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Severstal - ao

Earnings Release • Apr 12, 2019

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Earnings Release

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PAO Severstal (SVST)

Severstal reports Q1 2019 operational results

12-Apr-2019 / 09:02 MSK

Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.

The issuer is solely responsible for the content of this announcement.

Severstal reports Q1 2019 operational results

Moscow, Russia - 12 April 2019 - PAO 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 Q1 2019.

Q1 2019 GROUP HIGHLIGHTS

  • Hot metal output increased 6% q/q in Q1 2019 to 2.36 mln tonnes (Q4 2018: 2.23 mln tonnes) following short-term maintenance works at BF#2 in the previous quarter. Crude steel production grew to 3.04 mln tonnes (Q4 2018: 2.94 mln tonnes) reflecting an increase in pig iron production and production growth of EAF billets.

  • Consolidated steel product sales increased 3% q/q to 2.83 mln tonnes in Q1 2019 (Q4 2018: 2.76 mln tonnes), following short-term maintenance works at rolling-mill facilities in the previous quarter and an increase in productivity of aggregates. The share of domestic sales rose to 65% due to their increased attractiveness of domestic sales (Q4 2018: 62%).

  • The share of high value-added (HVA) products within the sales portfolio remained flat at 44% (Q4 2018: 44%), driven by a decline in sales of semi-finished products, which was offset by higher sales of galvanised, colour coated and hot rolled thick plate.

  • Coking coal concentrate sales volumes from Vorkutaugol declined 1% due to long-wall repositionings at Vorgashorskaya, Zapolyarnaya and Komsomolskaya mines, but remained at historically high levels reflecting the high production rate.

  • Iron ore pellet sales declined 4% to 2.83 mln tonnes (Q4 2018: 2.94 mln tonnes) as a result of lower production volumes in Q1 2019 and a stock sell-off in the previous quarter.

SUMMARY OF KEY PRODUCTION, SALES VOLUMES
Production, thousands of tonnes Q1 2019 Q4 2018 Change, % Q1 2019 Q1 2018 Change, %
Crude Steel (Russian Steel) 3,044 2,941 4% 3,044 3,033 0%
Hot metal (Russian Steel) 2,363 2,233 6% 2,363 2,347 1%
Sales volumes, thousands of tonnes Q1 2019 Q4 2018 Change, % Q1 2019 Q1 2018 Change, %
Coking coal concentrate 1,031 1,043 (1%) 1,031 628 64%
Iron ore pellets 2,832 2,943 (4%) 2,832 2,377 19%
Iron ore concentrate 1,301 1,430 (9%) 1,301 1,292 1%
Total steel products (Consolidated) 2,832 2,755 3% 2,832 2,864 (1%)
Total steel products (Russian Steel) 2,843 2,766 3% 2,843 2,874 (1%)
High value added steel products, % Q1 2019 Q4 2018 Change, % Q1 2019 Q1 2018 Change, %
Severstal (Consolidated) 44% 44% (0 ppts) 44% 45% (1 ppts)
Severstal Russian Steel 44% 44% (0 ppts) 44% 45% (1 ppts)

SEVERSTAL'S CONSOLIDATED SALES (NET OF INTERCOMPANY SALES)
Sales volumes, thousands of tonnes Q1 2019 Q4 2018 Change, % Q1 2019 Q1 2018 Change, %
Coal: 532 544 (2%) 532 404 32%
Coking coal concentrate 157 169 (7%) 157 46 n/a
Steam coal 375 375 0% 375 358 5%
Iron ore: 1,656 2,128 (22%) 1,656 1,441 15%
Iron ore pellets 1,302 1,871 (30%) 1,302 1,188 10%
Iron ore concentrate 354 257 38% 354 253 40%
Semi-finished products 121 157 (23%) 121 256 (53%)
Rolled products: 2,311 2,185 6% 2,311 2,166 7%
Hot-rolled coil 1,102 1,017 8% 1,102 963 14%
Hot-rolled plate 233 210 11% 233 198 18%
Cold-rolled coil 275 296 (7%) 275 389 (29%)
Galvanised and metallic coated coil 237 207 14% 237 198 20%
Colour coated coil 102 97 5% 102 67 52%
Long products 362 358 1% 362 351 3%
Downstream products: 400 413 (3%) 400 442 (10%)
Metalware products 126 136 (7%) 126 128 (2%)
Large diameter pipes 97 107 (9%) 97 119 (18%)
Other tubes, pipes, formed shapes 177 170 4% 177 195 (9%)

SEVERSTAL RESOURCES

  • Coking coal concentrate sales volumes from Vorkutaugol declined 1% q/q due to long-wall repositionings at the Vorgashorskaya, Zapolyarnaya and Komsomolskaya mines, but remained at historically high levels as a result of high production rates. Internal coking coal concentrate remained almost flat q/q as the Company maintained high level of sales to third parties due to a favourable pricing environment in the local market.

  • Steam coal sales at Vorkutaugol remained almost flat in Q1 2019 vs Q4 2018 but increased by 5% y/y, reflecting production growth.

  • Iron ore pellet sales declined 4% to 2.83 mln tonnes (Q4 2018: 2.94 mln tonnes) as a result of lower production volumes and stock sell-off in Q4 2018.

  • Iron ore concentrate sales decreased 9% to 1.30 mln tonnes (Q4 2018: 1.43 mln tonnes) due to seasonal factors and short-term maintenance works.
Sales volumes, thousands of tonnes Q1 2019 Q4 2018 Change, % Q1 2019 Q1 2018 Change, %
Coal: 1,406 1,417 (1%) 1,406 986 43%
Coking coal concentrate 1,031 1,043 (1%) 1,031 628 64%
Steam coal 375 374 0% 375 358 5%
Iron ore: 4,133 4,373 (5%) 4,133 3,669 13%
Iron ore pellets 2,832 2,943 (4%) 2,832 2,377 19%
Iron ore concentrate 1,301 1,430 (9%) 1,301 1,292 1%

SEVERSTAL RUSSIAN STEEL ('RSD')

  • RSD steel product sales increased 3% to 2.84 mln tonnes in Q1 2019 compared with the previous quarter (Q4 2018: 2.77 mln tonnes), following short-term maintenance works at rolling-mill facilities in the previous quarter and an increase in the productivity of aggregates. The share of domestic sales rose to 65% due to the increased attractiveness of domestic sales (Q4 2018: 62%).

  • The share of high value-added (HVA) products within the sales portfolio remained flat at 44% (Q4 2018: 44%), driven by a decline in sales of semi-finished products and higher sales of galvanised, colour coated and hot rolled thick plate.

  • Severstal increased production of colour-coated and galvanised products following the launch of new product lines, which reached their full utilisation rates in Q1 2019.

  • LDP sales volumes declined 9% q/q due to specific factors with the product range at the Izhora Pipe Mill (IPM) where the utilisation rate continued to remained high in Q1 2019. In February 2019 IPM has won several tenders to supply PAO Gazprom with over 200,000 tonnes of large diameter pipes. The products will be used in the development of gas transmission capacities for the Unified Gas Supply System in the North-West Region (NEGP), as well as the construction of the Kovykta-Chayanda section of the Power of Siberia gas pipeline. Thick plate sales increased 11% q/q.

  • Average selling prices for the majority of steel products declined in Q1 2019 in line with global benchmarks.
Sales volumes, thousands of tonnes Q1 2019 Q4 2018 Change, % Q1 2019 Q1 2018 Change, %
Total steel products 2,843 2,766 3% 2,843 2,874 (1%)
Semi-finished products 121 157 (23%) 121 256 (53%)
Rolled products: 2,322 2,194 6% 2,322 2,176 7%
Hot-rolled coil 1,102 1,017 8% 1,102 963 14%
Hot-rolled plate 233 210 11% 233 198 18%
Cold-rolled coil 275 296 (7%) 275 389 (29%)
Galvanised and metallic coated coil 237 207 14% 237 198 20%
Colour coated coil 102 97 5% 102 67 52%
Long products 373 367 2% 373 361 3%
Downstream products: 400 415 (4%) 400 442 (10%)
Metalware products 126 137 (8%) 126 128 (2%)
Large diameter pipes 97 107 (9%) 97 119 (18%)
Other tubes, pipes, formed shapes 177 171 4% 177 195 (9%)
Sales price, $/tonne Q1 2019 Q4 2018 Change, % Q1 2019 Q1 2018 Change, %
Semi-finished products 423 444 (5%) 423 428 (1%)
Hot-rolled coil 494 526 (6%) 494 551 (10%)
Hot-rolled plate 635 683 (7%) 635 741 (14%)
Cold-rolled coil 592 611 (3%) 592 626 (5%)
Galvanised and metallic coated coil 709 735* (4%) 709 734 (3%)
Colour coated coil 849 899 (6%) 849 899 (6%)
Long products 449 452 (1%) 449 496 (9%)
Metalware products 948 958 (1%) 948 1,013 (6%)
Large diameter pipes 1,008 982 3% 1,008 1,284 (21%)
Other tubes, pipes, formed shapes 568 561 1% 568 602 (6%)
Notes:

1) All production data is reported in thousands of 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) Large diameter pipes include all pipes with a diameter between 820 and 1420 mm.
Contacts

Investor Relations

Evgeny Belov

T: +7 (495) 926-77-66 ext. 6445

[email protected]

Public Relations

Anastasia Mishanina

T: +7 (495) 926-77-66 ext. 6457

[email protected]

Severstal's financial communications agency - Hudson Sandler

Andrew Leach / Emily Dillon

T: +44 (0) 20 7796 4133

***

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: TST
TIDM: SVST
LEI Code: 213800OKDPTV6K4ONO53
Sequence No.: 8188
EQS News ID: 799299
End of Announcement EQS News Service

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