26 Apr 2012 07:34
Magnitogorsk Iron and Steel Works
26 April 2012
MMK Group1 trading update for Q1 2012
MMK Group operating highlights
Production, thousand tons | ||||||
Production | Q1 '12 | Q4 '11 | % | Q1 '12 | Q1 '11 | % |
MMK Group crude steel | 3,417 | 3,109 | 10% | 3,417 | 3,092 | 11% |
MMK steel | 3,117 | 2,826 | 10% | 3,117 | 3,092 | 1% |
MMK Metalurji steel | 300 | 283 | 6% | 300 | - | |
MMK Group finished steel products | 3,021 | 2,859 | 6% | 3,021 | 2,737 | 10% |
MMK finished steel products | 2,766 | 2,623 | 5% | 2,766 | 2,707 | 2% |
MMK-Metiz finished steel products2 | 110 | 103 | 7% | 110 | 123 | -11% |
MMK-Metalurji finished steel products | 253 | 233 | 9% | 253 | 28 | x9 |
HVA products, MMK Group (volume) | 1,199 | 1,028 | 17% | 1,199 | 1,080 | 11% |
HVA products, MMK Group (% of total production) | 40% | 36% | 4 pp | 40% | 39% | 1 pp |
Belon coal concentrate | 776 | 882 | -12% | 776 | 766 | 1% |
Iron ore | 1,047 | 1,145 | -9% | 1,047 | 1,277 | -18% |
§ MMK Group's total crude steel output in Q1 2012 was 3,417 thousand tons (+10% q-o-q)
§ MMK Group's total steel products output in Q1 2012 was 3,021 thousand tons (+6% q-o-q)
§ MMK's crude steel output in Q1 2012 was 3,117 thousand tons (+10% q-o-q)
§ MMK's finished steel products output in Q1 2012 was 2,766 thousand tons (+5% q-o-q)
§ MMK-Metiz's finished steel products output in Q1 2012 was 110 thousand tons (+7% q-o-q)
§ MMK-Metalurji's total finished steel products output in Q1 2012 was 253 thousand tons (+9% q-o-q)
§ MMK Group's total output of high value-added (HVA) products increased 17% q-o-q in Q1 2012 to 1,199 thousand tons.
§ Production of coking coal concentrate in Q1 2012 was 776 thousand tons (-12% q-o-q).
§ Consumption of own iron ore in Q1 2012 was 1,047 thousand tons (-9% q-o-q).
Steel segment
MMK
Production, thousand tons | ||||||
Production | Q1 '12 | Q4 '11 | % | Q1 '12 | Q1 '11 | % |
Cast iron | 2,479 | 2,277 | 9% | 2,479 | 2,471 | 0.3% |
Crude steel | 3,117 | 2,826 | 10% | 3,117 | 3,092 | 1% |
Finished products, of which: | 2,766 | 2,623 | 5% | 2,766 | 2,707 | 2% |
Slabs and billets | 45 | 102 | -56% | 45 | 45 | 1% |
Long products | 401 | 372 | 8% | 401 | 335 | 20% |
Flat hot-rolled products | 1,380 | 1,343 | 3% | 1,380 | 1,396 | -1% |
HVA products, of which: | 939 | 807 | 16% | 939 | 931 | 1% |
Thick plate (mill 5000) | 248 | 171 | 45% | 248 | 307 | -19% |
Flat cold-rolled products | 316 | 303 | 4% | 316 | 272 | 16% |
Downstream products, of which: | 374 | 333 | 13% | 374 | 352 | 6% |
Tin plate | 37 | 29 | 29% | 37 | 40 | -6% |
Galvanised steel | 159 | 140 | 13% | 159 | 144 | 10% |
Colour-coated steel | 65 | 70 | -8% | 65 | 57 | 14% |
Band | 30 | 27 | 11% | 30 | 24 | 25% |
Formed section | 60 | 56 | 7% | 60 | 69 | -13% |
Pipes | 23 | 10 | 132% | 23 | 18 | 29% |
Shipments by market | ||||||
Domestic* | 2,033 | 1,673 | 22% | 2,033 | 1,898 | 7% |
Export | 732 | 950 | -23% | 732 | 809 | -9% |
Average prices, finished products (USD) | ||||||
Q1 '12 | Q4 '11 | % | Q1 '12 | Q1 '11 | % | |
Average price per ton: | ||||||
Slabs and billets | 496 | 483 | 3% | 496 | 536 | -7% |
Long products | 647 | 654 | -1% | 647 | 687 | -6% |
Flat hot-rolled products | 599 | 610 | -2% | 599 | 661 | -9% |
HVA products, of which: | 894 | 905 | -1% | 894 | 945 | -5% |
Thick plate (mill 5000) | 939 | 888 | 6% | 939 | 1,082 | -13% |
Flat cold-rolled products | 726 | 761 | -5% | 726 | 743 | -2% |
Downstream products, of which: | 1,007 | 1,043 | -3% | 1,007 | 982 | 3% |
Tin plate | 1,093 | 1,079 | 1% | 1,093 | 1,085 | 1% |
Galvanised steel | 984 | 1,022 | -4% | 984 | 939 | 5% |
Colour-coated steel | 1,225 | 1,229 | -0.3% | 1,225 | 1,172 | 5% |
Band | 867 | 930 | -7% | 867 | 974 | -11% |
Formed section | 949 | 934 | 2% | 949 | 895 | 6% |
Pipes | 752 | 789 | -5% | 752 | 827 | -9% |
Average price per ton, of which: | 705 | 702 | 0.4% | 705 | 760 | -7% |
Domestic* | 772 | 783 | -1% | 772 | 828 | -7% |
Export | 517 | 558 | -7% | 517 | 601 | -14% |
*including CIS
§ Finished steel products output in Q1 2012 was 2,766 thousand tons (+5% q-o-q). Sales to the higher priority domestic market increased by 22%, and the share in total shipments increased by six percentage points to 73% in Q1 2012.
§ Sales of HVA products in Q1 2012 grew by 16%, due to higher sales volumes to the domestic market, which traditionally requires more complex products than export markets.
§ Production of finished slab in Q1 2012 declined by 56% q-o-q to 45 thousand tons.
§ Output of long products in Q1 2012 grew by 8% q-o-q, due to a recovery in demand from the construction sector, and additional output from MMK-Metiz, which uses long products from MMK as a semi-finished rolled product. Shipments to MMK-Metiz in Q1 2012 accounted for 24% of the total in Q1 2012, up from 17% in Q4 2011.
§ Production of flat hot-rolled products in Q1 2012 was 1,380 thousand tons, 3% higher q-o-q.
§ Total production of thick plate (mill 5000) in Q1 2012 was 248 thousand tons, up 45% q-o-q. This was due to a significant increase in orders from pipe manufacturers for rolled products for large-diameter pipes. Demand for complex tube steels increased significantly, leading to the average price for plate growing faster (+6% q-o-q) than the average price for finished steel products.
§ Tin plate output in Q1 2012 grew by 29% q-o-q due to a seasonal increase in domestic and CIS demand.
§ Output of galvanised steel in Q1 2012 increased by 13% q-o-q, due to a recovery of business activity on the Russian market and restocking by traders ahead of the new season.
§ Favourable market conditions throughout Q1 2012 led to higher margins on sales of galvanised steel compared with colour-coated steel. This led to a reduction in sales of colour-coated steel in Q1 2012 of 8% q-o-q.
§ Although average export prices in Q1 2012 declined 7% q-o-q, increased sales to the domestic market - which offers a premium and where demand for crude steel is recovering at a faster pace - led to an increase in the average price of finished steel products from MMK in Q1 2012 to $705 per ton ($702 in Q4 2011).
MMK-Metiz
Production, thousand tons | ||||||
Production | Q1 '12 | Q4 '11 | % | Q1 '12 | Q1 '11 | % |
Finished products, of which: | 110 | 103 | 7% | 110 | 123 | -11% |
MMK output | 108 | 100 | 9% | 108 | 121 | -11% |
§ MMK-Metiz's finished steel products output in Q1 2012 was 110 thousand tons (+7% q-o-q)
§ This was due to a some revival in business activity in major consumer sectors for MMK-Metiz's products (construction and metallurgy).
ММК Metalurji
Production, thousand tons | ||||||
Production | Q1 '12 | Q4 '11 | % | Q1 '12 | Q1 '11 | % |
Crude steel | 300 | 283 | 6% | 300 | 0 | n/a |
MMK-Metalurji finished products output, of which: | 253 | 233 | 9% | 253 | 28 | x9 |
Flat hot-rolled products | 119 | 115 | 3% | 119 | 2 | x60 |
HVA products, of which: | 135 | 118 | 14% | 135 | 26 | x5 |
Galvanised steel | 76 | 77 | -1% | 76 | 16 | x5 |
Colour-coated steel | 58 | 40 | 46% | 58 | 9 | х6 |
§ Crude steel output in Q1 2012 was 300 thousand tons, up 6% q-o-q.
§ Total finished steel products output at MMK's Turkish operations in Q1 2012 was 253 thousand tons (+9% q-o-q)
§ Production of colour-coated steel in Q1 2012 grew 46% q-o-q due to a seasonal revival of the construction sector.
§ Output of galvanised steel in Q1 2012 declined by an insignificant 1% q-o-q, due to increased shipments of colour-coated steel.
Mining segment
COAL
Belon
Production, thousand tons | ||||||
Production | Q1 '12 | Q4 '11 | % | Q1 '12 | Q1 '11 | % |
Coking coal | 1,292 | 1,474 | -12% | 1,292 | 1,216 | 6% |
Mined | 998 | 1,168 | -15% | 998 | 1,033 | -3% |
Purchased | 293 | 306 | -4% | 293 | 183 | 60% |
Coking coal concentrate | 776 | 882 | -12% | 776 | 766 | 1% |
§ The 12% reduction in mined output of coking coal in Q1 2012 q-o-q was due to scheduled replacement of walls in March 2012. Replacement of walls will continue throughout 2Q 2012.
§ Production of coking coal concentrate in Q1 2012 was 776 thousand tons, down 12% q-o-q due to a general reduction in coal output in Q1 2012.
§ Concentrate shipments to MMK in Q1 2012 remained at the same level as in Q4 2011.
§ Output of coking coal concentrate in 2012 is expected to remain at the same level as in 2011, despite the scheduled replacement of walls.
IRON ORE
Production, thousand tons | ||||||
Production | Q1 '12 | Q4 '11 | % | Q1 '12 | Q1 '11 | % |
Iron ore (used at MMK), of which: | 1,047 | 1,145 | -9% | 1,047 | 1,277 | -18% |
Bakal | 125 | 137 | -9% | 125 | 346 | -63% |
Magnitogorsk | 467 | 580 | -19% | 467 | 395 | 18% |
Slag processing | 455 | 428 | 6% | 455 | 536 | -15% |
* since end-Q2 2011, shipments from the Sosnovsky deposit have been included in shipments from the Magnitogorsk iron-ore base.
§ Consumption of captive iron ore in Q1 2012 declined by 9% q-o-q to 1,047 thousand tons.
§ MMK's consumption of iron ore from Bakal in Q1 2012 was 125 thousand tons, down 9% q-o-q, due to substitution of iron ore from Bakal by iron containing fraction from processed slag.
§ Consumption of iron ore from Magnitogorsk in Q1 2012 was 467 thousand tons, down 19% q-o-q. This was due to a planned reduction in mining of higher-quality ore and lower production of concentrate from lower-quality ore from Sosnovsky.
§ Slag processing volumes in Q1 2012 increased by 4% q-o-q to 443 thousand tons. Slag consumption in Q1 2012 declined by 17% y-o-y due primarily to a number of measures aimed at reducing expenditure on major raw materials, and an increase in sinter-cake quality.
Update on MMK Group's key investment projects.
Mill 2000
MMK Group plans to commission the second phase of the cold-rolled products facility - the continuous hot galvanising unit, continuous annealing unit and the inspection unit - which will make it the first Russian steel-maker to launch production of high-strength cold-rolled and galvanised products. The company is continuing to finalise the details of contracts to supply mill 2000 output to carmakers.
Since the start of 2012, mill 2000 has produced about 100 thousand tons of cold-rolled steel a month. The mill is currently being used to produce galvanised and colour-coated steel at existing capacities. The high quality of the input steel will increase the competitiveness of the product.
Outlook
MMK expects to increase sales of finished steel products in Q2 2012 q-o-q due to growth of the Russian economy in 2012 and a seasonal increase in domestic demand for steel.
The company expects further growth in production volumes and sales at MMK-Metalurji in Q2 2012 as the facility reaches full production capacity.
MMK will publish its consolidated IFRS financial results for Q1 2012 in June 2012.
* * *
About MMK
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 higher value added products. In 2011 the company produced 12.2 million tonnes of crude steel and 11.2 million tonnes of commercial steel products. MMK Group had sales in 2011 of USD 9.306 billion and EBITDA of USD 1.336 billion.
Investor relations
Andrey Serov,
tel. +7 (3519) 24-52-97
email: serov.ae@mmk.ru
Communications department:
Elena Evstigneeva, tel. +7 (985) 763-4443 email: evstigneevaed@mmk.ru
| Kirill Golubkov tel.: +7 (916) 67581 email: kgolubkov@mmk.ru
| Alexander Proskurov tel. +7 (3519) 24-63-03 email: proskurov@mmk.ru |