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PAO Severstal (SVST)
Severstal reports Q3 & 9M 2018 operational results
11-Oct-2018 / 09:00 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 Q3 & 9M 2018 operational results
Moscow, Russia - 11 October 2018 - 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
Q3 & 9M 2018.
Q3 2018 GROUP HIGHLIGHTS
· Hot metal output increased 2% in Q3 2018 to 2.30 mln tonnes (Q2 2018:
2.26 mln tonnes) compared with the previous quarter after short-term
maintenance works at BF#4 and BF#5. Crude steel production increased 2% to
3.06 mln tonnes (Q2 2018: 3.00 mln tonnes) in line with pig iron
production growth.
· Consolidated steel product sales declined 5% to 2.71 mln tonnes in Q3
2018 compared with the previous quarter (Q2 2018: 2.84 mln tonnes), due to
short-term maintenance works at rolling-mill facilities. The share of
domestic sales remained high at 65% (Q2 2018: 64%).
· The share of high value-added (HVA) products within the sales portfolio
increased two ppts to 48% (Q2 2018: 46%), driven by an increase in sales
volumes of colour-coated and large diameter pipe (LDP) products. At the
same time Severstal reduced semi-finished and hot-rolled coil (HRC) sales.
· Coking coal concentrate sales volumes from Vorkutaugol grew 27% largely
driven by higher production volumes of "2ZH", "GZHO" and "Concentrate K"
grades following the long-wall repositionings at Komsomolskaya and
Vorkutinskaya mines in Q2.
· Iron ore pellet sales decreased 18% to 2.55 mln tonnes (Q2 2018: 3.12
mln tonnes) after the realisation of a share of finished goods in transit
in Q2, carried over from the previous quarter.
· Iron ore concentrate sales increased to 1.42 mln tonnes (Q2 2018: 1.36
mln tonnes) driven by growth in production at the Olcon and Yakovlevskiy
mines.
9M 2018 GROUP HIGHLIGHTS
· Hot metal output increased 1% to 6.91 mln tonnes in 9M 2018 compared
with the previous period (9M 2017: 6.81 mln tonnes), due to fewer
maintenance works in 9M 2018 and declining idle time at BF's. Crude steel
production increased 5% to 9.10 mln tonnes (9M 2017: 8.64 mln tonnes),
driven by an improvement in steel production efficiency following the
launch of ladle furnace #2 in July 2017 as well as higher production
volumes from Balakovo mini-mill. Meanwhile, the Company continues its
efficiency programmes aimed at decreasing raw material consumption ratios
in the steel production process.
· Consolidated steel product sales improved to 8.42 mln tonnes in 9M 2018
(9M 2017: 8.14 mln tonnes), primary reflecting growth in sales of
semi-finished products compared with the previous year. The high share of
HVA products remained flat at 46% in 9M 2018 (9M 2017: 46%).
· Average selling prices for the majority of steel products grew
substantially, between 6%-20%, for 9M 2018, reflecting global trends as
well as sales and marketing initiatives run by Severstal.
· The higher iron ore concentrate sales y-o-y for 9M 2018 partially
reflects the consolidation of the Yakovlevskiy mine.
SUMMARY OF KEY PRODUCTION, SALES VOLUMES
Production, Q3 2018 Q2 2018 Change, % 9M 2018 9M 2017 Change, %
thousands of
tonnes
Crude Steel 3,064 3,001 2% 9,098 8,639 5%
(Russian
Steel)
Hot metal 2,307 2,259 2% 6,913 6,814 1%
(Russian
Steel)
Sales Q3 2018 Q2 2018 Change, % 9M 2018 9M 2017 Change, %
volumes,
thousands of
tonnes
Coking coal 953 750 27% 2,331 2,462 (5%)
concentrate*
Iron ore 2,554 3,123 (18%) 8,054 7,836 3%
pellets
Iron ore 1,424 1,364 4% 4,080 3,114 31%
concentrate
Total steel 2,712 2,844 (5%) 8,420 8,135 4%
products
(Consolidate
d)
Total steel 2,722 2,857 (5%) 8,453 8,167 4%
products
(Russian
Steel)
High value Q3 2018 Q2 2018 Change, % 9M 2018 9M 2017 Change, %
added steel
products, %
Severstal 48% 46% 2 ppts 46% 46% 0 ppts
(Consolidate
d)
Severstal 48% 46% 2 ppts 46% 46% 0 ppts
Russian
Steel
SEVERSTAL'S CONSOLIDATED SALES (NET OF INTERCOMPANY SALES)
Sales volumes, thousands Q3 2018 Q2 Change, 9M 9M Change,
of tonnes 2018 % 2018 201 %
7
Coal: 381 342 11% 1,12 1,2 (12%)
7 81
Coking coal 109 35 n.a. 190 69 175%
concentrate
Steam coal 272 307 (11%) 937 1,2 (23%)
12
Iron ore: 1,671 2,16 (23%) 5,27 4,4 20%
5 7 05
Iron ore pellets 1,465 2,05 (29%) 4,70 4,3 8%
4 7 54
Iron ore 206 111 86% 570 51 n.a.
concentrate
Semi-finished 97 185 (48%) 538 301 79%
products
Rolled products: 2,148 2,21 (3%) 6,53 6,4 1%
9 3 67
Hot-rolled coil 946 969 (2%) 2,87 3,0 (5%)
8 44
Hot-rolled plate 218 226 (4%) 642 565 14%
Cold-rolled coil 280 321 (13%) 990 1,0 (3%)
18
Galvanised and 211 218 (3%) 627 478 31%
metallic coated
coil
Colour coated 122 105 16% 294 318 (8%)
coil
Long products 371 380 (2%) 1,10 1,0 6%
2 44
Downstream 467 440 6% 1,34 1,3 (1%)
products: 9 68
Metalware 150 146 3% 424 486 (13%)
products
Large diameter 128 86 49% 333 249 34%
pipes
Other tubes, 189 208 (9%) 592 633 (6%)
pipes, formed
shapes
SEVERSTAL RESOURCES
· Coking coal concentrate sales volumes from Vorkutaugol grew 27%, largely
driven by higher production volumes of "2ZH", "GZHO" and "Concentrate K"
following the repositioning of long-walls at the Komsomolskaya and
Vorkutinskaya mines in Q2. Internal coking coal concentrate procurement
declined to 88% in Q3 2018 as the Company increased sales to third parties
due to a favourable pricing environment in the local market.
· Steam coal sales at Vorkutaugol declined 11% q/q reflecting a lower
production rate at Vorgashorskaya mine in Q3 and seasonally weaker
domestic demand.
· Iron ore pellet sales declined by 18% and totalled 2.55 mln tonnes (Q2
2018: 3.12 mln tonnes) after the realisation of a share of finished goods
in transit in Q2, carried over from the previous quarter.
· Iron ore concentrate sales increased to 1.42 mln tonnes (Q2 2018: 1.36
mln tonnes) driven by production growth at the Olcon and Yakovlevskiy
mines.
Sales Q3 2018 Q2 2018 Change, % 9M 2018 9M 2017 Change, %
volumes,
thousands of
tonnes
Coal: 1,226 1,057 16% 3,269 3,675 (11%)
Coking coal 953 750 27% 2,331 2,462 (5%)
concentrate*
Steam coal 273 307 (11%) 938 1,213 (23%)
Iron ore: 3,978 4,487 (11%) 12,134 10,950 11%
Iron ore 2,554 3,123 (18%) 8,054 7,836 3%
pellets
Iron ore 1,424 1,364 4% 4,080 3,114 31%
concentrate
SEVERSTAL RUSSIAN STEEL ('RSD')
· RSD steel product sales declined to 2.72 mln tonnes compared with the
previous quarter (Q2 2018: 2.86 mln tonnes) due to short-term maintenance
works at rolling-mill facilities. Domestic sales remained high at 65% (Q2
2018: 64%).
· The share of high value-added (HVA) products within the sales portfolio
increased two ppts to 48% (Q2 2018: 46%) as the company increased
colour-coated and large diameter pipe product sales. At the same time
Severstal reduced semi-finished and hot-rolled coil (HRC) sales.
· Semi-finished product sales decreased as a result of lower volumes of
slab sold, due to maintenance works at rolling mills in Q3. At the same
time, the decrease in semi-finished product sales q/q reflects a
"high-base" effect of billet sales in Q2 2018.
· Severstal increased colour-coated sales, which resulted in lower sales
of hot-dip galvanised (HDG) and cold-rolled coil volumes.
· LDP sales volumes grew 49% q/q as a result of higher production volumes
of LDP and a sell-off of finished goods at the Izhora Pipe Mill. In March
2018, the Izhora Pipe Mill was awarded a tender to supply approximately
165 thousand tonnes of LDPs for Gazprom projects during 2018-2019.
· Average selling prices for the majority of steel products declined in Q3
2018 in line with global benchmarks. The decline in LDP average selling
price in 9M 2018 was offset by higher sales volumes of thick plate.
Sales volumes, Q3 2018 Q2 Change, % 9M 2018 9M Change,
thousands of 2018 2017 %
tonnes
Total steel 2,722 2,857 (5%) 8,453 8,167 4%
products
Semi-finished 97 185 (48%) 538 301 79%
products
Rolled 2,157 2,232 (3%) 6,565 6,497 1%
products:
Hot-rolled coil 947 969 (2%) 2,879 3,044 (5%)
Hot-rolled 218 226 (4%) 642 566 13%
plate
Cold-rolled 280 321 (13%) 990 1,018 (3%)
coil
Galvanised and 211 218 (3%) 627 478 31%
metallic coated
coil
Colour coated 122 105 16% 294 318 (8%)
coil
Long products 379 393 (4%) 1,133 1,073 6%
Downstream 468 440 6% 1,350 1,369 (1%)
products:
Metalware 151 146 3% 425 486 (13%)
products
Large diameter 128 86 49% 333 249 34%
pipes
Other tubes, 189 208 (9%) 592 634 (7%)
pipes, formed
shapes
Sales price, Q3 2018 Q2 Change, % 9M 2018 9M Change,
$/tonne 2018 2017 %
Semi-finished 493 511 (4%) 468 389 20%
products
Hot-rolled coil 545 590 (8%) 562 479 17%
Hot-rolled 679 729 (7%) 716 610 17%
plate
Cold-rolled 616 639 (4%) 627 585 7%
coil
Galvanised and 763 782 (2%) 761 716 6%
metallic coated
coil
Colour coated 963 948 2% 943 872 8%
coil
Long products 482 503 (4%) 494 418 18%
Metalware 925 979 (6%) 970 876 11%
products
Large diameter 1,006 1,047 (4%) 1,116 1,412 (21%)
pipes
Other tubes, 601 629 (4%) 611 568 8%
pipes, formed
shapes
Notes:
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.
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 / Dan de Belder
T: +44 (0) 20 7796 4133
***
P?? 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 2017
reached 11.7 million tonnes www.severstal.com
ISIN: US8181503025
Category Code: TST
TIDM: SVST
LEI Code: 213800OKDPTV6K4ONO53
Sequence No.: 6168
EQS News ID: 732469
End of Announcement EQS News Service
(END) Dow Jones Newswires
October 11, 2018 02:01 ET (06:01 GMT)
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