|Real-time Estimate - 11/25 08:37:25 am|
Severstal : reports Q3 & 9M 2020 financial results
|10/22/2020 | 02:00am|
PAO Severstal (SVST)
Severstal reports Q3 & 9M 2020 financial results
- Delivering 31% EBITDA and 101% FCF growth q/q; EBITDA margin reaches 35.0% -
Moscow, Russia - 22 October 2020 - PAO Severstal (MICEX-RTS: CHMF; LSE: SVST), one of the world's leading steel and steel-related mining companies, today announces its Q3 & 9M 2020 financial results for the period ended 30 September 2020.
CONSOLIDATED FINANCIAL RESULTS FOR Q3 AND 9M 2020
Q3 2020 vs. Q2 2020 ANALYSIS:
9M 2020 vs. 9M 2019 ANALYSIS:
FINANCIAL POSITION HIGHLIGHTS:
Alexander Shevelev, CEO of Severstal Management, commented:
"The health and safety of all Severstal employees remains our first priority. Our response to COVID-19 pandemic has proved effective so far, and we have avoided any large-scale outbreak of COVID-19 and our operations have continued without interruption. Considering the autumn increase in incidence, we have again decided to send our office personnel to remote working, cancelled all business trips; all staff continue to work adhering to our strict sanitary policies.
To our great regret, in Q3 2020 we have recorded one fatality of our employee. We remain committed to reach our 2025 safety goals, which are to eliminate fatalities and reduce LTIFR by 50% to 0.5. As of the end of 9 months of 2020 it stood at 0.68. In October 2020, we announced the appointment of a new Director for Health, Safety and Environment. We hope that his significant experience, expertise and leadership will help us make a significant step change in our improvement in the area of workplace safety.
Recovery in global markets impacted positively on steel price dynamics. Increase in revenues in Q3 enabled us to deliver EBITDA of $656 million and to increase EBITDA margin from 31.5% to 35.0%, which is the highest in the global steel industry.
Market-wise, favourable domestic price dynamics allowed us to reallocate a portion of our sales volumes to Russia in Q3 2020. The weighted average steel selling prices increased by 2% due to sales of HVA finished goods which reduced our stock levels. HVA share amounted to 49% in Q3.
We increased sales of steel products by 18% q/q, sales volumes of iron ore pellets and of iron ore concentrate increased by 3%. As a result, total revenue grew by 18% q/q.
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 0.77 times at the end of Q3 2020, the Board remains confident in its outlook and is recommending a dividend of 37.34 roubles per share for Q3 2020".
SEVERSTAL RUSSIAN STEEL (RSD)
RSD steel product sales increased by 18% q/q to 3.02 mln tonnes in Q3 2020 (Q2 2020: 2.56 mln tonnes) reflecting production growth, a lower share of export shipments with a longer realisation period vs the previous quarter and finished goods stock reduction.
The Company increased its share of domestic steel shipments to 63% (Q2 2020: 56%) in response to demand recovery in Russia in Q3 2020.
The share of high value-added (HVA) products within the sales portfolio amounted to 49% (Q2 2020: 43%) as a result of delayed demand for HVA products. The Company reduced HVA finished goods stock levels q/q.
The weighted average selling price for the whole range of steel products in Q3 2020 increased by 2%, due to positive steel pricing dynamics and a higher share of HVA products in the sales mix q/q. RSD topline increased by 18.0% q/q to $1,874 million (Q2 2020: $1,588 million). EBITDA increased by 17.4% q/q to $412 million (Q2 2020: $351 million). The EBITDA margin remained almost flat at 22.0% (Q2 2020: 22.1%).
The total non-integrated cash cost of slab production per tonne at the Cherepovets Steel Mill in Q3 2020 increased by $18/t q/q to $270/t (Q2 2020: $252/t) affected by higher input cost and devaluation of the rouble. The integrated cash cost of slab in Q3 2020 declined by $11/t q/q to $173/t (Q2 2020: $184/t).
Sales volumes of coking coal concentrate from Vorkutaugol declined 5% q/q to 1.22 mln tonnes as a result of lower concentrate output and a lower run-of-mine (ROM-rate) at the Zapolyarnaya mine.
Iron ore pellet sales increased by 3% to 2.61 mln tonnes (Q2 2020: 2.53 mln tonnes) as a result of higher production levels of iron ore pellets and inventory sell-off q/q.
Iron ore concentrate sales volumes grew by 3% to 1.96 mln tonnes (Q2 2020: 1.90 mln tonnes) mainly driven by higher output at Karelsky Okatysh and Olcon.
Revenue from the Resources Division increased to $473 million in Q3 2020 (Q2 2020: $402 million), mainly as a result of improved iron ore segment performance. EBITDA increased by 43.4% q/q to $261 million (Q2 2020: $182 million) due to increased topline q/q. The EBITDA margin increased to 55.2%.
At Vorkutaugol, the cash cost of coal concentrate per tonne increased to $72/t (Q2 2020: $66/t) reflecting temporary reduction in sales volumes q/q. The cash cost of iron ore pellets per tonne at Karelsky Okatysh declined to $22/t (Q2 2020: $23/t). At Olcon, the cash cost per tonne of iron ore concentrate declined to $22/t (Q2 2020: $24/t) reflecting growth in sales volumes q/q.
The Board of Directors is recommending a dividend of 37.34 roubles per share for Q3 2020. Approval of the dividend is expected to take place at the Company's EGM on 27 November 2020. The record date for participation in the EGM is 2 November 2020. The recommended record date for the dividend payment is 8 December 2020. The approval of the record date for the dividend payment is also expected to take place at the Company's EGM on 27 November 2020.
In Q3 2020 global steel demand recovered gradually in line with the lifting of lockdowns. Chinese steel demand increased by 6% in the year to date, while ex-China demand decreased by 14%. Global steel production bottomed in April 2020 with a year on year reduction of 13% and then started to catch up reaching 1% y/y in August. Iron ore prices remained elevated in Q3 due to high Chinese demand and limited supply. Restarts of ex-China BF capacities also pushed up coking coal prices.
Russian domestic steel demand moderately recovered in Q3 2020. Thus we are upgrading our outlook for the whole 2020. Though it would still be a decrease of steel consumption in Russia this year, it's likely to be in the range of 6% in 2020 versus the previous year. In addition, we are expecting global steel benchmark prices to remain solid in Q4 2020.
Despite the number of potential headwinds on both export and domestic markets, including a second wave of outbreaks of COVID-19, Severstal's low cost position allows us to be 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 Q3 & 9M 2020 results for investors and analysts hosted by Alexey Kulichenko, Chief Financial Officer, will be held on 22 October 2020 at 11.00 (London)/ 13.00 (Moscow).
Conference ID: 7569179
+44 (0)330 336 9128
The call will be recorded and there will be a replay facility available for seven days as follows:
Replay Passcode: 7569179
+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:||1142372|
|End of Announcement||EQS News Service|