DJ PJSC Magnitogorsk Iron and Steel Works: MMK Group Trading Update for Q4 and FY 2017
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PJSC Magnitogorsk Iron and Steel Works (MMK)
PJSC Magnitogorsk Iron and Steel Works: MMK Group Trading Update for Q4 and
FY 2017
25-Jan-2018 / 08:05 CET/CEST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
MMK Group Trading Update for Q4 and FY 2017
??? Group: Consolidated results
(thousand tonnes)
Q4 Q3 % FY FY %
2017 2017 2017 2016
Finished products sales, 2,827 3,232 -12.5% 11,617 11,454 1.4%
of which:
Slabs and billets 2 2 0.2% 4 104 -96.2%
Long products 342 374 -8.7% 1,374 1,325 3.7%
Flat hot-rolled products 1,219 1,389 -12.2% 4,968 4,873 2.0%
Thick plate (mill 5000) 208 182 13.9% 806 799 0.8%
Flat cold-rolled 294 380 -22.6% 1,287 1,385 -7.1%
products
Downstream products, of 762 904 -15.7% 3,178 2,969 7.0%
which:
Tin plate 19 29 -33.7% 113 137 -17.2%
Galvanised steel 389 483 -19.5% 1,658 1,598 3.8%
Polymer-coated steel 157 185 -15.5% 623 534 16.8%
Band 38 33 17.2% 128 128 0.4%
Formed section 36 24 51.5% 114 41 177.0%
Pipes 8 19 -59.2% 65 78 -16.9%
Metalware 95 109 -12.6% 402 383 4.9%
Other metal products 20 22 -11.0% 74 70 5.7%
HVA products 1,264 1,467 -13.8% 5,270 5,153 2.3%
Share of HVA products 44.7% 45.4% 45.4% 45.0%
Coal concentrate 760 658 15.6% 2,725 2,870 -5.1%
production
Iron ore production 844 827 2.1% 3,275 3,260 0.4%
Q4 2017 highlights vs. Q3 2017
- MMK Group's total finished steel product sales in Q4 2017 (excluding
intra-group sales) totalled 2,827 thousand tonnes (down 12.5% q-o-q).
- MMK Group's HVA steel product sales in Q4 2017 was 1,264 thousand tonnes
(down 13.8% q-o-q). The share of HVA products in total output amounted to
44.7%.
- Production of coal concentrate by MMK Coal in Q4 2017 totalled 760
thousand tonnes (up 15.6% q-o-q).
FY 2017 highlights vs. FY 2016
- MMK Group's total finished steel product sales in FY 2017 (excluding
intra-group sales) amounted to 11,617 thousand tonnes (up 1.4% y-o-y).
- MMK Group's HVA steel product output in FY 2017 was 5,270 thousand tonnes
(up 2.3% y-o-y). The share of HVA products in total output increased to
45.4%.
- Production of coal concentrate by MMK Coal in FY 2017 totalled 2,725
thousand tonnes (down 5.1% y-o-y).
MMK Group highlights by key segments
PSJC MMK
(thousand tonnes)
Q4 Q3 % FY FY %
2017 2017 2017 2016
Pig iron 2,654 2,559 3.7% 10,163 9,652 5.3%
Crude steel 3,291 3,321 -0.9% 12,860 12,544 2.5%
Finished products 2,787 3,092 -9.9% 11,333 11,323 0.1%
output, of which:
Slabs and billets 2 2 2.9% 4 104 -96.0%
Long products 419 469 -10.6% 1,787 1,730 3.3%
Flat hot-rolled products 1,346 1,496 -10.1% 5,397 5,320 1.4%
HVA products, of which: 1,020 1,125 -9.3% 4,145 4,170 -0.6%
Thick plate (mill 5000) 210 186 13.2% 820 823 -0.3%
Flat cold-rolled 308 375 -17.9% 1,318 1,456 -9.4%
products
Downstream products, of 502 564 -11.0% 2,007 1,892 6.1%
which:
Tin plate 19 32 -41.3% 117 140 -16.3%
Galvanised steel 298 325 -8.4% 1,133 1,136 -0.2%
Polymer-coated steel 100 132 -23.9% 440 360 22.1%
Band 36 30 20.4% 127 124 2.6%
Formed section 40 27 49.1% 123 50 147.5%
Pipes 9 18 -52.4% 65 82 -20.5%
Shipments by market:
Russia + CIS 2,055 2,484 -17.3% 8,528 8,236 3.6%
Export 732 607 20.5% 2,805 3,089 -9.2%
(USD / tonne)
Q4 Q3 % FY FY %
2017 2017 2017 2016
Average price per tonne: 616 555 11.0% 575 432 33.1%
Long products 547 496 10.3% 491 352 39.5%
Flat hot-rolled products 544 476 14.3% 496 358 38.5%
HVA products, of which: 739 686 7.7% 714 564 26.6%
Thick plate (mill 5000) 807 774 4.3% 765 611 25.2%
Flat hot-rolled products 620 545 13.8% 579 435 33.3%
Downstream products, of which: 783 751 4.3% 781 643 21.5%
Tin plate 834 834 0.0% 855 791 8.1%
Galvanised steel 741 709 4.5% 739 604 22.4%
Polymer-coated steel 928 898 3.3% 928 800 16.0%
Band 698 600 16.3% 669 510 31.2%
Formed section 800 704 13.6% 777 599 29.7%
Pipes 700 593 18.0% 614 454 35.2%
? Pig iron output in FY 2017 increased by 511 thousand tonnes or 5.3% y-o-y.
This was due to the completion of major repairs at three blast furnaces in
2016 and early 2017, and their maximum capacity utilisation for the most
part of 2017.
- Crude steel output in Q4 2017 remained nearly flat q-o-q. At the same
time, steel production in FY 2017 grew 2.5% y-o-y to 12,860 thousand tonnes.
Pig iron production grew faster than steel production, thus allowing the
company to increase the share of pig iron in furnace charge, thereby
decreasing the cash cost.
? In Q4 2017, shipments of finished products totalled 2,787 thousand tonnes,
down 9.9% q-o-q. This decline was due to the seasonal weakness of business
activity on the domestic market, as well as dynamics stocks at the Company's
warehouses? Which were declining in Q3 and growing in Q4 2017.
- In FY 2017, shipments of finished products slightly rose above FY 2016
levels and amounted to 11,333 thousand tonnes. This indicator grew slower
than steel production due to a transition to a less productive (but
higher-margin) product mix for domestic sales, as well as recovery of
finished products stocks to standard level.
- Seasonal weakness in business activity on the domestic market in Q4 2017
resulted in a 17.3% decrease in shipments q-o-q. However, domestic shipments
in FY 2017 grew 3.6% to 8,528 thousand tonnes, while the share of domestic
sales in the overall sales structure exceeded 75% (up from 72.7% in FY
2016).
- In FY 2017, shipments of long products increased by 3.3% y-o-y to 1,787
thousand tonnes. This growth was due to the recovery in demand for
construction metal which also resulted in an increase in sales prices for
this product by 39.5% y-o-y.
? The 1.4% increase in shipments of hot-rolled products y-o-y in FY 2017 was
mainly due to the sustainably high demand from pipemakers, recovery in
demand from construction industry, and higher shipments to ??? Metalurji.
- Shipments of HVA products in FY 2017 slightly declined y-o-y and totalled
4,145 thousand tones. This was due to lower shipments of cold-rolled
products and recovery of finished products stocks to the standard level.
- Decline in shipments of cold-rolled products in FY 2017 (down 9.4% y-o-y)
was due to higher production of polymer-coated steel and formed section.
- In Q4 2017, shipments of mill 5000 thick plate grew by 13.2% q-o-q and
amounted to 210 thousand tonnes. This growth was due to higher sales to
pipemakers and machine-building industry.
- In FY 2017, shipments of galvanised steel remained flat y-o-y, while
shipments of polymer-coated steel grew by 80 thousand tonnes or 22.1%. At
the same time, capacity utilisation at coated-product facilities remained at
nearly 100% throughout FY 2017.
- The lack of positive dynamics in galvanised steel production (despite
commissioning of a new galvanising line in July 2017) was due to higher
production of polymer-coated metal and higher shipments of C-surface group
galvanised metal to carmakers (which meant a more complex product mix).
- Sales of formed section in FY 2017 grew 147.5% y-o-y, as a result of the
recovery in demand from railcar producers.
- The average sales price in US dollars in Q4 2017 increased by 11.0% q-o-q
to USD 616 per tonne. Higher prices on export markets during the quarter
supported domestic sales prices.
- In FY 2017, the average sales price for the Company's metal amounted to
USD 575 per tonne, up 33.1% y-o-y.
Steel segment (Turkey)
(thousand tonnes)
Q4 Q3 % FY FY %
2017 2017 2017 2016
??? Metalurji finished 213 249 -14.5% 925 854 8.4%
products, of which:
Flat hot-rolled products 37 46 -18.7% 164 134 22.2%
HVA products, of which: 176 204 -13.5% 762 720 5.8%
Galvanised steel 122 159 -22.9% 580 511 13.6%
Polymer-coated steel 54 45 19.1% 182 209 -13.3%
??? Metalurji finished output 176 166 5.5% 640 615 4.0%
from ??? steel
? Sales of finished products in Q4 2017 declined by 14.5% q-o-q and totalled
213 thousand tonnes. This was due to the seasonally weak demand.
- Sales of finished products in FY 2017 grew 71 thousand tonnes or 8.4%
y-o-y.
? This growth was mainly due to an increase in sales of galvanised steel (up
69 thousand tonnes or 13.6%), which under the current market conditions
provided higher margins compared to other products, as well as mastering
production of a new product - steel sheets produced by cutting rolled steel
made by MMK.
- Sustainable local demand and higher export sales mean that sales will
likely remain flat in 2018 y-o-y.
MMK Coal
(thousand tonnes)
Q4 Q3 % FY FY %
2017 2017 2017 2016
Coking coal mining 1,158 823 40.7% 3,614 3,416 5.8%
Coking coal processing 1,358 1,225 10.8% 4,893 4,958 -1.4%
Mined 1,003 809 24.0% 3,469 3,574 -2.9%
Purchased 355 417 -14.8% 1,424 1,384 2.5%
Coking coal concentrate 760 658 15.6% 2,725 2,870 -5.0%
- Coking coal production in Q4 2017 grew 40.7% q-o-q and amounted to 1,158
thousand tonnes. This growth was due to commissioning of new longwall at
Chertinskaya-Koksovaya mine and completion of passing through a section with
complex geological conditions at Kostromovskaya mine.
- Coal production in FY 2017 increased by 198 thousand tonnes y-o-y and
amounted to 3,614 thousand tonnes.
? Coal concentrate production in Q4 2017 amounted to 760 thousand tonnes, up
15.6% q-o-q. The increase was due to higher volumes of own materials
processing amid lower coal purchases from third-parties.
- In FY 2017, coal concentrate production decreased by 5.0% y-o-y to 2,725
thousand tonnes. Lower coal concentrate production was due to major
scheduled maintenance and higher ash content of coal at the Kostromovskaya
mine (section with a more complex geological conditions).
Outlook
Management expects that seasonality and scheduled maintenance of equipment
will affect Q1 2018 results.
At the same time, this factor is expected to be balanced by higher sales
prices for finished products on the Company's domestic and export markets.
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 2016, the company produced 12.5 million tonnes of crude steel
and 11.6 million tonnes of commercial steel products. MMK Group had sales in
2016 of USD 5,630 million and EBITDA of USD 1,956 million.
Contacts
Investor Relations Department:
Andrey Serov
+7 3519 24-52-97
serov.ae@mmk.ru
Communications Department:
Dmitry Kuchumov Dmitry Bulin
+7 499 238-26-13 +7 499 238-26-13
kuchumov.do@mmk.ru bulin.dn@mmk.ru
ISIN: US5591892048
Category Code: TST
TIDM: MMK
LEI Code: 253400XSJ4C01YMCXG44
Sequence No.: 5133
End of Announcement EQS News Service
648243 25-Jan-2018
(END) Dow Jones Newswires
January 25, 2018 02:05 ET (07:05 GMT)
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