|Real-time Estimate - 09/24 11:30:00 am|
Severstal : reports Q2 & H1 2020 financial results
|07/23/2020 | 02:05am|
PAO Severstal (SVST)
Severstal reports Q2 & H1 2020 financial results
- Leading 32% EBITDA margin maintained; strong free cash flow growth delivered q/q; dividend recommended -
Moscow, Russia - 23 July 2020 - PAO Severstal (MICEX-RTS: CHMF; LSE: SVST), one of the world's leading steel and steel-related mining companies, today announces its Q2 & H1 2020 financial results for the period ended 30 June 2020.
CONSOLIDATED FINANCIAL RESULTS FOR Q2 AND H1 2020
Q2 2020 vs. Q1 2020 ANALYSIS:
H1 2020 vs. H1 2019 ANALYSIS:
FINANCIAL POSITION HIGHLIGHTS:
Alexander Shevelev, CEO of Severstal Management, commented:
"The health and safety of all Severstal employees remains our first priority. For this reason, in response to the COVID-19 pandemic we have implemented strict protective measures across all our sites and organised remote working for our office staff since the middle of March. Fortunately, in almost all of the regions where we operate, we have avoided any large-scale outbreak of COVID-19 and our operations have continued without interruption. As long as necessary, Severstal will continue to maintain strict sanitary requirements and to closely monitor adherence in this area.
Moving on to our financial results for Q2 2020, I am pleased to note that all our businesses demonstrated a strong performance despite the market disruptions made by the COVID-19 outbreak. We have maintained almost 100% utilisation rate at our steelmaking facilities. At our mining operations we have increased sales volumes of coking coal by 34% q/q, maintained strong sales volumes of iron ore products and achieved significant end-to-end optimisation effects. The flexibility of our distribution network allowed us to maintain a high share of exports, keeping sales volumes relatively steady during the period. The weighted average selling prices declined only by 4% q/q as we continue developing our downstream operations. Despite the 11% decline in revenues in Q2 2020, our high levels of operational efficiency enabled us to maintain an EBITDA margin of 31.5%, which is the highest in the global steel industry globally. Free Cash Flow also increased from $54 million to $190 million q/q, even though our capital investment level remained high.
Despite the COVID-19 pandemic our transformation programme continues and remains a very high priority for us.
Severstal's financial position remains strong with Net Debt/EBITDA ratio of 0.8 times, the Board remains confident in its outlook and is recommending a dividend of 15.44 roubles per share for Q2 2020."
SEVERSTAL RUSSIAN STEEL (RSD)
RSD steel product sales decreased 7% q/q to 2.56 mln tonnes in Q2 2020 (Q1 2020: 2.76 mln tonnes), reflecting lower production levels of crude steel and a higher portion of export sales, which have a longer realisation period. In addition, the Company increased its stock of finished goods at the end of the quarter.
The share of steel export shipments remained high at 44% (Q1 2020: 45%) in response to a slowdown in domestic demand caused by lockdown measures implemented in Russia.
The share of high value-added (HVA) products within the sales portfolio amounted to 43% (Q1 2020: 42%), reflecting an increase in shipments of colour-coated products and lower sales volumes of semi-finished and hot rolled coil.
The weighted average selling price for the whole range of steel products in Q2 2020 declined by just 4%, despite weaker price dynamics of global benchmarks. RSD topline declined by 10.3% q/q to $1,558 million (Q1 2020: $1,770 million). EBITDA declined by 5.1% q/q to $351 million (Q1 2020: $370 million). The EBITDA margin increased to 22.1% (Q1 2020: 20.9%).
The total non-integrated cash cost of slab production per tonne at the Cherepovets Steel Mill in Q2 2020 declined by $19/t q/q to $252/t (Q1 2020: $271/t) affected by devaluation of the rouble. The integrated cash cost of slab in Q2 2020 totalled $184/t declining by $25/t q/q (Q1 2020: $209/t).
Sales volumes of coking coal concentrate from Vorkutaugol increased 34% q/q to 1.28 mln tonnes in Q2 2020, as a result of planned production growth.
Iron ore pellet sales decreased 15% to 2.53 mln tonnes (Q1 2020: 2.97 mln tonnes). In response to weaker pricing dynamics for pellets in Q2 2020, Karelsky Okatysh reallocated a portion of its volumes into iron ore concentrate, achieving a higher rate of end-to-end efficiency of internal consumption at CherMK.
Iron ore concentrate sales volumes increased 30% q/q to 1.90 mln tonnes (Q1 2020: 1.47 mln tonnes) driven by production growth at Karelsky Okatysh, and a recovery in production levels following a planned decline in Q1 at Olcon.
Revenue from the Resources Division increased to $402 million in Q2 2020 (Q1 2020: $400 million), mainly as a result of improved sales volumes at Vorkutaugol. EBITDA increased by 6.4% q/q to $182 million (Q1 2020: $171 million) due to increased topline and lower cost of sales q/q. The EBITDA margin increased to 45.3%.
At Vorkutaugol, the cash cost of coal concentrate per tonne declined to $66/t (Q1 2020: $78/t) reflecting a 34% increase in sales volumes q/q. The cash cost of iron ore pellets per tonne at Karelsky Okatysh declined to $23/t (Q1 2020: $27/t). At Olcon, the cash cost per tonne of iron ore concentrate declined to $24/t (Q1 2020: $30/t) reflecting growth in sales volumes q/q.
The Board of Directors is recommending a dividend of 15.44 roubles per share for Q2 2020. Approval of the dividend is expected to take place at the Company's EGM on 28 August 2020. The record date for participation in the EGM is 3 August 2020. The recommended record date for the dividend payment is 8 September 2020. The approval of the record date for the dividend payment is also expected to take place at the Company's EGM on 28 August 2020.
In Q2 2020 global steel demand was impacted by the spread of COVID-19 as a result of lockdown restrictions throughout the EU and Russia. According to industry experts, global steel demand is expected to decline by 6% y/y in 2020. Iron ore prices demonstrated strong upward dynamics due to high production rates in China, whereas production contraction elsewhere resulted in lower demand for coking coal.
Russian domestic steel demand reduced significantly in Q2 2020; however, this is expected to partially recover in H2 2020.
Despite a number of potential headwinds on both export and domestic markets, Severstal's low cost position allows us to remain competitive and 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
T: +7 (495) 926-77-66
Severstal Public Relations
T: +7 (495) 926-77-66
Severstal's financial communications agent - Hudson Sandler
Andrew Leach / Emily Dillon
T: +44 (0) 20 7100% 4133
A conference call on Q2 & H1 2020 results for investors and analysts hosted by Alexey Kulichenko, Chief Financial Officer, will be held on 23 July 2020 at 14.30 (London)/ 16.30 (Moscow).
Conference ID: 3060369
+44 (0)330 336 9411
The call will be recorded and there will be a replay facility available for seven days as follows:
Replay Passcode: 3060369
+44 (0) 207 660 0134 (Local access)
P?? 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
|EQS News ID:||1099927|
|End of Announcement||EQS News Service|