18 Jan 2019 07:00
PAO Severstal (SVST) Severstal reports Q4 & FY2018 operational results 18-Jan-2019 / 10:00 MSK Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group. The issuer is solely responsible for the content of this announcement. Severstal reports Q4 & FY2018 operational results
Moscow, Russia - 18 January 2019 - PAO Severstal (MICEX-RTS: CHMF; LSE: SVST), one of the world's leading vertically integrated steel and steel-related mining companies, today announces its operational results for Q4 and FY2018. Q4 2018 GROUP HIGHLIGHTS Hot metal output decreased 3% q/q in Q4 2018 to 2.23 mln tonnes (Q3 2018: 2.31 mln tonnes), due to BF#2 short-term maintenance works. Crude steel production declined by 4% to 2.94 mln tonnes (Q3 2018: 3.06 mln tonnes) reflecting a decrease in pig iron production and seasonal slowdown of production at Balakovo mini-mill.Consolidated steel product sales increased 2% q/q to 2.76 mln tonnes in Q4 2018 (Q3 2018: 2.71 mln tonnes), following short-term maintenance works at rolling-mill facilities in the previous quarter. The share of domestic sales declined to 62% as a result of seasonal slowdown in domestic consumption (Q3 2018: 65%). The share of high value-added (HVA) products within the sales portfolio decreased four ppts to 44% (Q3 2018: 48%), driven by an increase in semi-finished and hot rolled coil sales and declining sales volumes of large diameter pipes, colour coated and hot rolled thick plate. Coking coal concentrate sales volumes from Vorkutaugol continued to grow, increasing 9% q/q following 27% increase in Q3. This was largely driven by higher production volumes at the Zapolyarnaya and Komsomolskaya mines. Iron ore pellet sales increased 15% to 2.94 mln tonnes (Q3 2018: 2.55 mln tonnes) as a result of higher production volumes and stock sell-off in Q4.
FY2018 GROUP HIGHLIGHTS Hot metal output remained almost unchanged in 2018 at 9.15 mln tonnes, however crude steel production increased 3% to 12.04 mln tonnes (FY2017: 11.65 mln tonnes). This was driven by an improvement in steel production efficiency following the launch of ladle furnace #2 and higher production volumes from Balakovo mini-mill. Meanwhile, the Company is continuing its efficiency programmes aimed at decreasing raw material consumption ratios in the steel production process.Consolidated steel product sales increased 2% y/y to 11.18 mln tonnes in FY2018 (FY2017: 10.92 mln tonnes), reflecting crude steel production growth. The high share of HVA products remained high at 46% in FY2018 (FY2017: 46%). Average selling prices for the majority of steel products grew substantially, by 5%-12% in FY2018, reflecting global trends as well as Severstal's sales and marketing initiatives. The higher iron ore concentrate sales y-o-y for FY2018 partially reflects the consolidation of the Yakovlevskiy mine and an uptick in production volumes at Olcon. Coking coal concentrate sales volumes at Vorkutaugol increased by 2% to 3.37 mln tonnes in 2018. As announced at Severstal's Capital Markets Day in November 2018, the Company plans to achieve coking coal concentrate production volumes growth of up to approximately 5.6mt per annum at the Vorkutaugol mines and plans to ramp-up Yakovlevskiy mine to approximately 5mt per annum in 2023, which will result in a higher level of vertical integration.
SUMMARY OF KEY PRODUCTION, SALES VOLUMES
SEVERSTAL'S CONSOLIDATED SALES (NET OF INTERCOMPANY SALES)
SEVERSTAL RESOURCES Coking coal concentrate sales volumes from Vorkutaugol continued to grow by 9% q/q following a 27% increase in Q3. This was largely driven by higher production volumes at the Zapolyarnaya and Komsomolskaya mines. Internal coking coal concentrate procurement declined to 83% in Q4 2018 as the Company increased sales to third parties due to a favourable pricing environment in the local market.Steam coal sales at Vorkutaugol increased by 37% q/q, reflecting seasonally stronger domestic demand driven by the beginning of the heating season. Iron ore pellet sales increased by 15% to 2.94 mln tonnes (Q3 2018: 2.55 mln tonnes) driven by higher production volumes and stock sell-off in Q4. Iron ore concentrate sales remained almost flat in Q4 at 1.43 mln tonnes (Q3 2018: 1.42 mln tonnes). The higher iron ore concentrate sales y/y for FY2018 partially reflects the consolidation of the Yakovlevskiy mine and growth in production volumes at Olcon.
SEVERSTAL RUSSIAN STEEL ('RSD') RSD steel product sales increased by 2% to 2.77 mln tonnes in Q4 2018 compared with the previous quarter (Q3 2018: 2.72 mln tonnes), following short-term maintenance works at rolling-mill facilities in the previous quarter. The share of domestic sales declined to 62% due to a seasonal slowdown in domestic consumption (Q3 2018: 65%). The share of high value-added (HVA) products within the sales portfolio decreased by four ppts to 44% (Q3 2018: 48%), driven by an increase in semi-finished (slab) and hot rolled coil sales and declining volumes of large diameter pipes, colour coated and hot rolled thick plate. In Q4 2018, the Company increased sales of hot rolled coil to European customers and decreased sales of the product to the Middle East market. Severstal increased stocks of colour-coated products, which reflects lower sales volumes for the period. LDP sales volumes declined 16% q/q due to specifics of the product range and after a sell-off of finished goods at the Izhora Pipe Mill in Q3 where the utilisation rate continued to remain high in Q4 2018. In March 2018, the Izhora Pipe Mill was awarded a tender to supply approximately 165,000 tonnes of LDPs for Gazprom projects during 2018-2019. Average selling prices for the majority of steel products declined in Q4 2018 in line with global benchmarks, however selling prices for HVA products were less affected by this downward trend due to the nature of the contracts and Severstal's sales and marketing initiatives. The decline in LDP average selling price in FY2018 was offset by higher sales volumes of thick plate.
Q4, H2 & FY 2018 ESG (ENVIRONMENTAL, SOCIAL, GOVERNANCE) HIGHLIGHTS Health and safety of our employees and contractors is crucial for all our operations. Severstal targets zero fatalities in its operations. In Q4 2018, LTIFR* decreased 5% q/q to 0.78 (Q3 2018: 0.82). In FY 2018 LTIFR was 0.95, decreasing 1% y/y (FY 2017: 0.96). In H2 2018, there were no fatalities of Severstal staff or its contractors. Personnel involvement in safety issues has increased in 2018 and was confirmed by the results of the Accident Prevention System audits. On a five-point scale Severstal Russian Steel outperformed the target, achieving 3.3 points, Vorkutaugol reached the base target of 2.6 points.
At Severstal Russian Steel atmospheric emissions of pollutants decreased in 2018 by 3% to 301,710 tonnes (2017: 312,039 tonnes). Atmospheric emission of pollutants per tonne of steel products went down by 6% to 25.1 kg per tonne of steel in 2018 (2017: 26.8 kg per tonne) due to the reconstruction of coke battery #4 starting Q2 2017 and decommissioning of the gas filtering systems in complex steel processing facilities №№ 1-3. At Severstal Resources atmospheric emissions of pollutants increased in 2018 by 7% y/y and totaled 218,694 tonnes (2017: 204,986 tonnes). The growth mostly reflects increased iron ore pellets production and increased emissions of ventilation and drained methane at Vorkutaugol, explained by decommissioning from the drainage system of previously worked out coalfields, and the increased coal production volumes.
Notes to this section:
* LTIFR refers to Lost Time Injury Frequency Rate of Severstal staff, the number of lost time injuries occurring in a workplace per 1 million hours worked. ** Emissions data is calculated in accordance with Russian regulation and is reported to the relevant Russian authorities on an annual basis and reviewed by them. *** Steel production at Cherepovets Steel Mill and Severstal Long Product Mill Balakovo.
1) All production data is reported in thousands of 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.
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 / Dan de Belder T: +44 (0) 20 7796 4133
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 $7,848 million and EBITDA of $2,577 million in 2017. Severstal's crude steel production in 2018 reached 12.0 million tonnes www.severstal.com
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ISIN: | US8181503025 |
| Category Code: | TST |
| TIDM: | SVST |
| LEI Code: | 213800OKDPTV6K4ONO53 |
| Sequence No.: | 7192 |
| EQS News ID: | 767329 |
| End of Announcement | EQS News Service |
UK Regulatory announcement transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement.