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PJSC Magnitogorsk Iron and Steel Works

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DGAP-UK-Regulatory News vom 25.01.2018

PJSC Magnitogorsk Iron and Steel Works: MMK Group Trading Update for Q4 and FY 2017

PJSC Magnitogorsk Iron and Steel Works (MMK)

25-Jan-2018 / 08:05 CET/CEST
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MMK Group Trading Update for Q4 and FY 2017

ММК Group: Consolidated results

(thousand tonnes)

 

Q4

2017

Q3

2017

%

FY

2017

FY

2016

%

Finished products sales, of which:

2,827

3,232

-12.5%

11,617

11,454

1.4%

Slabs and billets

2

2

0.2%

4

104

-96.2%

Long products

342

374

-8.7%

1,374

1,325

3.7%

Flat hot-rolled products

1,219

1,389

-12.2%

4,968

4,873

2.0%

Thick plate (mill 5000)

208

182

13.9%

806

799

0.8%

Flat cold-rolled products

294

380

-22.6%

1,287

1,385

-7.1%

Downstream products, of which:

762

904

-15.7%

3,178

2,969

7.0%

Tin plate

19

29

-33.7%

113

137

-17.2%

Galvanised steel

389

483

-19.5%

1,658

1,598

3.8%

Polymer-coated steel

157

185

-15.5%

623

534

16.8%

Band

38

33

17.2%

128

128

0.4%

Formed section

36

24

51.5%

114

41

177.0%

Pipes

8

19

-59.2%

65

78

-16.9%

Metalware

95

109

-12.6%

402

383

4.9%

Other metal products

20

22

-11.0%

74

70

5.7%

HVA products

1,264

1,467

-13.8%

5,270

5,153

2.3%

Share of HVA products

44.7%

45.4%

 

45.4%

45.0%

 

Coal concentrate production

760

658

15.6%

2,725

2,870

-5.1%

Iron ore production

844

827

2.1%

3,275

3,260

0.4%

Q4 2017 highlights vs. Q3 2017

       MMK Group's total finished steel product sales in Q4 2017 (excluding intra-group sales) totalled 2,827 thousand tonnes (down 12.5% q-o-q).

       MMK Group's HVA steel product sales in Q4 2017 was 1,264 thousand tonnes (down 13.8% q-o-q). The share of HVA products in total output amounted to 44.7%.

       Production of coal concentrate by MMK Coal in Q4 2017 totalled 760 thousand tonnes (up 15.6% q-o-q).

FY 2017 highlights vs. FY 2016

       MMK Group's total finished steel product sales in FY 2017 (excluding intra-group sales) amounted to 11,617 thousand tonnes (up 1.4% y-o-y).

       MMK Group's HVA steel product output in FY 2017 was 5,270 thousand tonnes (up 2.3% y-o-y). The share of HVA products in total output increased to 45.4%.

       Production of coal concentrate by MMK Coal in FY 2017 totalled 2,725 thousand tonnes (down 5.1% y-o-y).

 

 


MMK Group highlights by key segments

PSJC MMK

(thousand tonnes)

 

 

Q4

2017

Q3

2017

%

FY

2017

FY

2016

%

Pig iron

2,654

2,559

3.7%

10,163

9,652

5.3%

Crude steel

3,291

3,321

-0.9%

12,860

12,544

2.5%

Finished products output, of which:

2,787

3,092

-9.9%

11,333

11,323

0.1%

Slabs and billets

2

2

2.9%

4

104

-96.0%

Long products

419

469

-10.6%

1,787

1,730

3.3%

Flat hot-rolled products

1,346

1,496

-10.1%

5,397

5,320

1.4%

HVA products, of which:

1,020

1,125

-9.3%

4,145

4,170

-0.6%

Thick plate (mill 5000)

210

186

13.2%

820

823

-0.3%

Flat cold-rolled products

308

375

-17.9%

1,318

1,456

-9.4%

Downstream products, of which:

502

564

-11.0%

2,007

1,892

6.1%

Tin plate

19

32

-41.3%

117

140

-16.3%

Galvanised steel

298

325

-8.4%

1,133

1,136

-0.2%

Polymer-coated steel

100

132

-23.9%

440

360

22.1%

Band

36

30

20.4%

127

124

2.6%

Formed section

40

27

49.1%

123

50

147.5%

Pipes

9

18

-52.4%

65

82

-20.5%

Shipments by market:

 

 

 

 

 

 

Russia + CIS

2,055

2,484

-17.3%

8,528

8,236

3.6%

Export

732

607

20.5%

2,805

3,089

-9.2%

(USD / tonne)

 

Q4

2017

Q3

2017

%

FY

2017

FY

2016

%

 Average price per tonne:

616

555

11.0%

575

432

33.1%

Long products

547

496

10.3%

491

352

39.5%

Flat hot-rolled products

544

476

14.3%

496

358

38.5%

HVA products, of which:

739

686

7.7%

714

564

26.6%

Thick plate (mill 5000)

807

774

4.3%

765

611

25.2%

Flat hot-rolled products

620

545

13.8%

579

435

33.3%

Downstream products, of which:

783

751

4.3%

781

643

21.5%

Tin plate

834

834

0.0%

855

791

8.1%

Galvanised steel

741

709

4.5%

739

604

22.4%

Polymer-coated steel

928

898

3.3%

928

800

16.0%

Band

698

600

16.3%

669

510

31.2%

Formed section

800

704

13.6%

777

599

29.7%

Pipes

700

593

18.0%

614

454

35.2%

       Pig iron output in FY 2017 increased by 511 thousand tonnes or 5.3% y-o-y. This was due to the completion of major repairs at three blast furnaces in 2016 and early 2017, and their maximum capacity utilisation for the most part of 2017.

       Crude steel output in Q4 2017 remained nearly flat q-o-q. At the same time, steel production in FY 2017 grew 2.5% y-o-y to 12,860 thousand tonnes. Pig iron production grew faster than steel production, thus allowing the company to increase the share of pig iron in furnace charge, thereby decreasing the cash cost.

       In Q4 2017, shipments of finished products totalled 2,787 thousand tonnes, down 9.9% q-o-q. This decline was due to the seasonal weakness of business activity on the domestic market, as well as dynamics stocks at the Company's warehouses? Which were declining in Q3 and growing in Q4 2017.

       In FY 2017, shipments of finished products slightly rose above FY 2016 levels and amounted to 11,333 thousand tonnes. This indicator grew slower than steel production due to a transition to a less productive (but higher-margin) product mix for domestic sales, as well as recovery of finished products stocks to standard level.

       Seasonal weakness in business activity on the domestic market in Q4 2017 resulted in a 17.3% decrease in shipments q-o-q. However, domestic shipments in FY 2017 grew 3.6% to 8,528 thousand tonnes, while the share of domestic sales in the overall sales structure exceeded 75% (up from 72.7% in FY 2016).

       In FY 2017, shipments of long products increased by 3.3% y-o-y to 1,787 thousand tonnes. This growth was due to the recovery in demand for construction metal which also resulted in an increase in sales prices for this product by 39.5% y-o-y.

       The 1.4% increase in shipments of hot-rolled products y-o-y in FY 2017 was mainly due to the sustainably high demand from pipemakers, recovery in demand from construction industry, and higher shipments to ММК Metalurji.  

       Shipments of HVA products in FY 2017 slightly declined y-o-y and totalled 4,145 thousand tones. This was due to lower shipments of cold-rolled products and recovery of finished products stocks to the standard level.

       Decline in shipments of cold-rolled products in FY 2017 (down 9.4% y-o-y) was due to higher production of polymer-coated steel and formed section.

       In Q4 2017, shipments of mill 5000 thick plate grew by 13.2% q-o-q and amounted to 210 thousand tonnes. This growth was due to higher sales to pipemakers and machine-building industry.

       In FY 2017, shipments of galvanised steel remained flat y-o-y, while shipments of polymer-coated steel grew by 80 thousand tonnes or 22.1%. At the same time, capacity utilisation at coated-product facilities remained at nearly 100% throughout FY 2017.

       The lack of positive dynamics in galvanised steel production (despite commissioning of a new galvanising line in July 2017) was due to higher production of polymer-coated metal and higher shipments of C-surface group galvanised metal to carmakers (which meant a more complex product mix).  

       Sales of formed section in FY 2017 grew 147.5% y-o-y, as a result of the recovery in demand from railcar producers.

       The average sales price in US dollars in Q4 2017 increased by 11.0% q-o-q to USD 616 per tonne. Higher prices on export markets during the quarter supported domestic sales prices.

       In FY 2017, the average sales price for the Company's metal amounted to USD 575 per tonne, up 33.1% y-o-y.

 

Steel segment (Turkey)

(thousand tonnes)

 

Q4

2017

Q3

2017

%

FY

2017

FY

2016

%

ММК Metalurji finished products, of which:

213

249

-14.5%

925

854

8.4%

Flat hot-rolled products

37

46

-18.7%

164

134

22.2%

HVA products, of which:

176

204

-13.5%

762

720

5.8%

Galvanised steel

122

159

-22.9%

580

511

13.6%

Polymer-coated steel

54

45

19.1%

182

209

-13.3%

ММК Metalurji finished output from ММК steel

176

166

5.5%

640

615

4.0%

       Sales of finished products in Q4 2017 declined by 14.5% q-o-q and totalled 213 thousand tonnes. This was due to the seasonally weak demand.

       Sales of finished products in FY 2017 grew 71 thousand tonnes or 8.4% y-o-y.

       This growth was mainly due to an increase in sales of galvanised steel (up 69 thousand tonnes or 13.6%), which under the current market conditions provided higher margins compared to other products, as well as mastering production of a new product - steel sheets produced by cutting rolled steel made by MMK.

       Sustainable local demand and higher export sales mean that sales will likely remain flat in 2018 y-o-y.

 

MMK Coal

(thousand tonnes)

 

Q4

2017

Q3

2017

%

FY

2017

FY

2016

%

Coking coal mining

1,158

823

40.7%

3,614

3,416

5.8%

Coking coal processing

1,358

1,225

10.8%

4,893

4,958

-1.4%

Mined

1,003

809

24.0%

3,469

3,574

-2.9%

Purchased

355

417

-14.8%

1,424

1,384

2.5%

Coking coal concentrate

760

658

15.6%

2,725

2,870

-5.0%

       Coking coal production in Q4 2017 grew 40.7% q-o-q and amounted to 1,158 thousand tonnes. This growth was due to commissioning of new longwall at Chertinskaya-Koksovaya mine and completion of passing through a section with complex geological conditions at Kostromovskaya mine.

       Coal production in FY 2017 increased by 198 thousand tonnes y-o-y and amounted to 3,614 thousand tonnes.

       Coal concentrate production in Q4 2017 amounted to 760 thousand tonnes, up 15.6% q-o-q. The increase was due to higher volumes of own materials processing amid lower coal purchases from third-parties.

       In FY 2017, coal concentrate production decreased by 5.0% y-o-y to 2,725 thousand tonnes. Lower coal concentrate production was due to major scheduled maintenance and higher ash content of coal at the Kostromovskaya mine (section with a more complex geological conditions).

Outlook

Management expects that seasonality and scheduled maintenance of equipment will affect Q1 2018 results.

At the same time, this factor is expected to be balanced by higher sales prices for finished products on the Company's domestic and export markets.

    

MMK is one of the world's largest steel producers and a leading Russian metals company. The company's operations in Russia include a large steel producing complex encompassing the entire production chain, from preparation of iron ore to downstream processing of rolled steel. MMK turns out a broad range of steel products with a predominant share of high-value-added products. In 2016, the company produced 12.5 million tonnes of crude steel and 11.6 million tonnes of commercial steel products. MMK Group had sales in 2016 of USD 5,630 million and EBITDA of USD 1,956 million.

 

 

 

 

 

 

Contacts

Investor Relations Department:

Andrey Serov

+7 3519 24-52-97

[email protected]

Communications Department:

Dmitry Kuchumov Dmitry Bulin

+7 499 238-26-13 +7 499 238-26-13

[email protected]    [email protected]

 




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