 14% q/q), galvanized and metallic coated coils (up 23% q/q) and color coated coils (up 20% q/q)
● Abovementioned factors resulted in substantial increase of the share of high value-added (HVA) products in the sales portfolio from 47% to 52%
● Furthermore, sales of large diameter pipes increased more than two-fold (by 125% q/q) partially due to the low base effect, with sales in Q2 being negatively affected by technical transportation constraints for that type of product, resulted in delayed recognition of shipments from Izhora Pipe Mill (part of Severstal's Russian Steel division) for the South Stream Pipeline. At the same time in Q3 Severstal launched shipments for the Power of Siberia and Southern Corridor pipelines, which enabled the Izhora Pipe Mill to run at a high utilization rate
● USD-nominated prices for almost all steel products at RSD remained barely flat q/q in Q3 (on average). Meanwhile, we highlight that RSD was able to increase RUB-nominated sales prices reflecting catch up in prices on the back of further RUB depreciation.
| Sales volumes, tonnes | Q3 2014 | Q2 2014 | Change, % | 9M 2014 | 9M 2013 | Change, % |
| Total steel products | 2 745 261 | 2 739 100 | 0 % | 7 938 292 | 7 968 141 | (0) % |
| Semi-finished products | 15 107 | 170 139 | (91) % | 304 850 | 444 659 | (31) % |
| Rolled products: | 2 214 512 | 2 123 265 | 4 % | 6 274 851 | 6 238 117 | 1 % |
| Hot-rolled coil | 1 003 188 | 1 001 448 | 0 % | 2 948 765 | 3 140 978 | (6) % |
| Hot-rolled plate | 219 902 | 193 185 | 14 % | 643 442 | 565 431 | 14 % |
| Cold-rolled coil | 377 033 | 386 368 | (2) % | 1 098 483 | 1 051 062 | 5 % |
| Galvanised and metallic coated coil | 170 665 | 138 873 | 23 % | 429 254 | 461 669 | (7) % |
| Color coated coil | 133 240 | 110 970 | 20 % | 322 077 | 332 699 | (3) % |
| Long products | 310 484 | 292 420 | 6 % | 832 830 | 686 278 | 21 % |
| Downstream products: | 515 642 | 445 696 | 16 % | 1 358 591 | 1 285 365 | 6 % |
| Metalware products | 163 954 | 177 096 | (7) % | 486 863 | 506 696 | (4) % |
| Large diameter pipes | 121 998 | 54 192 | 125 % | 252 034 | 226 415 | 11 % |
| Other tubes, pipes, formed shapes | 229 690 | 214 408 | 7 % | 619 694 | 552 254 | 12 % |
| Sales price, $/tonne | Q3 2014 | Q2 2014 | Change, % | 9M 2014 | 9M 2013 | Change, % |
| Semi-finished products | 491 | 465 | 6% | 450 | 443 | 2 % |
| Hot-rolled coil | 517 | 501 | 3 % | 496 | 525 | (6) % |
| Hot-rolled plate | 726 | 791 | (8) % | 751 | 731 | 3 % |
| Cold-rolled coil | 576 | 583 | (1) % | 579 | 624 | (7) % |
| Galvanised and metallic coated coil | 803 | 796 | 1 % | 783 | 832 | (6) % |
| Color coated coil | 1 080 | 1 075 | 0 % | 1 037 | 1 072 | (3) % |
| Long products | 587 | 566 | 4 % | 552 | 599 | (8) % |
| Metalware products | 1 077 | 1 073 | 0 % | 1 082 | 1 170 | (8) % |
| Large diameter pipes | 1 453 | 1 521 | (4) % | 1 501 | 1 512 | (1) % |
| Other tubes, pipes, formed shapes | 647 | 650 | (1) % | 642 | 691 | (7) % |
SEVERSTAL'S CONSOLIDATED SALES (NET OF INTERCOMPANY SALES)
| Sales volumes, tonnes | Q3 2014 | Q2 2014 | Change, % | 9M 2014 | 9M 2013 | Change, % | |
| Coal: | 682 500 | 861 805 | (21) % | 2 493 789 | 4 950 939 | (50) % | |
| Coking coal concentrate | 364 373 | 369 800 | (1) % | 1 205 621 | 2 655 949 | (55) % | |
| Raw coking coal | - | 25 967 | n.a. | 57 999 | 516 128 | (89) % | |
| Steam coal | 318 127 | 466 036 | (32) % | 1 230 169 | 1 778 862 | (31) % | |
| Iron ore: | 1 556 704 | 1 373 044 | 13 % | 4 458 095 | 4 428 579 | 1 % | |
| Iron ore pellets | 1 556 704 | 1 285 837 | 21 % | 4 325 681 | 4 220 432 | 2 % | |
| Iron ore concentrate | - | 87 207 | n.a. | 132 414 | 208 147 | (36) % | |
| Semi-finished products | 15 107 | 170 139 | (91) % | 274 879 | 323 714 | (15) % | |
| Rolled products: | 2 133 134 | 2 084 173 | 2 % | 6 137 210 | 6 222 300 | (1) % | |
| Hot-rolled coil | 937 254 | 968 632 | (3) % | 2 836 932 | 3 137 500 | (10) % | |
| Hot-rolled plate | 219 905 | 193 078 | 14 % | 643 228 | 565 039 | 14 % | |
| Cold-rolled coil | 371 138 | 386 028 | (4) % | 1 092 248 | 1 051 053 | 4 % | |
| Galvanised and metallic coated coil | 170 660 | 138 870 | 23 % | 429 244 | 461 669 | (7) % | |
| Color coated coil | 133 240 | 110 970 | 20 % | 322 077 | 332 699 | (3) % | |
| Long products | 300 937 | 286 595 | 5 % | 813 481 | 674 340 | 21 % | |
| Downstream products: | 513 932 | 444 146 | 16 % | 1 353 967 | 1 279 395 | 6 % | |
| Metalware products | 163 030 | 176 236 | (7) % | 484 664 | 505 409 | (4) % | |
| Large diameter pipes | 121 451 | 53 795 | 126 % | 250 459 | 222 077 | 13 % | |
| Other tubes, pipes, formed shapes | 229 451 | 214 116 | 7 % | 618 844 | 551 909 | 12 % | |
| Notes |
1) All production data is reported in metric tonnes;
2) Sales prices are stated on EXW basis;
3) Segmental data includes intercompany sales;
4) Semi-finished products include pig iron, slabs, billets, ingots, steel casting and forgings;
5) Metalware sales volumes and metalware average selling prices include Severstal Metiz, Cherepovets Steel Mill, Severstallat and Severstal Invest data;
6) Large diameter pipes include all pipes with a diameter between 820 and 1420 mm;
7) Group and RSD volumes and average selling prices for 9M2013 were restated due to a change in recognized revenues, based on a re-classification of products.
| Contacts |
Investor Relations
Vladimir Zaluzhsky
T: +7 (495) 926-77-66 ext. 6375
Public Relations
Elena Kovaleva
T: +7 (495) 926-77-66 ext. 6447
Severstal's financial communications agent - Hudson Sandler
Andrew Hayes / Maria Ignatova / Alex Brennan
T: +44 (0) 20 7796 4133
***
ОАО Severstal is one of the world's leading vertically integrated steel and steel related mining companies, with assets in Russia, Ukraine, Latvia, Poland, Italy, Liberia and Brazil. Severstal is listed on RTS and MICEX and the company's GDRs are traded on the LSE. Severstal reported revenue of $9,434 million* and EBITDA of $1, 818 million* in 2013. Severstal's crude steel production in 2013 reached 10.7 million tonnes*. www.severstal.com
* These amounts reflect adjustments made in connection with the presentation of the discontinued operation.
This information is provided by RNS
The company news service from the London Stock Exchange
END
TSTGGGUWUUPCUAA