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DGAP-UK-Regulatory News vom 11.10.2018

Severstal reports Q3 & 9M 2018 operational results

PAO Severstal (SVST)

11-Oct-2018 / 09:00 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 Q3 & 9M 2018 operational results

 

Moscow, Russia - 11 October 2018 - 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 Q3 & 9M 2018.

Q3 2018 GROUP HIGHLIGHTS

  • Hot metal output increased 2% in Q3 2018 to 2.30 mln tonnes (Q2 2018: 2.26 mln tonnes) compared with the previous quarter after short-term maintenance works at BF#4 and BF#5. Crude steel production increased 2% to 3.06 mln tonnes (Q2 2018: 3.00 mln tonnes) in line with pig iron production growth.

 

  • Consolidated steel product sales declined 5% to 2.71 mln tonnes in Q3 2018 compared with the previous quarter (Q2 2018: 2.84 mln tonnes), due to short-term maintenance works at rolling-mill facilities. The share of domestic sales remained high at 65% (Q2 2018: 64%).

 

  • The share of high value-added (HVA) products within the sales portfolio increased two ppts to 48% (Q2 2018: 46%), driven by an increase in sales volumes of colour-coated and large diameter pipe (LDP) products. At the same time Severstal reduced semi-finished and hot-rolled coil (HRC) sales.

 

  • Coking coal concentrate sales volumes from Vorkutaugol grew 27% largely driven by higher production volumes of "2ZH", "GZHO" and "Concentrate K" grades following the long-wall repositionings at Komsomolskaya and Vorkutinskaya mines in Q2.

 

  • Iron ore pellet sales decreased 18% to 2.55 mln tonnes (Q2 2018: 3.12 mln tonnes) after the realisation of a share of finished goods in transit in Q2, carried over from the previous quarter.

 

  • Iron ore concentrate sales increased to 1.42 mln tonnes (Q2 2018: 1.36 mln tonnes) driven by growth in production at the Olcon and Yakovlevskiy mines.

 

9M 2018 GROUP HIGHLIGHTS

 

  • Hot metal output increased 1% to 6.91 mln tonnes in 9M 2018 compared with the previous period (9M 2017: 6.81 mln tonnes), due to fewer maintenance works in 9M 2018 and declining idle time at BF's. Crude steel production increased 5% to 9.10 mln tonnes (9M 2017: 8.64 mln tonnes), driven by an improvement in steel production efficiency following the launch of ladle furnace #2 in July 2017 as well as higher production volumes from Balakovo mini-mill. Meanwhile, the Company continues its efficiency programmes aimed at decreasing raw material consumption ratios in the steel production process.

 

  • Consolidated steel product sales improved to 8.42 mln tonnes in 9M 2018 (9M 2017: 8.14 mln tonnes), primary reflecting growth in sales of semi-finished products compared with the previous year. The high share of HVA products remained flat at 46% in 9M 2018 (9M 2017: 46%).

 

  • Average selling prices for the majority of steel products grew substantially, between 6%-20%, for 9M 2018, reflecting global trends as well as sales and marketing initiatives run by Severstal.

 

  • The higher iron ore concentrate sales y-o-y for 9M 2018 partially reflects the consolidation of the Yakovlevskiy mine.

 

 

SUMMARY OF KEY PRODUCTION, SALES VOLUMES

Production, thousands of tonnes

Q3 2018

Q2 2018

Change, %

9M 2018

9M 2017

Change, %

Crude Steel (Russian Steel)

3,064

3,001

2%

9,098

8,639

5%

Hot metal (Russian Steel)

2,307

2,259

2%

6,913

6,814

1%

 

 

 

 

 

 

 

Sales volumes, thousands of tonnes

Q3 2018

Q2 2018

Change, %

9M 2018

9M 2017

Change, %

Coking coal concentrate*

953

750

27%

2,331

2,462

(5%)

Iron ore pellets

2,554

3,123

(18%)

8,054

7,836

3%

Iron ore concentrate

1,424

1,364

4%

4,080

3,114

31%

Total steel products (Consolidated)

2,712

2,844

(5%)

8,420

8,135

4%

Total steel products (Russian Steel)

2,722

2,857

(5%)

8,453

8,167

4%

 

High value added steel products, %

Q3 2018

Q2 2018

Change, %

9M 2018

9M 2017

Change, %

Severstal (Consolidated)

48%

46%

2 ppts

46%

46%

0 ppts

Severstal Russian Steel

48%

46%

2 ppts

46%

46%

0 ppts

 

 

SEVERSTAL'S CONSOLIDATED SALES (NET OF INTERCOMPANY SALES)

Sales volumes, thousands of tonnes

Q3 2018

Q2 2018

Change, %

9M 2018

9M 2017

Change, %

Coal:

381

342

11%

1,127

1,281

(12%)

Coking coal concentrate

109

35

n.a.

190

69

175%

Steam coal

272

307

(11%)

937

1,212

(23%)

Iron ore:

1,671

2,165

(23%)

5,277

4,405

20%

Iron ore pellets

1,465

2,054

(29%)

4,707

4,354

8%

Iron ore concentrate

206

111

86%

570

51

n.a.

Semi-finished products

97

185

(48%)

538

301

79%

Rolled products:

2,148

2,219

(3%)

6,533

6,467

1%

Hot-rolled coil

946

969

(2%)

2,878

3,044

(5%)

Hot-rolled plate

218

226

(4%)

642

565

14%

Cold-rolled coil

280

321

(13%)

990

1,018

(3%)

Galvanised and metallic coated coil

211

218

(3%)

627

478

31%

Colour coated coil

122

105

16%

294

318

(8%)

Long products

371

380

(2%)

1,102

1,044

6%

Downstream products:

467

440

6%

1,349

1,368

(1%)

Metalware products

150

146

3%

424

486

(13%)

Large diameter pipes

128

86

49%

333

249

34%

Other tubes, pipes, formed shapes

189

208

(9%)

592

633

(6%)

               

 

 

 

 

SEVERSTAL RESOURCES

  • Coking coal concentrate sales volumes from Vorkutaugol grew 27%, largely driven by higher production volumes of "2ZH", "GZHO" and "Concentrate K" following the repositioning of long-walls at the Komsomolskaya and Vorkutinskaya mines in Q2. Internal coking coal concentrate procurement declined to 88% in Q3 2018 as the Company increased sales to third parties due to a favourable pricing environment in the local market.

 

  • Steam coal sales at Vorkutaugol declined 11% q/q reflecting a lower production rate at Vorgashorskaya mine in Q3 and seasonally weaker domestic demand.

 

  • Iron ore pellet sales declined by 18% and totalled 2.55 mln tonnes (Q2 2018: 3.12 mln tonnes) after the realisation of a share of finished goods in transit in Q2, carried over from the previous quarter.

 

  • Iron ore concentrate sales increased to 1.42 mln tonnes (Q2 2018: 1.36 mln tonnes) driven by production growth at the Olcon and Yakovlevskiy mines.

Sales volumes, thousands of tonnes

Q3 2018

Q2 2018

Change, %

9M 2018

9M 2017

Change, %

Coal:

1,226

1,057

16%

3,269

3,675

(11%)

Coking coal concentrate*

953

750

27%

2,331

2,462

(5%)

Steam coal

273

307

(11%)

938

1,213

(23%)

Iron ore:

3,978

4,487

(11%)

12,134

10,950

11%

Iron ore pellets

2,554

3,123

(18%)

8,054

7,836

3%

Iron ore concentrate

1,424

1,364

4%

4,080

3,114

31%

 

 

SEVERSTAL RUSSIAN STEEL ('RSD')

  • RSD steel product sales declined to 2.72 mln tonnes compared with the previous quarter (Q2 2018: 2.86 mln tonnes) due to short-term maintenance works at rolling-mill facilities. Domestic sales remained high at 65% (Q2 2018: 64%).
  • The share of high value-added (HVA) products within the sales portfolio increased two ppts to 48% (Q2 2018: 46%) as the company increased colour-coated and large diameter pipe product sales. At the same time Severstal reduced semi-finished and hot-rolled coil (HRC) sales.
  • Semi-finished product sales decreased as a result of lower volumes of slab sold, due to maintenance works at rolling mills in Q3. At the same time, the decrease in semi-finished product sales q/q reflects a "high-base" effect of billet sales in Q2 2018.
  • Severstal increased colour-coated sales, which resulted in lower sales of hot-dip galvanised (HDG) and cold-rolled coil volumes.
  • LDP sales volumes grew 49% q/q as a result of higher production volumes of LDP and a sell-off of finished goods at the Izhora Pipe Mill. In March 2018, the Izhora Pipe Mill was awarded a tender to supply approximately 165 thousand tonnes of LDPs for Gazprom projects during 2018-2019.
  • Average selling prices for the majority of steel products declined in Q3 2018 in line with global benchmarks. The decline in LDP average selling price in 9M 2018 was offset by higher sales volumes of thick plate.

Sales volumes, thousands of tonnes

Q3 2018

Q2 2018

Change, %

9M 2018

9M 2017

Change, %

Total steel products

2,722

2,857

(5%)

8,453

8,167

4%

Semi-finished products

97

185

(48%)

538

301

79%

Rolled products:

2,157

2,232

(3%)

6,565

6,497

1%

Hot-rolled coil

947

969

(2%)

2,879

3,044

(5%)

Hot-rolled plate

218

226

(4%)

642

566

13%

Cold-rolled coil

280

321

(13%)

990

1,018

(3%)

Galvanised and metallic coated coil

211

218

(3%)

627

478

31%

Colour coated coil

122

105

16%

294

318

(8%)

Long products

379

393

(4%)

1,133

1,073

6%

Downstream products:

468

440

6%

1,350

1,369

(1%)

Metalware products

151

146

3%

425

486

(13%)

Large diameter pipes

128

86

49%

333

249

34%

Other tubes, pipes, formed shapes

189

208

(9%)

592

634

(7%)

 

Sales price, $/tonne

Q3 2018

Q2 2018

Change, %

9M 2018

9M 2017

Change, %

Semi-finished products

493

511

(4%)

468

389

20%

Hot-rolled coil

545

590

(8%)

562

479

17%

Hot-rolled plate

679

729

(7%)

716

610

17%

Cold-rolled coil

616

639

(4%)

627

585

7%

Galvanised and metallic coated coil

763

782

(2%)

761

716

6%

Colour coated coil

963

948

2%

943

872

8%

Long products

482

503

(4%)

494

418

18%

Metalware products

925

979

(6%)

970

876

11%

Large diameter pipes

1,006

1,047

(4%)

1,116

1,412

(21%)

Other tubes, pipes, formed shapes

601

629

(4%)

611

568

8%

 

 

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 Hayes / Emily Dillon / Dan de Belder

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, Ukraine, Latvia and Poland. Severstal is listed on RTS and MICEX and the company's GDRs are traded on the LSE. Severstal reported revenue of $7,848 million and EBITDA of $2,577 million in 2017. Severstal's crude steel production in 2017 reached 11.7 million tonnes www.severstal.com

 




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