DJ PJSC Magnitogorsk Iron and Steel Works: MMK Group Trading Update for Q3 2018
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PJSC Magnitogorsk Iron and Steel Works (MMK)
PJSC Magnitogorsk Iron and Steel Works: MMK Group Trading Update for Q3 2018
16-Oct-2018 / 07:58 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 Q3 2018
??? Group: Consolidated results
(thousand tonnes)
Q3 2018 Q2 2018 % 9M 2018 9M 2017 %
Finished products 3,052 2,848 7.2% 8,728 8,790 -0.7%
sales, of which:
Long products 386 364 6.0% 1 034 1 032 0.1%
Flat hot-rolled 1,315 1,103 19.2% 3,617 3,749 -3.5%
products
Thick plate (mill 208 195 6.7% 595 598 -0.5%
5000)
Flat cold-rolled 301 278 8.6% 917 993 -7.6%
products
Downstream 842 909 -7.3% 2,565 2,416 6.2%
products, of
which:
Tin plate 27 37 -28.7% 100 94 6.4%
Galvanised steel 414 445 -7.1% 1,294 1,269 2.0%
Polymer-coated 177 203 -13.2% 532 467 13.9%
steel
Band 37 36 1.6% 109 90 21.5%
Formed section 50 40 24.3% 125 78 59.9%
Pipes 18 19 -4.7% 48 57 -16.8%
Metalware 98 108 -9.2% 301 307 -1.8%
Other metal 23 20 17.4% 57 54 5.6%
products
HVA products 1,351 1,381 -2.1% 4,077 4,006 1.8%
Share of HVA 44.3% 48.5% 46.7% 45.6%
products
Coal concentrate 808 746 8.3% 2,220 1,965 13.0%
production
Iron ore 824 780 5.6% 2,355 2,430 -3.1%
production
Q3 2018 highlights vs. Q2 2018
- MMK Group's total sales of finished products in Q3 2018 totalled 3,052
thousand tonnes, up 7.2% quarter-on-quarter (q-o-q).
- MMK Group's sales of HVA products in Q3 2018 were 1,351 thousand tonnes,
down 2.1% q-o-q. HVA products accounted for 44.3% of total sales.
- MMK Coal's coal concentrate production in Q3 2018 totalled 808 thousand
tonnes, up 8.3% q-o-q.
9M 2018 highlights vs. 9M 2017
- MMK Group's total sales of finished products in 9M 2018 totalled 8,728
thousand tonnes, down 0.7% year-on-year (y-o-y).
- MMK Group's sales of HVA products in 9M 2018 were 4,077 thousand tonnes,
up 1.8% y-o-y. The share of HVA products in total sales increased to 46.7%.
- MMK Coal's coal concentrate production in 9M 2018 totalled 2,220 thousand
tonnes, up 13.0% y-o-y.
MMK Group highlights by key segments
PSJC MMK
(thousand tonnes)
Q3 2018 Q2 2018 % 9M 2018 9M 2017 %
Pig iron 2,621 2,276 15.2% 7,301 7,509 -2.8%
Crude steel 3,376 3,029 11.5% 9,552 9,569 -0.2%
Finished products 3,007 2,762 8.9% 8,599 8,546 0.6%
sales, of which:
Long products 481 464 3.5% 1,372 1,368 0.3%
Flat hot-rolled 1,422 1,221 16.5% 3,920 4,048 -3.2%
products
HVA products, of 1,104 1,076 2.5% 3,306 3,129 5.7%
which:
Thick plate (mill 215 202 6.1% 616 610 1.0%
5000)
Flat cold-rolled 355 348 2.0% 1,079 1,014 6.4%
products
Downstream 534 526 1.5% 1,611 1,505 7.0%
products, of
which:
Tin plate 27 36 -24.3% 99 98 1.1%
Galvanised steel 312 313 -0.2% 954 836 14.1%
Polymer-coated 87 88 -0.4% 266 340 -21.8%
steel
Band 38 34 12.9% 111 91 22.4%
Formed section 47 39 19.5% 126 84 50.1%
Pipes 23 18 29.3% 55 57 -2.2%
Shipments by
market:
Russia + CIS 2,339 2,278 2.7% 6,842 6,474 5.7%
Export 667 484 38.0% 1,756 2,072 -15.2%
(USD / tonne)
Q3 2018 Q2 2018 % 9M 2018 9M 2017 %
Average price per 610 655 -6.7% 637 561 13.5%
tonne:
Long products 528 566 -6.7% 553 474 16.7%
Flat hot-rolled 550 588 -6.5% 573 480 19.4%
products
HVA products, of 723 769 -5.9% 747 705 6.0%
which:
Thick plate (mill 691 818 -15.4% 779 750 3.9%
5000)
Flat cold-rolled 613 641 -4.4% 626 566 10.6%
products
Downstream 810 834 -2.9% 815 781 4.4%
products, of which:
Tin plate 790 826 -4.4% 812 859 -5.5%
Galvanised steel 797 814 -2.1% 793 738 7.5%
Polymer-coated 1,002 1,008 -0.6% 991 929 6.7%
steel
Band 655 680 -3.7% 671 658 2.0%
Formed section 777 828 -6.2% 817 766 6.7%
Pipes 597 642 -6.9% 639 602 6.1%
- Pig iron output in Q3 2018 increased by 15.2% q-o-q. This was due to the
completion of scheduled maintenance work at blast furnace No. 1 at the end
of the previous quarter and the furnace's operations reaching full capacity.
? Higher pig iron output coupled with the completion of scheduled repairs to
the oxygen converter led to an 11.5% q-o-q increase in crude steel output
for the quarter.
- Sales of finished products in Q3 2018 grew 8.9% q-o-q to 3,007 thousand
tonnes. Adequate amounts of steel and consistently high level of demand in
the Company's sales markets allowed MMK not only to reach full capacity
utilisation but also to keep warehouse stocks of finished products at a
minimum.
? In Q3 2018, the Company continued to increase sales to the domestic market
(up 2.7% q-o-q). The pricing environment on external markets also allowed
the Company to increase export sales by 183 thousand tonnes, or 38.0% q-o-q.
As a result, domestic sales accounted for 77.8% of overall sales (82.5% in
Q2 2018).
? In Q3 2018, sales of long products increased by 3.5% q-o-q to 481 thousand
tonnes. This growth was due to the seasonal uptick in domestic demand for
construction products, leading to increased capacity utilisation of long
products production facilities.
- The significant increase in shipments of hot-rolled products in Q3 2018
(up 201 thousand tonnes, or 16.5% q-o-q) was due to completion of a stage of
reconstruction of Mill 2500 and equipment upgrades.
- Shipments of HVA products in Q3 2018 increased 2.5% q-o-q and totalled
1,104 thousand tonnes. In 9M 2018, shipments of HVA products grew 177
thousand tonnes, or 5.7%, y-o-y. This growth was mainly due to the new
hot-dip galvanizing line reaching full capacity, higher sales of cold-rolled
products to the Lysva Metallurgical Plant, and higher sales of other HVA
products on the domestic market.
? The increase in shipments of cold-rolled products in Q3 2018 by 2.0% q-o-q
was due to higher exports of black tin steel on the backdrop of high
capacities utilisation rates.
- In Q3 2018, shipments of Mill 5000 products grew 6.1% q-o-q with capacity
utilisation of 100%. The increase was due to changes in the order mix,
particularly lower orders for high-tech but less productive rolled steel
from large-diameter pipe producers, which was offset by higher sales to
other industries and higher export sales.
- In Q3 2018, galvanised steel and polymer-coated steel shipments remained
flat q-o-q and amounted to 312 thousand tonnes and 87 thousand tonnes,
respectively.
- The increase in shipments of galvanised steel in 9M 2018 by 118 thousand
tonnes, or 14.1%, was due to the new hot-dip galvanizing line reaching full
capacity which amid stable demand from the construction industry allowed the
Company to substitute imports. Sales to carmakers also were higher q-o-q.
- Lower shipments of polymer-coated metal were due to both higher shipments
of galvanised steel and changes in the reporting of product sales by Lysva
Metallurgical Plant following its acquisition in late 2017.
- Sales of formed section in 9M 2018 grew 50.1% y-o-y due to consistently
high demand from railcar manufacturers.
- The average sales price in US dollars in Q3 2018 decreased by 6.7% q-o-q
to USD 610 per tonne. This decrease was due to the correction in global
steel prices and devaluation of the rouble vs the dollar during the quarter.
CJSC Lysva Metallurgical Plant
(thousand tonnes)
Q3 2018 Q2 2018 % 9M 2018 9M 2017 %
Finished products 79 69 14.8% 194 88 120.8%
sales, of which:
Electro-galvanised 0.6 0.4 45.2% 4 5 -20.2%
steel (automotive
sheet)
Galvanised steel 71 66 7.9% 178 80 122.9%
with polymer
coating
Galvanised steel 7 2 254.6% 11 3 324.3%
with decorative
coating (SteelArt)
- Sales of finished products in Q3 2018 amounted to 79 thousand tonnes, up
14.8% q-o-q. This growth was mainly due to the seasonal uptick in demand for
construction metal.
- Sales of finished products in 9M 2018 grew by 106 thousand tonnes, or
120.8% q-o-q. This significant growth was mainly due to the low base effect
in 9M 2017, which in turn was related to a shortage of working capital.
Capacity utilisation rates and sales in 2018 have stabilized thanks to the
plant becoming part of MMK Group.
Steel segment (Turkey)
(thousand tonnes)
Q3 2018 Q2 2018 % 9M 2018 9M 2017 %
??? Metalurji 137 198 -30.6% 565 712 -20.6%
finished products
sales, of which:
Flat hot-rolled 4 9 -59.6% 40 127 -68.4%
products
HVA products, of 133 188 -29.2% 525 586 -10.3%
which:
Galvanised steel 113 149 -24.5% 410 458 -10.5%
Polymer-coated 21 39 -47.1% 116 128 -9.5%
steel
??? Metalurji 91 187 -51.3% 430 504 -14.7%
finished products
from ??? steel
- Sales of finished products in Q3 2018 totalled 137 thousand tonnes (down
30.6% q-o-q).
? Sales of finished products in 9M 2018 decreased by 20.6% y-o-y, mainly due
to external headwinds, the challenging economic situation in Turkey, the
sharp devaluation of the Turkish lira and a significant decline in the
customers' financial solvency.
? The company is offsetting lower domestic demand by increasing export sales
to Europe and North Africa.
MMK Coal
(thousand tonnes)
Q3 2018 Q2 % 9M 9M %
2018 2018 2017
Coking coal mining 1,512 1,323 14.3% 3,699 2,457 50.6%
Coking coal 1,436 1,493 -3.8% 4,188 3,529 18.7%
processing
Mined 1,332 1,325 0.5% 3,600 2,466 46.0%
Purchased 105 168 -37.6% 571 1,063 -46.3%
Coking coal 808 746 8.3% 2,220 1,965 13.0%
concentrate
? Coking coal production in Q3 2018 increased by 14.3% q-o-q and amounted to
1,512 thousand tonnes. This increase was due to the completion of operations
in a high ground pressure area at Chertinskaya-Koksovaya mine.
? Coal concentrate production in Q3 2018 amounted to 808 thousand tonnes, up
8.3% q-o-q. This growth was due to processing higher volumes of own and
purchased materials thanks to the completion of the first stage of the
reconstruction of enrichment facilities and an improvement in the quality of
own coal.
- In 9M 2018, coking coal production increased by 50.6% y-o-y to 3,699
thousand tonnes. This growth was due to the commissioning of a new longwall
at Chertinskaya-Koksovaya mine.
- In 9M 2018, coal concentrate production increased by 13.0% y-o-y to 2,220
thousand tonnes. This growth was due to higher volumes of own material
processing, which in turn allowed the company to significantly cut coal
purchases from the third parties.
Outlook
The Company expects that sales volumes and prices in Q4 2018 will be
affected by the seasonal decline in business activity on the domestic market
and the ongoing correction in global steel prices.
The Company will offset these factors by higher operational efficiency
following the completion of all scheduled maintenance work and lower cost of
sales for steel production (higher share of pig iron in burden).
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 2017, the company produced 12.9 million tonnes of crude steel
and 11.6 million tonnes of commercial steel products. MMK Group had sales in
2017 of USD 7,546 million and EBITDA of USD 2,032 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.: 6208
EQS News ID: 733847
End of Announcement EQS News Service
(END) Dow Jones Newswires
October 16, 2018 02:00 ET (06:00 GMT)
