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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
Production, Q4 2018 Q3 2018 Change, % 2018 2017 Change, %
thousands of
tonnes
Crude Steel 2,941 3,064 (4%) 12,039 11,651 3%
(Russian
Steel)
Hot metal 2,233 2,307 (3%) 9,146 9,158 (0%)
(Russian
Steel)
Sales volumes, Q4 2018 Q3 2018 Change, % 2018 2017 Change, %
thousands of
tonnes
Coking coal 1,043 953 9% 3,374 3,294 2%
concentrate
Iron ore 2,943 2,554 15% 10,997 11,133 (1%)
pellets
Iron ore 1,430 1,424 0% 5,510 4,251 30%
concentrate
Total steel 2,756 2,712 2% 11,176 10,919 2%
products
(Consolidated)
Total steel 2,767 2,722 2% 11,220 10,959 2%
products
(Russian
Steel)
High value added Q4 2018 Q3 2018 Change, % 2018 2017 Change, %
steel products, %
Severstal 44% 48% (4 ppts) 46% 46% 0 ppts
(Consolidated)
Severstal Russian 44% 48% (4 ppts) 46% 46% 0 ppts
Steel
SEVERSTAL'S CONSOLIDATED SALES (NET OF INTERCOMPANY SALES)
Sales volumes, thousands Q4 2018 Q3 Change 2018 2017 Change
of tonnes 201 , % , %
8
Coal: 544 381 43% 1,671 1,700 (2%)
Coking coal 169 109 55% 359 127 183%
concentrate
Steam coal 375 272 38% 1,312 1,573 (17%)
Iron ore: 2,128 1,6 27% 7,405 6,645 11%
71
Iron ore 1,871 1,4 28% 6,578 6,514 1%
pellets 65
Iron ore 257 206 25% 827 131 531%
concentrate
Semi-finished 157 97 62% 695 519 34%
products
Rolled 2,186 2,1 2% 8,719 8,540 2%
products: 48
Hot-rolled coil 1,017 946 8% 3,895 3,949 (1%)
Hot-rolled 210 218 (4%) 852 804 6%
plate
Cold-rolled 296 280 6% 1,286 1,324 (3%)
coil
Galvanised and 208 211 (1%) 835 654 28%
metallic coated
coil
Colour coated 97 122 (20%) 391 403 (3%)
coil
Long products 358 371 (4%) 1,460 1,406 4%
Downstream 413 467 (12%) 1,762 1,861 (5%)
products:
Metalware 136 150 (9%) 560 615 (9%)
products
Large diameter 107 128 (16%) 440 416 6%
pipes
Other tubes, 170 189 (10%) 762 830 (8%)
pipes, formed
shapes
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.
Sales volumes, Q4 2018 Q3 2018 Change, % 2018 2017 Change, %
thousands of
tonnes
Coal: 1,417 1,226 16% 4,686 4,868 (4%)
Coking coal 1,043 953 9% 3,374 3,294 2%
concentrate
Steam coal 374 273 37% 1,312 1,574 (17%)
Iron ore: 4,373 3,978 10% 16,507 15,384 7%
Iron ore 2,943 2,554 15% 10,997 11,133 (1%)
pellets
Iron ore 1,430 1,424 0% 5,510 4,251 30%
concentrate
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.
Sales volumes, Q4 2018 Q3 2018 Change, % 2018 2017 Change, %
thousands of
tonnes
Total steel 2,767 2,722 2% 11,220 10,959 2%
products
Semi-finished 157 97 62% 695 519 34%
products
Rolled 2,195 2,157 2% 8,760 8,579 2%
products:
Hot-rolled 1,017 947 7% 3,896 3,950 (1%)
coil
Hot-rolled 210 218 (4%) 852 805 6%
plate
Cold-rolled 296 280 6% 1,286 1,324 (3%)
coil
Galvanised and 208 211 (1%) 835 654 28%
metallic
coated coil
Colour coated 97 122 (20%) 391 403 (3%)
coil
Long products 367 379 (3%) 1,500 1,443 4%
Downstream 415 468 (11%) 1,765 1,862 (5%)
products:
Metalware 137 151 (9%) 562 615 (9%)
products
Large diameter 107 128 (16%) 440 416 6%
pipes
Other tubes, 171 189 (10%) 763 831 (8%)
pipes, formed
shapes
Sales price, Q4 2018 Q3 2018 Change, % 2018 2017 Change, %
$/tonne
Semi-finished 444 493 (10%) 463 422 10%
products
Hot-rolled coil 526 545 (3%) 553 492 12%
Hot-rolled plate 683 679 1% 708 642 10%
Cold-rolled coil 610 616 (1%) 623 591 5%
Galvanised and 730 763 (4%) 753 718 5%
metallic coated
coil
Colour coated 899 963 (7%) 932 876 6%
coil
Long products 452 482 (6%) 483 431 12%
Metalware 958 925 4% 967 893 8%
products
Large diameter 982 1,006 (2%) 1,083 1,373 (21%)
pipes
Other tubes, 561 601 (7%) 599 571 5%
pipes, formed
shapes
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.
Health and Safety Q4 2018 Q3 2018 Change, % 2018 2017 Change, %
LTIFR* 0.78 0.82 (5%) 0.95 0.96 (1%)
· 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.
Environment** Q4 2018 Q3 2018 Change, % 2018 2017 Change, %
Atmospheric 74.2 75.6 (2%) 301.7 312.0 (3%)
emission of
pollutants,
thousand tonnes
(Russian Steel)
Atmospheric 54.0 57.0 (5%) 218.7 205.0 7%
emission of
pollutants,
thousand tonnes
(Severstal
Resources)
Specific 25.2 24.7 2% 25.1 26.8 (6%)
atmospheric
emission of
pollutants, kg
per tonne of
steel***
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.
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
***
PAO 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
(END) Dow Jones Newswires
January 18, 2019 02:00 ET (07:00 GMT)
