19 Jan 2018 07:06
Severstal reports Q4 & FY 2017 operational results
Moscow, Russia - 19 January 2018 - PAO Severstal (MICEX-RTS: CHMF; LSE: SVST), one of the world's leading vertically integrat--ed steel and steel-related mining companies, today announces its operational results for Q4 2017 & FY 2017.
Q4 2017 GROUP HIGHLIGHTS
· Hot metal output increased 5% to 2.34 mln tonnes (Q3 2017: 2.23 mln tonnes) compared with the previous quarter, and crude steel production was up 2% at 3.01 mln tonnes (Q3 2017: 2.94 mln tonnes).
· Consolidated steel product sales declined 2% to 2.78 mln tonnes compared with the previous quarter (Q3 2017: 2.86 mln tonnes) after significant stock sell-off in Q3. Meanwhile, the Company replenished stocks of steel products at its export subsidiaries in Q4. Semi-finished product volumes growth was driven by Mill-2000 maintenance works and increased demand for billets in Q4.
· The Company increased export sales volumes to 42% (Q3 2017: 35%). The share of high value-added (HVA) products within the sales portfolio remained high at 47% (Q3 2017: 49%) driven by the continued destocking of large diameter pipes (LDP).
· Coking coal concentrate sales volumes from Vorkutaugol declined 10% impacted by the long-wall repositioning at the Komsomolskaya mine and the normalisation of production volumes of "Concentrate K" coal after an uptick in Q3.
· Iron ore pellet sales increased 39% and totalled 3.30 mln tonnes (Q3 2017: 2.38 mln tonnes) due to the realisation of a significant share of finished goods in transit in Q4, shifted from the previous quarter. Iron ore concentrate sales increased 6% q/q to 1.14 mln tonnes (Q3 2017: 1.08 mln tonnes). Iron ore concentrate sales improvement in Q4 reflects the consolidation of the Yakovlevskiy mine.
· In Q4 2017 raw material prices were high: HCC prices were mainly supported by supply disruptions at Dalrymple Bay (Australia) and Chinese restocking ahead of the heating season. Iron ore prices recovered as a result of higher steel margins in China and improved demand for higher quality iron ore. Global export steel prices remained high on the back of Chinese production restrictions in the November-March heating season and decreased exports. Though Russian steel demand softened due to seasonal factors, Russian export prices followed global trends and are expected to increase in Q1 2018. Industry experts anticipate Russian steel demand to continue growing in 2018 by 3-4%.
· In 2018, Severstal Resources anticipates an increase in production volumes of additional 40kt of pellets at Karelsky Okatysh and additional 370kt of coking coal concentrate at Vorkutaugol. Yakovlevskiy mine iron ore output is estimated to be c.1.3 million tonnes for 2018. Severstal Russian Steel production volumes growth will be positively impacted by a new ladle furnance (+75kt of crude steel) and a new HDG (+400kt) and colour-coating (+200kt) unit.
SUMMARY OF KEY PRODUCTION, SALES VOLUMES AND SELLING PRICES DATA
Production, tonnes | Q4 2017 | Q3 2017 | Change, % | 2017 | 2016 | Change, % |
Crude Steel (Russian Steel) | 3,012,107 | 2,943,903 | 2% | 11,651,166 | 11,630,333 | 0% |
Hot metal (Russian Steel) | 2,343,386 | 2,231,663 | 5% | 9,157,526 | 9,317,516 | (2%) |
Sales volumes, tonnes | Q4 2017 | Q3 2017 | Change, % | 2017 | 2016 | Change, % |
Coking coal concentrate | 827,609 | 914,737 | (10%) | 3,280,122 | 4,146,803 | (21%) |
Iron ore pellets | 3,297,251 | 2,376,621 | 39% | 11,133,219 | 10,842,369 | 3% |
Iron ore concentrate | 1,136,650 | 1,075,091 | 6% | 4,251,044 | 4,103,389 | 4% |
Total steel products (Consolidated) | 2,784,373 | 2,855,071 | (2%) | 10,919,346 | 10,671,897 | 2% |
Total steel products (Russian Steel) | 2,792,509 | 2,867,465 | (3%) | 10,959,216 | 10,714,890 | 2% |
High value added steel products, % | Q4 2017 | Q3 2017 | Change, % | 2017 | 2016 | Change, % |
Severstal (Consolidated) | 47% | 49% | (2 ppts) | 46% | 42% | 4 ppts |
Severstal Russian Steel | 47% | 49% | (2 ppts) | 46% | 42% | 4 ppts |
SEVERSTAL'S CONSOLIDATED SALES (NET OF INTERCOMPANY SALES)
Sales volumes, tonnes | Q4 2017 | Q3 2017 | Change, % | 2017 | 2016 | Change, % | |
Coal: | 418,486 | 371,465 | 13% | 1,699,729 | 2,939,565 | (42%) | |
Coking coal concentrate | 57,687 | 49,801 | 16% | 126,637 | 899,542 | (86%) | |
Steam coal | 360,799 | 321,664 | 12% | 1,573,092 | 2,040,023 | (23%) | |
Iron ore: | 2,239,773 | 1,362,572 | 64% | 6,644,519 | 6,098,502 | 9% | |
Iron ore pellets | 2,159,754 | 1,342,593 | 61% | 6,513,605 | 5,978,222 | 9% | |
Iron ore concentrate | 80,019 | 19,979 | 301% | 130,914 | 120,280 | 9% | |
Semi-finished products | 217,935 | 72,769 | 199% | 518,522 | 724,155 | (28%) | |
Rolled products: | 2,073,440 | 2,261,672 | (8%) | 8,540,320 | 8,081,276 | 6% | |
Hot-rolled coil | 905,081 | 1,001,739 | (10%) | 3,949,003 | 4,079,627 | (3%) | |
Hot-rolled plate | 239,361 | 187,292 | 28% | 804,487 | 691,269 | 16% | |
Cold-rolled coil | 306,426 | 352,617 | (13%) | 1,324,399 | 963,575 | 37% | |
Galvanised and metallic coated coil | 176,104 | 210,697 | (16%) | 653,821 | 560,123 | 17% | |
Colour coated coil | 84,791 | 133,579 | (37%) | 402,980 | 386,016 | 4% | |
Long products | 361,677 | 375,748 | (4%) | 1,405,630 | 1,400,666 | 0% | |
Downstream products: | 492,998 | 520,630 | (5%) | 1,860,504 | 1,866,466 | (0%) | |
Metalware products | 129,123 | 170,749 | (24%) | 614,657 | 639,132 | (4%) | |
Large diameter pipes | 166,189 | 122,794 | 35% | 415,520 | 388,854 | 7% | |
Other tubes, pipes, formed shapes | 197,686 | 227,087 | (13%) | 830,327 | 838,480 | (1%) | |
SEVERSTAL RESOURCES
· Coking coal concentrate sales volumes from Vorkutaugol declined 10% impacted by the long-wall repositioning at the Komsomolskaya mine and the normalisation of production volumes of "Concentrate K" coal after an uptick in Q3. Internal coking coal concentrate procurement was almost 93% in Q4 while the minor volumes allocated by Vorkutaugol to external sales remained flat q/q.
· Steam coal sales at Vorkutaugol increased 12% q/q reflecting stronger demand from domestic consumers following the beginning of the heating season.
· Iron ore pellet sales increased 39% and totalled 3.30 mln tonnes (Q3 2017: 2.38 mln tonnes) due to the sale of finished goods in transit in Q4.
· Iron ore concentrate sales increased 6% q/q to 1.14 mln tonnes (Q3 2017: 1.08 mln tonnes). Iron ore concentrate sales improvement in Q4 reflected the consolidation of the Yakovlevskiy mine.
Sales volumes, tonnes | Q4 2017 | Q3 2017 | Change, % | 2017 | 2016 | Change, % |
Coal: | 1,188,409 | 1,236,818 | (4%) | 4,853,771 | 6,187,173 | (22%) |
Coking coal concentrate | 827,609 | 914,737 | (10%) | 3,280,122 | 4,146,803 | (21%) |
Steam coal | 360,800 | 322,081 | 12% | 1,573,649 | 2,040,370 | (23%) |
Iron ore: | 4,433,901 | 3,451,712 | 28% | 15,384,263 | 14,945,758 | 3% |
Iron ore pellets | 3,297,251 | 2,376,621 | 39% | 11,133,219 | 10,842,369 | 3% |
Iron ore concentrate | 1,136,650 | 1,075,091 | 6% | 4,251,044 | 4,103,389 | 4% |
SEVERSTAL RUSSIAN STEEL ('RSD')
· RSD steel product sales declined 3% to 2.79 mln tonnes compared with the previous quarter (Q3 2017: 2.87 mln tonnes) after significant stock sell-off in Q3. Meanwhile, the Company replenished stocks of steel products at its export subsidiaries in Q4. Semi-finished product volumes growth was driven by Mill-2000 maintenance works and increased demand for billets in Q4.
· The Company increased export sales volumes to 42% (Q3 2017: 35%) due to higher profitability of export deliveries in Q4. The share of high value-added (HVA) products within the sales portfolio remained high at 47% (Q3 2017: 49%) driven by the continued destocking of large diameter pipes (LDP).
· Sales volumes decline of HDG, colour-coated and cold-rolled coil products was due to the replenishment of stocks after the Q3 sell-off.
· Large diameter pipe sales volumes continued to grow by 35% q/q, followed by Q3 2017 111% q/q growth, on the back of a destocking of finished goods produced in H1 2017 at Izhora Pipe Mill. Meanwhile, Izhora Pipe Mill remains at full capacity utilisation and continues to supply LDPs to Gazprom, Rosneft and other customers.
· Long products sales declined as a result of lower production volumes at Balakovo mini-mill due to seasonality.
· Average selling prices for the majority of steel products followed global trends in Q4. The Company has achieved a recovery in prices in Q4 after a decline in previous months. Domestic prices were catching up with global price trends but with a time lag, and this contributed to a growth in average selling prices.
Sales volumes, tonnes | Q4 2017 | Q3 2017 | Change, % | 2017 | 2016 | Change, % |
Total steel products | 2,792,509 | 2,867,465 | (3%) | 10,959,216 | 10,714,890 | 2% |
Semi-finished products | 217,935 | 72,769 | 199% | 518,522 | 724,156 | (28%) |
Rolled products: | 2,081,329 | 2,273,535 | (8%) | 8,578,591 | 8,120,183 | 6% |
Hot-rolled coil | 905,157 | 1,001,840 | (10%) | 3,949,629 | 4,080,211 | (3%) |
Hot-rolled plate | 239,404 | 187,376 | 28% | 804,928 | 691,509 | 16% |
Cold-rolled coil | 306,427 | 352,617 | (13%) | 1,324,400 | 963,575 | 37% |
Galvanised and metallic coated coil | 176,104 | 210,698 | (16%) | 653,822 | 560,123 | 17% |
Colour coated coil | 84,791 | 133,579 | (37%) | 402,980 | 386,016 | 4% |
Long products | 369,446 | 387,425 | (5%) | 1,442,832 | 1,438,749 | 0% |
Downstream products: | 493,245 | 521,161 | (5%) | 1,862,103 | 1,870,551 | (0%) |
Metalware products | 129,283 | 170,995 | (24%) | 615,232 | 641,250 | (4%) |
Large diameter pipes | 166,189 | 122,794 | 35% | 415,520 | 389,489 | 7% |
Other tubes, pipes, formed shapes | 197,773 | 227,372 | (13%) | 831,351 | 839,812 | (1%) |
Sales price, $/tonne | Q4 2017 | Q3 2017 | Change, % | 2017 | 2016 | Change, % | |||||
Semi-finished products | 468 | 403 | 16% | 422 | 289 | 46% | |||||
Hot-rolled coil | 535 | 467 | 15% | 492 | 360 | 37% | |||||
Hot-rolled plate | 716 | 627 | 14% | 642 | 458 | 40% | |||||
Cold-rolled coil | 610 | 564 | 8% | 591 | 468 | 26% | |||||
Galvanised and metallic coated coil | 723 | 706 | 2% | 718 | 575 | 25% | |||||
Colour coated coil | 891 | 844 | 6% | 876 | 771 | 14% | |||||
Long products | 466 | 439 | 6% | 431 | 343 | 26% | |||||
Metalware products | 961 | 857 | 12% | 893 | 764 | 17% | |||||
Large diameter pipes | 1,315 | 1,327 | (1%) | 1,373 | 1,179 | 16% | |||||
Other tubes, pipes, formed shapes | 579 | 548 | 6% | 571 | 444 | 29% | |||||
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) Large diameter pipes include all pipes with a diameter between 820 and 1420 mm.
Contacts |
Investor Relations
Evgeny Belov
T: +7 (495) 926-77-66 ext. 6445
evgenii.belov@severstal.com
Public Relations
Anastasia Mishanina
T: +7 (495) 926-77-66 ext. 6457
anastasia.mishanina@severstal.com
Severstal's financial communications agency - Hudson Sandler
Andrew Hayes / Emily Dillon / Fern Duncan
T: +44 (0) 20 7796 4133
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PАО Severstal is one of the world's leading vertically integrated steel and steel related mining companies, with assets in Russia, Ukraine, Latvia and Poland. Severstal is listed on RTS and MICEX and the company's GDRs are traded on the LSE. Severstal reported revenue of $5,916 million and EBITDA of $1,911 million in 2016. Severstal's crude steel production in 2017 reached 11.7 million tonnes www.severstal.com