DJ PJSC Magnitogorsk Iron and Steel Works: MMK Group Trading Update for Q3 and 9M 2019
PJSC Magnitogorsk Iron and Steel Works (MMK) PJSC Magnitogorsk Iron and Steel Works: MMK Group Trading Update for Q3 and 9M 2019 15-Oct-2019 / 10:06 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 and 9M 2019 ??? Group: Consolidated results (thousand tonnes) Q3 2019 Q2 2019 % 9M 2019 9M 2018 % Finished products 2,897 2,856 1.4% 8,535 8,728 -2.2% sales, including: Long products 340 366 -7.1% 1,039 1,034 0.6% Flat hot-rolled 1,139 1,064 7.0% 3,314 3,617 -8.4% products Thick plate (mill 251 281 -10.8% 824 595 38.5% 5000) Flat cold-rolled 247 241 2.5% 746 917 -18.7% products Downstream 920 904 1.8% 2,611 2,565 1.8% products, including: Tin plate 36 43 -17.0% 111 100 10.8% Galvanised steel 489 484 1.0% 1,387 1,294 7.2% Polymer-coated 184 176 4.4% 516 532 -2.9% steel Band 27 29 -6.9% 87 109 -20.9% Formed section 49 38 27.4% 128 125 2.4% Pipes 18 11 69.6% 41 48 -14.7% Metalware 100 106 -5.7% 299 301 -0.7% Other metal 17 16 5.1% 43 57 -24.2% products HVA products 1,418 1,426 -0,6% 4,181 4,077 2.6% Share of HVA 48.9% 49.9% 49.0% 46.7% products Coal concentrate 629 487 29.2% 1,893 2,220 -14.8% production Iron ore 646 729 -11.4% 2,091 2,370 -11.8% production Q3 2019 highlights vs. Q2 2019 ? MMK Group's total sales of finished products in Q3 2019 totalled 2,897 thousand tonnes, up 1.4% quarter-on-quarter (q-o-q). ? MMK Group's sales of HVA products in Q3 2019 totalled 1,418 thousand tonnes, slightly down 0.6% q-o-q. The share of HVA products in total sales amounted to 48.9%. ? MMK Coal's coal concentrate production in Q3 2019 totalled 629 thousand tonnes, up 29.2% q-o-q. 9M 2019 highlights vs. 9M 2018 ? MMK Group's total sales of finished products in 9M 2019 totalled 8,535 thousand tonnes, down 2.2% year-on-year (y-o-y). ? MMK Group's sales of HVA products in 9M 2019 totalled 4,181 thousand tonnes, up 2.6% y-o-y. The share of HVA products in total sales increased to 49.0%. ? MMK Coal's coal concentrate production in 9M 2019 totalled 1,893 thousand tonnes, down 14.8% y-o-y. MMK Group highlights by key segments PSJC MMK (thousand tonnes) Q3 2019 Q2 2019 % 9M 2019 9M 2018 % Pig iron 2,560 2,452 4.4% 7,409 7,301 1.5% Crude steel 3,194 3,091 3.3% 9,392 9,552 -1.7% Finished products, 2,787 2,730 2.1% 8,248 8,599 -4.1% including: Long products 470 452 4.1% 1,379 1,372 0.5% Flat hot-rolled 1,207 1,166 3.5% 3,554 3,920 -9.3% products HVA products, 1,109 1,112 -0.2% 3,316 3,306 0.3% including: Thick plate (mill 256 287 -10.9% 810 616 31.6% 5000) Flat cold-rolled 322 294 9.5% 936 1,079 -13.3% products Downstream 531 530 0.1% 1,569 1,611 -2.6% products, including: Tin plate 35 42 -16.5% 111 99 11.3% Galvanised steel 327 338 -3.2% 976 954 2.4% Polymer-coated 77 70 10.2% 228 266 -14.3% steel Band 26 28 -7.3% 82 111 -26.5% Formed section 40 42 -5.8% 122 126 -3.4% Pipes 26 11 149% 51 55 -7.4% Shipments by market: Russia + CIS 2,541 2,444 4.0% 7,427 6,842 8.6% Export 246 286 -13.9% 821 1,756 -53.2% (USD / tonne) Q3 2019 Q2 2019 % 9M 2019 9M 2018 % Average price per 616 625 -1.5% 607 637 -4.7% tonne: Long products 493 510 -3.2% 494 553 -10.7% Flat hot-rolled 551 551 0% 536 573 -6.5% products HVA products, 740 750 -1.3% 729 747 -2.4% including: Thick plate (mill 752 747 0.6% 737 779 -5.4% 5000) Flat cold-rolled 631 629 0.3% 613 626 -2.1% products Downstream 800 818 -2.3% 794 815 -2.6% products, including: Tin plate 840 817 2.8% 811 812 -0.1% Galvanised steel 777 802 -3.1% 774 793 -2.4% Polymer-coated 961 981 -2.1% 951 991 -4.0% steel Band 703 689 2.0% 681 671 1.5% Formed section 841 827 1.7% 816 817 -0.1% Pipes 583 594 -1.8% 573 639 -10.3% ? Pig iron output in Q3 2019 increased by 4.4% q-o-q. This was due to the completion of the scheduled overhaul of the blast furnace No.7 and higher productivity. ? At the same time, the volume of steel output in Q3 2019 grew at a slower pace, which allowed the company to decrease the share of metal scrap in burden. ? The volume of shipments in Q3 2019 grew 2.1% q-o-q and amounted to 2,787 thousand tonnes. This growth was mainly due to the continued high demand in the company's key sales markets and a decrease in the finished product stock in the warehouses. ? Strong demand on the domestic market allowed the company to increase its domestic shipments by 4.0% q-o-q to 2,541 thousand tonnes. As a result, the share of shipments to the domestic market increased to 91%. ? The volume of shipments of long products in Q3 2019 grew by 4.1% q-o-q and amounted to 470 thousand tonnes. This growth was due to seasonally strong demand for construction products on the domestic market, which allowed the company to maintain the capacity utilisation rate of long products equipment at close to 100% level. ? The volume of shipments of hot-rolled products for Q3 2019 grew by 3.5% q-o-q and amounted to 1,207 thousand tonnes, which was due to the completion of the reconstruction of Mill 2500 in Q2 2019 under the current investment programme. The decline in output in 9M 2019 compared to 9M 2018 was due to the reconstruction of Mill 2500. ? The volume of shipments of HVA products for Q3 2019 were flat q-o-q and amounted to 1,109 thousand tonnes. Sustainable shipment volumes were due to high capacity utilisation rates of equipment, producing downstream products. ? The increase in the volume of shipments of cold-rolled products for Q3 2019 by 9.5% q-o-q was mainly due to the completion of equipment maintenance in Q2 2019 and continued high demand on the domestic market. ? In Q3 2019, the shipment volume of Mill 5000 products decreased by 10.9% q-o-q and amounted to 256 thousand tonnes amid 100% capacity utilisation rate. This decrease was due to the equipment overhaul in Q3 2019. ? In 9M 2019, the volume of shipments of Mill 5000 thick plate increased by 31.6% y-o-y and amounted to 810 thousand tonnes due to strong demand for large diameter pipes from the oil and gas industry. ? In Q3 2019, shipments of galvanised steel decreased by 3.2% q-o-q and amounted to 327 thousand tonnes. This decrease was due to a more complex sales mix and the increase in sales of polymer-coated steel by 10.2% q-o-q. ? In 9M 2019, shipments of galvanised steel grew by 22 thousand tonnes, or 2.4% y-o-y, due to high demand from the automotive and construction industries on the domestic market, as well as a decrease in semi-finished rolled products for polymer coated steel, since galvanised steel delivered higher margins. ? In 9M 2019, shipments of polymer-coated steel declined by 14.3% y-o-y to 228 thousand tonnes mainly due to higher volumes of galvanised steel. ? The average selling price, expressed in US dollars, for Q3 2019 decreased by 1.5% q-o-q and amounted to USD 616 per tonne. This decrease was due to a significant correction in global steel prices. MMK - Lysvensky Metallurgical Plant (thousand tonnes) Q3 2019 Q2 2019 % 9M 2019 9M 2018 % Finished products, 66 74 -11.0% 201 194 3.5% including: Galvanised steel 21 3 534.5% 26 4 516.9% Galvanised steel 39 68 -42.4% 163 178 -8.6% with polymer coating Galvanised steel 6 3 113.5% 12 11 5.9% with decorative coating (SteelArt) ? Finished products output decreased q-o-q in Q3 2019 as a result of the increase in sales (up 12% q-o-q), including of the stocks of finished products from the warehouses. ? Output growth in 9M 2019 compared to 9M 2018 was due to the implementation of a programme to promote construction products, including SteelArt. Steel segment (Turkey) (thousand tonnes) Q3 2019 Q2 2019 % 9M 2019 9M 2018 % ??? Metalurji 188 197 -4.3% 561 565 -0.7% finished products, including: Flat hot-rolled 2 8 -68.3% 18 40 -56.0% products HVA products, 186 189 -1.6% 543 525 3.5% including: Galvanised steel 146 160 -8.8% 435 410 6.2% Polymer-coated 40 29 38.1% 108 116 -6.1% steel ??? Metalurji 82 58 41.1% 298 430 -30.7% finished products from ??? steel ? Sales of finished products for Q3 2019 amounted to 188 thousand tonnes, down 4.3% q-o-q, mainly due to lower sales of hot-rolled steel. ? Despite the challenging economic situation in Turkey, the volume of sales of commercial products for 9M 2019 was flat y-o-y. The company was able to maintain the sales volume due to higher sales of HVA products and the reorientation of sales towards export. ? The continued challenging economic situation and external headwinds, along with a sharp acceleration of price drops at the end of the quarter, continue to negatively affect the demand for finished products and prices on both local and foreign markets. MMK Coal (thousand tonnes) Q3 2019 Q2 2019 % 9M 2019 9M 2018 % Coking coal 1,092 978 11.6% 3,533 3,699 -4.5% mining Coking coal 1,091 916 19.1% 3,429 4,188 -18.1% processing Mined 983 786 25.0% 3,171 3,600 -11.9% Purchased 109 116 -6.2% 244 571 -57.3% Toll 14 -100.0% 14 17 -17.6% Coking coal 629 487 29.2% 1,893 2,220 -14.8% concentrate ? The volume of coking coal production in Q3 2019 increased by 11.6% q-o-q and amounted to 1,092 thousand tonnes, as there were no maintenance works during the quarter. ? The increase in coal concentrate production by 29.2% q-o-q in Q3 2019 was due to measures aimed at productivity growth and the process of ramping up the beneficiation plant to its design capacity following the reconstruction. ? The volume of coking coal production in 9M 2019 decreased by 4.5% y-o-y to 3,533 thousand tonnes due to mine face operations in the area of mining and geological breaches and the beneficiation plant reconstruction. ? The decrease in coal concentrate production by 14.8% q-o-q in 9M 2019 was due to maintenance works and equipment adjustment at the beneficiation plant. It is expected that the plant will reach its full design capacity in Q4 2019. Outlook The Company's management expects that the seasonally weak business activity coupled with a significant correction in global prices will affect MMK Group's performance in Q4 2019. The impact of these negative factors should be partly offset by higher operational efficiency and high capacity utilisation of high-margin production units. MMK is one of the world's largest steel producers and a leading Russian metals company. The company's operations in Russia span the entire value chain from iron ore processing to downstream production of rolled steel. MMK produces an extensive range of steel products with a predominant share of high-value-added products. In 2018, the company produced 12.7 million tonnes of crude steel and 11.7 million tonnes of commercial steel products. MMK Group had sales in 2018 of USD 8,214 million and EBITDA of USD 2,418 million. Contacts Investor Relations Department: +7 3519 25-24-48 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.: 23438 EQS News ID: 890175 End of Announcement EQS News Service
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October 15, 2019 04:07 ET (08:07 GMT)