13 Jul 2016 08:14
MMK Group Trading Update for Q2 and H1 2016
ММК Group: Operational highlights
(thousand tonnes)
Q2 2016 | Q1 2016 | % | H1 2016 | H1 2015 | % | |
ММК Group crude steel | 3,183 | 3,025 | 5.2% | 6,208 | 6,197 | 0.2% |
ММК Group steel products | 3,003 | 2,788 | 7.7% | 5,790 | 5,628 | 2.9% |
MMK steel products | 2,936 | 2,709 | 8.4% | 5,644 | 5,521 | 2.2% |
MMK-Metiz steel products | 107 | 93 | 14.7% | 200 | 203 | -1.9% |
ММК Metalurji steel products | 213 | 202 | 5.7% | 415 | 384 | 8.1% |
MMK Group HVA products | 1,420 | 1,249 | 13.7% | 2,668 | 2,659 | 0.3% |
MMK Group HVA products share | 47.3% | 44.8% | 46.1% | 47.2% | ||
Belon coal concentrate | 629 | 794 | -20.7% | 1,423 | 1,295 | 9.9% |
Iron ore | 880 | 745 | 18.1% | 1,626 | 1,563 | 4.0% |
Q2 2016 highlights vs. Q1 2016
ü MMK Group's total crude steel output in Q2 2016 totalled 3,183 thousand tonnes (+5.2% q-o-q). Overall steelmaking capacity utilisation at the main Magnitogorsk site (subject to maintenance schedule) in Q2 2016 increased to 90% (from 88% in Q1 2016).
ü MMK Group's total finished steel product shipments in Q2 2016 (excluding intra-group sales) amounted to 3,003 thousand tonnes (+7.7% q-o-q). The increase versus Q1 2016 was due to the start of seasonal demand recovery on the domestic market and an increase in steel prices on MMK sales markets.
ü MMK Group's HVA steel product output in Q2 2016 was 1,420 thousand tonnes, 13.7% higher q-o-q. The share of HVA products in total output increased q-o-q to 47.3%.
ü Production of coal concentrate by Belon in Q2 2016 stood at 629 thousand tonnes (down 20.7% q-o-q).
H1 2016 highlights vs. H1 2015
ü MMK Group's total crude steel output in H1 2016 totalled 6,208 thousand tonnes (+0.2% y-o-y). Overall steelmaking capacity utilisation at the main Magnitogorsk site (subject to maintenance schedule) in Q2 2016 increased to 89% (from 87% in H1 2015).
ü MMK Group's total finished steel product shipments in H1 2016 (excluding intra-group sales) amounted to 5,790 thousand tonnes (+2.9% y-o-y). The increase versus H1 2015 was due to increase in sales of high-margin products on the domestic market and higher export sales volumes.
ü MMK Group's HVA steel product output in H1 2016 was 2,668 thousand tonnes. The share of HVA products in total output decreased y-o-y to 46.1%.
ü Production of coal concentrate by Belon in H1 2016 stood at 1,423 thousand tonnes (up 9.9% y-o-y).
MMK Group highlights by key segments
Steel segment (Russia)
(thousand tonnes)
Q2 2016 | Q1 2016 | % | H1 2016 | H1 2015 | % | |
Pig iron | 2,455 | 2,403 | 2.2% | 4,859 | 4,935 | -1.5% |
Crude steel | 3,183 | 3,025 | 5.2% | 6,208 | 6,197 | 0.2% |
Finished products output, of which: | 2,936 | 2,709 | 8.4% | 5,644 | 5,521 | 2.2% |
Slabs and billets | 39 | 44 | -10.7%, | 83 | 40 | 105.7% |
Long products | 450 | 416 | 8.2% | 866 | 825 | 5.0% |
Flat hot-rolled products | 1,313 | 1,262 | 4.0% | 2,575 | 2,550 | 1.0% |
HVA products, of which: | 1,133 | 986 | 14.9% | 2,119 | 2,105 | 0.7% |
Thick plate (mill 5000) | 239 | 217 | 10.0% | 456 | 555 | -17.8% |
Flat cold-rolled products | 394 | 340 | 15.7% | 734 | 683 | 7.4% |
Downstream products, of which: | 500 | 428 | 16.8% | 929 | 867 | 7.2% |
Tin plate | 37 | 42 | -13.3% | 79 | 79 | -0.3% |
Galvanised steel | 307 | 246 | 24.9% | 552 | 478 | 15.5% |
Polymer-coated steel | 93 | 85 | 10.0% | 178 | 166 | 7.0% |
Band | 35 | 29 | 20.1% | 63 | 86 | -26.5% |
Formed section | 8 | 9 | -12.5% | 16 | 20 | -18.4% |
Pipes | 22 | 19 | 18.1% | 40 | 37 | 9.1% |
Shipments by market: | ||||||
Russia + CIS | 2,251 | 1,864 | 20.7% | 4,115 | 4,140 | -0.6% |
Export | 685 | 844 | -18.8% | 1,529 | 1,381 | 10.7% |
(USD / tonne)
Q2 2016 | Q1 2016 | % | H1 2016 | H1 2015 | % | |
Average price per tonne: | 448 | 324 | 38.2% | 384 | 491 | -21.9% |
Long products | 371 | 254 | 46.2% | 311 | 412 | -24.6% |
Flat hot-rolled products | 380 | 256 | 48.2% | 315 | 408 | -22.7% |
HVA products, of which: | 563 | 446 | 26.1% | 502 | 627 | -19.8% |
Thick plate (mill 5000) | 611 | 541 | 12.9% | 574 | 760 | -24.4% |
Flat hot-rolled products | 426 | 316 | 34.7% | 370 | 477 | -22.4% |
Downstream products, of which: | 647 | 501 | 29.1% | 572 | 659 | -13.2% |
Tin plate | 831 | 661 | 25.6% | 738 | 724 | 2.0% |
Galvanised steel | 605 | 457 | 32.4% | 531 | 628 | -15.5% |
Polymer-coated steel | 808 | 621 | 30.2% | 711 | 849 | -16.2% |
Band | 516 | 404 | 27.6% | 459 | 489 | -6.2% |
Formed section | 584 | 446 | 31.0% | 508 | 589 | -13.8% |
Pipes | 466 | 345 | 34.9% | 405 | 504 | -19.6% |
ü Pig iron output in Q2 2016 increased by 2.2% q-o-q to 2,455 thousand tonnes, despite scheduled maintenance at blast furnace No 4 starting in May.
ü Crude steel output in Q2 2016 increased by 5.2% q-o-q to 3,183 thousand tonnes. This was due to an increase in arc-furnace capacity utilisation to 61% (from 59% in Q1 2016).
ü In Q2 2016, sales of finished products totalled 2,936 thousand tonnes, up 8.4% q-o-q. Sales grew faster than steel production as the company sold stocks built up during the seasonal slowdown on the domestic market.
ü Seasonal recovery in demand for steel on the domestic market, accompanied by an increase in sales prices, made it possible to significantly increase shipments volumes on the domestic market. Metal shipments to the Russian and CIS market in Q2 2016 increased by 20.7% q-o-q, while the share of domestic sales in the overall structure recovered to 76.7% (vs. 68.8% in Q1 2016). In H1 2016, sales in Russia and CIS were flat y-o-y.
ü The favourable situation on the domestic market led to a decrease in export sales in Q2 2016 of 18.8% q-o-q to 685 thousand tonnes. However, in H1 2016, export sales grew 10.7% y-o-y.
ü Start of the construction season and inflation expectations driven restocking by traders led to an increase in sales of long products by 8.2% versus Q1 2016 to 450 thousand tonnes.
ü Sales of hot-rolled products in Q2 2016 grew slower (up 4.0% q-o-q) than overall sales, due to an increase in sales of HVA products by 14.9% q-o-q (HVA products share recovered to 38.6%) and limitations in steelmaking facilities.
ü Sales of cold-rolled products in Q2 2016 grew 15.7% q-o-q due to an increase in sales to carmakers and coated steel products producers.
ü Healthy demand for large-diameter pipes supported high volumes of sales of Mill 5000 thick plate. In Q2 2016, these sales increased by 10.0% q-o-q to 239 thousand tonnes.
ü Growth in sales of galvanized and polymer-coated steel in Q2 2016 by 24.9% and 10.0% q-o-q, respectively, was due to seasonal recovery in demand for construction products and increase in sales of stocks.
ü Average sales price in US dollars in Q2 2016 increased by 38.2% q-o-q. This growth was mainly due to seasonal recovery of prices on domestic and export markets, as well as the ruble strengthening against US dollar.
ü Seasonal growth in demand for construction products led to an increase in sales of MMK-Metiz products in Q2 2016 by 14.7% q-o-q to 107 thousand tonnes (including 105 thousand tonnes from MMK products).
Steel segment (Turkey)
(thousand tonnes)
Q2 2016 | Q1 2016 | % | H1 2016 | H1 2015 | % | |
ММК Metalurji finished products, of which: | 213 | 202 | 5.7% | 415 | 384 | 8.1% |
Flat hot-rolled products | 33 | 32 | 1.9% | 65 | 33 | 95.8% |
HVA products, of which: | 180 | 170 | 6.4% | 350 | 351 | -0.3% |
Galvanised steel | 131 | 111 | 17.7% | 242 | 218 | 10.9% |
Polymer-coated steel | 50 | 58 | -15.1% | 108 | 133 | -18.7% |
ММК Metalurji finished output from ММК steel | 147 | 124 | 18.9% | 271 | 278 | -2.5% |
ü Sales of finished products in Q2 2016 totalled 213 thousand tonnes (up 5.7% q-o-q). This was due to seasonal recovery in demand for construction products and higher prices on the Turkish market.
ü Taking advantage of the favourable situation on the galvanized steel market, the company increased sales volumes of this product by 17.1% to 131 thousand tonnes.
ü The high volume of orders for the company's products meant maximum utilisation rates were maintained.
ü Supply of semi-finished rolled products from MMK to MMK Metalurji in H1 2016 was nearly flat y-o-y at 271 thousand tonnes.
Raw materials segment (Belon)
(thousand tonnes)
Q2 2016 | Q1 2016 | % | H1 2016 | H1 2015 | % | |
Coking coal mining | 674 | 808 | -16.5% | 1,482 | 1,620 | -8.5% |
Coking coal processing | 1,151 | 1,270 | -9.4% | 2,421 | 2,155 | 12.3% |
Mined | 806 | 856 | -5.9% | 1,662 | 1,403 | 18.5% |
Purchased | 345 | 414 | -16.6% | 758 | 752 | 0.8% |
Coking coal concentrate | 629 | 794 | -20.7% | 1,423 | 1,295 | 9.9% |
ü Volumes of coking coal production in Q2 2016 decreased by 16.5% q-o-q, to 674 thousand tonnes. This was mainly due to scheduled maintenance at Chertinskaya-Koksovaya mine.
ü Coking coal concentrate production in Q2 2016 declined by 20.7% q-o-q. However, in H1 2016, production increased by 9.9% y-o-y. This growth was due to processing of mined coal stocks formed during the period of lower steel production volumes at MMK (end of 2015-beginning of 2016).
Outlook
In July 2016 the Company sees a slowdown in demand for its products on the domestic market (comparing to high Q2 2016 results) while demand coming from export markets remains flat.
Late Q2 2016 prices correction on export markets will put pressure on domestic market prices.
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 2015, the company produced 12.2 million tonnes of crude steel and 11.2 million tonnes of commercial steel products. MMK Group had sales in 2015 of USD 5,839 million and EBITDA of USD 1,668 million.
Contacts
Investor Relations Department:
Andrey Serov
+7 3519 24-52-97
serov.ae@mmk.ru
Communications Department:
Dmitry Kuchumov Sergey Vykhukholev
+7 499 238-26-13 +7 499 238-26-13
kuchumov.do@mmk.ru vykhukholev.sv@mmk.ru