DJ PJSC Magnitogorsk Iron and Steel Works: MMK Group Trading Update for Q2 and H1 2019
PJSC Magnitogorsk Iron and Steel Works (MMK) PJSC Magnitogorsk Iron and Steel Works: MMK Group Trading Update for Q2 and H1 2019 16-Jul-2019 / 09:59 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 Q2 and H1 2019 ??? Group: Consolidated results (thousand tonnes) Q2 2019 Q1 2019 % H1 2019 H1 2018 % Finished products 2,856 2,782 2.7% 5,638 5,675 -0.7% sales, of which: Long products 366 333 9.9% 700 648 8.0% Flat hot-rolled 1,064 1,111 -4.2% 2,175 2,302 -5.5% products Thick plate (mill 281 293 -4.1% 574 387 48.3% 5000) Flat cold-rolled 241 257 -6.2% 498 615 -19.0% products Downstream 904 788 14.7% 1,692 1,723 -1.8% products, of which: Tin plate 43 32 34.4% 75 73 2.7% Galvanised steel 484 414 16.9% 898 880 2.0% Polymer-coated 176 156 12.8% 332 355 -6.5% steel Band 29 30 -3.3% 59 73 -19.2% Formed section 38 41 -7.3% 79 75 5.3% Pipes 11 11 - 22 30 -26.6% Metalware 106 93 14.0% 199 203 -2.0% Other metal 16 11 45.4% 27 34 -20.6% products HVA products 1,426 1,338 6.6% 2,764 2,726 1.4% Share of HVA 49.9% 48.1% 49.0% 48.0% products Coal concentrate 487 777 -37.3% 1,263 1,412 -10.5% production Iron ore 729 716 1.8% 1,202 1,320 -8.9% production Q2 2019 highlights vs. Q1 2019 ? MMK Group's total sales of finished products in Q2 2019 totalled 2,856 thousand tonnes, up 2.7% quarter-on-quarter (q-o-q). ? MMK Group's sales of HVA products in Q2 2019 totalled 1,426 thousand tonnes, up 6.6% q-o-q. The share of HVA products in total sales increased to 49.9%. ? MMK Coal's coal concentrate production in Q2 2019 totalled 487 thousand tonnes, down 37.3% q-o-q. H1 2019 highlights vs. H1 2018 ? MMK Group's total sales of finished products in H1 2019 totalled 5,638 thousand tonnes, down 0.7% year-on-year (y-o-y). ? MMK Group's sales of HVA products in H1 2019 totalled 2,764 thousand tonnes, up 1.4% y-o-y. The share of HVA products in total sales increased to 49.0%. ? MMK Coal's coal concentrate production in H1 2019 totalled 1,263 thousand tonnes, down 10.5% y-o-y. MMK Group highlights by key segments PSJC MMK (thousand tonnes) Q2 2019 Q1 2019 % H1 2019 H1 2018 % Pig iron 2,452 2,396 2.3% 4,849 4,680 3.6% Crude steel 3,091 3,107 -0.5% 6,198 6,176 0.4% Finished products, 2,730 2,731 -0.1% 5,461 5,592 -2.3% of which: Long products 452 457 -1.1% 908 892 1.9% Flat hot-rolled 1,166 1,180 -1.1% 2,346 2,498 -6.1% products HVA products, of 1,112 1,095 1.5% 2,207 2,203 0.2% which: Thick plate (mill 287 267 7.5% 554 401 38.3% 5000) Flat cold-rolled 294 319 -7.9% 614 724 -15.3% products Downstream 530 508 4.3% 1,039 1,078 -3.6% products, of which: Tin plate 42 34 23.4% 76 73 4.4% Galvanised steel 338 311 8.7% 649 642 1.1% Polymer-coated 70 81 -13.6% 151 178 -15.5% steel Band 28 28 0.5% 56 73 -23.7% Formed section 42 40 5.0% 82 79 3.4% Pipes 11 14 -21.4% 25 32 -21.7% Shipments by market: Russia + CIS 2,444 2,442 0.1% 4,886 4,503 8.5% Export 286 290 -1.5% 575 1,089 -47.2% (USD / tonne) Q2 2019 Q1 2019 % H1 2019 H1 2018 % Average price per 625 578 8.1% 602 651 -7.6% tonne: Long products 510 480 6.3% 494 567 -12.8% Flat hot-rolled 551 506 8.8% 528 584 -9.6% products HVA products, of 750 698 7.5% 724 760 -4.8% which: Thick plate (mill 747 712 5.0% 730 830 -12.1% 5000) Flat cold-rolled 629 579 8.7% 603 634 -4.8% products Downstream products, 818 765 7.1% 792 819 -3.3% of which: Tin plate 817 777 5.2% 798 829 -3.7% Galvanised steel 802 742 8.0% 772 792 -2.5% Polymer-coated steel 981 916 7.2% 946 986 -4.0% Band 689 653 5.5% 671 680 -1.3% Formed section 827 779 6.2% 803 838 -4.2% Pipes 594 542 9.6% 565 664 -14.9% ? Pig iron output in Q2 2019 increased by 2.3% q-o-q. This was due to the completion of the scheduled overhaul of the blast furnace No.7 in mid May and productivity growth. ? At the same time, the volume of steel output in Q2 2019 remained flat q-o-q. The increase in pig iron volumes allowed the company to decrease the share of metal scrap in burden. ? The volume of shipments in Q2 2019 was flat q-o-q and amounted to 2,730 thousand tonnes. Sustainable shipments were a result of the continued high demand in the domestic market amid the scheduled repairs of rolling equipment. ? In Q2 2019, the domestic market saw continued high demand for steel products, which was associated with the beginning of the construction season and high volume of orders from manufacturers of large diameter pipes. These factors allowed the Company to maintain shipments to the domestic market flat q-o-q (2,444 thousand tonnes), as a result, the share of shipments to the domestic market amounted to about 90%. ? The volume of shipments of long products in Q2 2019 remained flat q-o-q and amounted to 452 thousand tonnes amid the recovery of business activity at the beginning of the construction season. ? The volume of shipments of hot-rolled products for Q2 2019 remained low, which was due to the continued reconstruction of Mill 2500 under the current investment programme. ? The volume of shipments of HVA products for Q2 2019 increased by 1.5% q-o-q and amounted to 1,112 thousand tonnes. This growth is mainly due to the increase in shipments of thick plate and the high capacity utilisation rates for deep processing production. ? The decrease in the volume of shipments of cold-rolled products for Q2 2019 by 7.9% q-o-q was mainly due to an increase of galvanised steel production at MMK's site and an increase in sales of polymer-coated steel produced at Lysvensky Metallurgical Plant. ? In Q2 2019, the volume of shipments of Mill 5000 products increased by 7.5% q-o-q and reached 287 thousand tonnes. This growth was associated with the continued supply of steel for the production of large diameter pipes as part of the implementation of major pipeline projects by Gazprom. ? In H1 2019, the volume of shipments of Mill 5000 thick plate increased by 38.3% y-o-y and amounted to 554 thousand tonnes. ? Seasonal increase in demand for construction products allowed the Company to increase shipments of galvanized steel in Q2 2019 by 8.7% q-o-q to 338 thousand tonnes. ? The decrease in shipments of polymer-coated steel compared to the previous quarter was due to the higher margin of galvanised steel sales in the current market environment. ? The average selling price, expressed in US dollars, for Q2 2019 increased by 8.1% q-o-q and amounted to USD 625 per tonne. This growth was due to both the recovery of global and Russian steel prices following a significant correction at the end of last year and an increase of HVA products share in the sales mix. MMK - Lysvensky Metallurgical Plant (thousand tonnes) Q2 2019 Q1 2019 % H1 2019 H1 2018 % Finished products, 74 60 22.8% 135 115 17.0% of which: Electro-galvanised 2 1 98.6% 3 3 - steel (automotive sheet) Galvanised steel 70 56 24.7% 125 107 17.1% with polymer coating Galvanised steel 3 4 -28.4% 6 5 37.7% with decorative coating (SteelArt) ? Finished products output increased by 23% q-o-q in Q2 2019 and was due to the seasonal growth in demand for construction products. ? A 17% growth in H1 2019, compared to H1 2018 was due to the introduction of a programme to promote construction products, including SteelArt, in H2 2018. Steel segment (Turkey) (thousand tonnes) Q2 2019 Q1 2019 % H1 2019 H1 2018 % ??? Metalurji 197 176 11.8% 373 428 -13.0% finished products, of which: Flat hot-rolled 8 7 6.9% 15 36 -58.2% products HVA products, of 189 169 12.1% 358 392 -8.8% which: Galvanised steel 160 129 23.9% 289 297 -2.7% Polymer-coated 29 39 -26.6% 68 95 -27.9% steel ??? Metalurji 58 136 -63.6% 217 339 -36.2% finished products from ??? steel ? Sales of finished products for Q2 2019 amounted to 197 thousand tonnes, up 11.8% q-o-q, due to the higher share of exports sales. ? The volume of sales of commercial products for H1 2019 decreased by 13.0% y-o-y, mainly due to the continued challenging economic situation in Turkey. The sales volumes were affected by lower sales of flat hot-rolled steel amid high volatility in prices for these products and low marginality. ? External headwinds, a continued challenging economic situation and political uncertainties continue to negatively affect domestic demand for construction metal products. MMK Coal (thousand tonnes) Q2 2019 Q1 % H1 H1 % 2019 2019 2018 Coking coal mining 978 1,464 -33.2% 2,442 2,187 11.6% Coking coal 916 1,422 -35.6% 2,337 2,752 -15.1% processing Mined 786 1,403 -44.0% 2,188 2,268 -3.5% Purchased 116 19 - 135 466 -71.1% Toll 14 0 - 14 17 -19.5% Coking coal 487 777 -37.3% 1,263 1,412 -10.5% concentrate ? The volume of coking coal production in Q2 2019 decreased by 33.2% q-o-q and amounted to 978 thousand tonnes. This decrease was due to the maintenance works during the quarter. ? The decrease in coal concentrate production by 37.3% q-o-q in Q2 2019, as well as the decrease y-o-y in H1 2019, were due to ramping up of the beneficiation plant to its design capacity following the reconstruction. It is expected, that the plant will reach its full design capacity in Q4 2019. ? The volume of coking coal production in H1 2019 increased by 11.6% y-o-y to 2,442 thousand tonnes due to the changes in the maintenance works schedule. Outlook The Company's management expects that in Q3 2019 demand for steel in the domestic market will remain strong and with the completion of another stage of reconstruction at hot-rolling Mill 2500, this should have a positive impact on the sales volumes of MMK Group. The maximum capacity utilisation of high-margin production units and continued high price premium in the domestic market should help offset the higher prices for iron ore in H1 2019, which should support MMK Group's financial results in Q3 2019. 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 unit encompassing the entire production chain, from the 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 2018, the company produced 12.7 mln tonnes of crude steel and 11.7 mln tonnes of commercial steel products. MMK Group had sales in 2018 of USD 8,214 mln and EBITDA of USD 2,418 mln. Contacts Investor Relations Department: Andrey Serov +7 3519 25-30-29 ir@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.: 13559 EQS News ID: 841855 End of Announcement EQS News Service
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July 16, 2019 04:00 ET (08:00 GMT)