14 Jul 2014 07:00
Severstal reports Q2 2014 and H1 2014 operational results
Moscow, Russia - July 14, 2014 - OAO Severstal (MICEX-RTS: CHMF; LSE: SVST), one of the world's leading steel and steel-related mining companies, today announces its operational results for Q2 2014 and H1 2014.
Q2 2014 GROUP HIGHLIGHTS
● Crude steel production increased 5% q/q driven by production growth both at the Russian Steel Division (RSD) and Severstal North America (SNA).
● Consolidated sales of steel products increased 10% due to seasonal growth in the Russian steel market, strong export markets for RSD and sustainable demand growth in the US (for SNA).
● The q/q pricing environment was favourable for RSD with almost all rolled products demonstrating price increases in Q2 2014; sales prices at SNA were flat overall; while prices for coking coal concentrate and iron ore prices saw a further decline in line with market trends.
SUMMARY OF KEY PRODUCTION, SALES VOLUMES AND SELLING PRICES DATA
Production, tonnes | Q2 2014 | Q1 2014 | Change | H1 2014 | H1 2013 | Change | |||
Crude steel (Total output): | 4 148 112 | 3 932 664 | 5 % | 8 080 776 | 7 866 987 | 3 % | |||
Russian Steel (RSD) | 2 834 277 | 2 713 759 | 4 % | 5 548 036 | 5 405 682 | 3 % | |||
Severstal North America (SNA) | 1 313 836 | 1 218 904 | 8 % | 2 532 740 | 2 461 305 | 3 % | |||
Hot metal (total output): | 2 695 865 | 2 697 370 | (0) % | 5 393 235 | 5 325 011 | 1 % | |||
Russian Steel | 2 226 364 | 2 246 364 | (1) % | 4 472 728 | 4 325 753 | 3 % | |||
North America | 469 501 | 451 006 | 4 % | 920 507 | 999 258 | (8) % | |||
Sales volumes, tonnes | Q2 2014 | Q1 2014 | Change | H1 2014 | H1 2013 | Change | |||
Coking coal concentrate | 1 220 431 | 1 391 490 | (12) % | 2 611 921 | 3 614 667 | (28) % | |||
Iron ore pellets | 2 539 568 | 2 582 560 | (2) % | 5 122 128 | 5 138 384 | (0) % | |||
Iron ore concentrate | 1 211 144 | 1 099 297 | 10 % | 2 310 441 | 2 272 905 | 2 % | |||
Total steel products (Consolidated) | 3 950 818 | 3 588 180 | 10 % | 7 538 998 | 7 564 712 | (0) % | |||
Total steel products (Russian Steel) | 2 739 100 | 2 453 932 | 12 % | 5 193 032 | 5 386 979 | (4) % | |||
Total steel products (SNA) | 1 252 361 | 1 182 755 | 6 % | 2 435 116 | 2 282 801 | 7 % | |||
Average price, $/tonne | Q2 2014 | Q1 2014 | Change | H1 2014 | H1 2013 | Change | |||
Coking coal concentrate, Vorkutaugol | 93 | 96 | (3) % | 95 | 115 | (18) % | |||
Iron ore pellets, Karelsky Okatysh | 89 | 107 | (17) % | 98 | 111 | (12) % | |||
Hot-rolled coil (RSD) | 501 | 469 | 7 % | 485 | 535 | (9) % | |||
Rolled products (SNA) | 827 | 835 | (1) % | 831 | 798 | 4 % | |||
High value added steel products, % | Q2 2014 | Q1 2014 | Change | H1 2014 | H1 2013 | Change | |||
Severstal (Consolidated) | 46% | 47% | (1) ppts | 47% | 46% | 1 ppts | |||
Severstal Russian Steel | 47% | 47% | 0 ppts | 47% | 45% | 2 ppts | |||
Severstal North America | 44% | 46% | (2) ppts | 45% | 45% | 0 ppts | |||
SEVERSTAL RESOURCES
●Iron ore pellet sales remained broadly flat with only a 2% decline q/q, while sales of iron ore concentrate increased 10% on seasonally weak production and sales in Q1 as well as growth in export shipments in Q2.
● Coking coal concentrate sales saw a further decline due to long wall repositioning which also impacted production volumes in Q1. In 2014, Vorkutaugol will commission 11 new coalfaces across all five of its mines. A new face at the Chetvertiy seam (Zapolyarnaya mine) has recently been commissioned. Production at another face (Severnaya mine) will be started in July.
● In May, Severstal launched a gas-reciprocating power plant running on methane (a coal by-product) at the Severnaya mine (Vorkutaugol). The power plant will supply around 80% of the electricity used by the Severnaya mine and approximately half of the mine's required thermal power. The launch of the project will increase electricity savings at Vorkutaugol by up to 12%.
● Prices for iron ore pellets declined further (17% down q/q) following a decrease in prices of global benchmarks for iron ore products in Q2 2014. Prices for coking coal concentrate were more resilient with only a 3% decline for coking coal concentrate at Vorkutaugol.
Sales volumes, tonnes | Q2 2014 | Q1 2014 | Change | H1 2014 | H1 2013 | Change |
Coal: | 1 712 435 | 1 869 528 | (8) % | 3 581 963 | 5 102 043 | (30) % |
Coking coal concentrate, including: | 1 220 431 | 1 391 490 | (12) % | 2 611 921 | 3 614 667 | (28) % |
Vorkutaugol | 1 002 645 | 1 192 711 | (16) % | 2 195 356 | 2 687 305 | (18) % |
PBS Coals | 217 786 | 198 779 | 10 % | 416 565 | 927 362 | (55) % |
Raw coking coal, Vorkutaugol | 25 967 | 32 032 | (19) % | 57 999 | 324 506 | (82) % |
Steam coal, including: | 466 036 | 446 006 | 4 % | 912 042 | 1 162 870 | (22) % |
Vorkutaugol | 457 807 | 432 783 | 6 % | 890 591 | 1 089 085 | (18) % |
PBS Coals | 8 229 | 13 223 | (38) % | 21 452 | 73 785 | (71) % |
Iron ore: | 3 750 712 | 3 681 857 | 2 % | 7 432 569 | 7 411 289 | 0 % |
Iron ore pellets | 2 539 568 | 2 582 560 | (2) % | 5 122 128 | 5 138 384 | (0) % |
Iron ore concentrate | 1 211 144 | 1 099 297 | 10 % | 2 310 441 | 2 272 905 | 2 % |
Sales price, $/tonne | Q2 2014 | Q1 2014 | Change | H1 2014 | H1 2013 | Change |
Coking coal concentrate, Vorkutaugol | 93 | 96 | (3) % | 95 | 115 | (17) % |
Coking coal concentrate, PBS Coals | 103 | 111 | (7) % | 107 | 113 | (5) % |
Raw coking coal, Vorkutaugol | 60 | 57 | 5 % | 58 | 52 | 12 % |
Steam coal, Vorkutaugol | 36 | 36 | 0 % | 36 | 39 | (8) % |
Steam coal, PBS Coals | 51 | 78 | (35) % | 68 | 50 | 36 % |
Iron ore pellets | 89 | 107 | (17) % | 98 | 111 | (12) % |
Iron ore concentrate | 63 | 70 | (10) % | 66 | 80 | (18) % |
SEVERSTAL RUSSIAN STEEL
● Severstal Russian Steel demonstrated solid q/q sales growth in rolled and downstream products in Q2 2014, with 10% and 12% growth respectively, largely driven by sales of long products (up 27% q/q), colour coated coils (up 43% q/q) and metalware products (up 21% q/q).
● This sales growth was driven by a seasonal pickup in demand in the domestic market in Q2 as well as strong export markets.
● The share of high value added (HVA) products remained strong at 47%.
● Shipments of 813 mm diameter pipes for the South Stream Pipeline have been launched in May from the Izhora Pipe Mill (part of Severstal's Russian Steel division). A 29% decline in large diameter sales in Q2 resulted from technical transportation constraints for that type of product. At the same time production volumes in Q2 were strong with the Izhora Pipe Mill running at a high utilization rate.
● With the exception of metalware products and large diameter pipes, average sales prices increased 1-18% q/q with the most significant price growth in colour coated and long products, supported by strong seasonal demand.
Sales volumes, tonnes | Q2 2014 | Q1 2014 | Change | H1 2014 | H1 2013 | Change | |
Total steel products | 2 739 100 | 2 453 932 | 12 % | 5 193 032 | 5 386 979 | (4) % | |
Semi-finished products | 170 139 | 119 604 | 42 % | 289 743 | 331 852 | (13) % | |
Rolled products: | 2 123 265 | 1 937 075 | 10 % | 4 060 340 | 4 204 619 | (3) % | |
Hot-rolled coil | 1 001 448 | 944 129 | 6 % | 1 945 577 | 2 178 051 | (11) % | |
Hot-rolled plate | 193 185 | 230 355 | (16) % | 423 540 | 369 971 | 14 % | |
Cold-rolled coil | 386 368 | 335 082 | 15 % | 721 450 | 702 269 | 3 % | |
Galvanised and metallic coated coil | 138 873 | 119 716 | 16 % | 258 589 | 291 547 | (11) % | |
Color coated coil | 110 970 | 77 867 | 43 % | 188 837 | 217 510 | (13) % | |
Long products | 292 420 | 229 926 | 27 % | 522 346 | 445 271 | 17 % | |
Downstream products: | 445 696 | 397 253 | 12 % | 842 949 | 850 508 | (1) % | |
Metalware products | 177 096 | 145 813 | 21 % | 322 909 | 334 868 | (4) % | |
Large diameter pipes | 54 192 | 75 844 | (29) % | 130 036 | 165 519 | (21) % | |
Other tubes, pipes, formed shapes | 214 408 | 175 596 | 22 % | 390 004 | 350 120 | 11 % | |
Sales price, $/tonne | Q2 2014 | Q1 2014 | Change | H1 2014 | H1 2013 | Change |
Semi-finished products | 465 | 423 | 10 % | 448 | 456 | (2) % |
Hot-rolled coil | 501 | 469 | 7 % | 485 | 535 | (9) % |
Hot-rolled plate | 791 | 741 | 7 % | 764 | 741 | 3 % |
Cold-rolled coil | 583 | 579 | 1 % | 581 | 639 | (9) % |
Galvanised and metallic coated coil | 796 | 741 | 7 % | 770 | 851 | (9) % |
Color coated coil | 1 075 | 909 | 18 % | 1 007 | 1 074 | (6) % |
Long products | 566 | 490 | 15 % | 532 | 604 | (12) % |
Metalware products | 1 073 | 1 099 | (2) % | 1 085 | 1 197 | (9) % |
Large diameter pipes | 1 521 | 1 564 | (3) % | 1 546 | 1 555 | (1) % |
Other tubes, pipes, formed shapes | 650 | 626 | 4 % | 639 | 705 | (9) % |
SEVERSTAL NORTH AMERICA
● Severstal North America delivered significant growth in sales of its rolled products, which jumped 6% q/q.
● The share of HVA products in the sales portfolio decreased slightly from 46% to 44% while the share of HVA products in H1 was stable YoY (45%).
● Average sales prices in H1 2014 were up 4% YoY, while rolled product prices remained mostly flat with prices for cold rolled coils the most resilient.
Sales volumes, tonnes | Q2 2014 | Q1 2014 | Change | H1 2014 | H1 2013 | Change |
Rolled products: | 1 248 084 | 1 182 755 | 6 % | 2 430 839 | 2 282 680 | 6 % |
Hot-rolled coil and plate | 696 663 | 638 170 | 9 % | 1 334 833 | 1 255 605 | 6 % |
Cold-rolled coil | 135 180 | 144 829 | (7) % | 280 009 | 271 699 | 3 % |
Galvanised and metallic coated coil | 416 241 | 399 756 | 4 % | 815 997 | 755 377 | 8 % |
Sales price, $/tonne | Q2 2014 | Q1 2014 | Change | H1 2014 | H1 2013 | Change | |
| |||||||
Rolled products | 827 | 835 | (1) % | 831 | 798 | 4 % |
|
SEVERSTAL'S CONSOLIDATED SALES (NET OF INTERCOMPANY SALES)
Sales volumes, tonnes | Q2 2014 | Q1 2014 | Change | H1 2014 | H1 2013 | Change | |
Coal: | 861 805 | 949 485 | (9) % | 1 811 290 | 3 375 579 | (46) % | |
Coking coal concentrate | 369 800 | 471 448 | (22) % | 841 248 | 1 888 203 | (55) % | |
Raw coking coal | 25 967 | 32 032 | (19) % | 57 999 | 324 506 | (82) % | |
Steam coal | 466 036 | 446 006 | 4 % | 912 042 | 1 162 870 | (22) % | |
Iron ore: | 1 373 044 | 1 528 347 | (10) % | 2 901 391 | 3 011 077 | (4) % | |
Iron ore pellets | 1 285 837 | 1 483 140 | (13) % | 2 768 977 | 2 968 575 | (7) % | |
Iron ore concentrate | 87 207 | 45 207 | 93 % | 132 414 | 42 502 | 212 % | |
Semi-finished products | 174 416 | 89 633 | 95 % | 264 049 | 241 371 | 9 % | |
Rolled products: | 3 332 255 | 3 102 659 | 7 % | 6 434 914 | 6 475 587 | (1) % | |
Hot-rolled coil | 1 665 295 | 1 569 216 | 6 % | 3 234 511 | 3 430 356 | (6) % | |
Hot-rolled plate | 193 078 | 230 245 | (16) % | 423 323 | 369 682 | 15 % | |
Cold-rolled coil | 521 207 | 479 911 | 9 % | 1 001 118 | 973 968 | 3 % | |
Galvanised and metallic coated coil | 555 110 | 519 471 | 7 % | 1 074 581 | 1 046 923 | 3 % | |
Color coated coil | 110 970 | 77 867 | 43 % | 188 837 | 217 510 | (13) % | |
Long products | 286 595 | 225 949 | 27 % | 512 544 | 437 148 | 17 % | |
Downstream products: | 444 146 | 395 889 | 12 % | 840 035 | 847 754 | (1) % | |
Metalware products | 176 236 | 145 398 | 21 % | 321 634 | 334 339 | (4) % | |
Large diameter pipes | 53 795 | 75 213 | (28) % | 129 008 | 163 564 | (21) % | |
Other tubes, pipes, formed shapes | 214 116 | 175 277 | 22 % | 389 393 | 349 850 | 11 % | |
Notes |
1) All production data is reported in metric 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) Metalware sales volumes and metalware average selling prices include Severstal Metiz, Cherepovets Steel Mill, Severstallat and Severstal Invest data;
6) Large diameter pipes include all pipes with a diameter between 820 and 1420 mm;
7) Group and RSD volumes and average selling prices for H1 2013 were restated due to a change in recognised revenues, based on a re- classification of products
Contacts |
Investor Relations
Vladimir Zaluzhsky
T: +7 (495) 926-77-66 ext. 6375
vladimir.zaluzhsky@severstal.com
Public Relations
Elena Kovaleva
T: +7 (495) 926-77-66 ext. 6447
elena.kovaleva@severstal.com
Severstal's financial communications agent - Hudson Sandler
Andrew Hayes / Maria Ignatova / Alex Brennan
T: +44 (0) 20 7796 4133
*** |
ОАО Severstal is one of the world's leading vertically integrated steel and steel related mining companies, with assets in Russia, the USA, Ukraine, Latvia, Poland, Italy, Liberia and Brazil. Severstal is listed on RTS and MICEX and the company's GDRs are traded on the LSE. Severstal reported revenue of $13,312 million and EBITDA of $2,063 million in 2013. Severstal's crude steel production in 2013 reached 15.7 million tonnes. www.severstal.com