DJ PJSC Magnitogorsk Iron and Steel Works: MMK Group Trading Update for Q4 and FY 2019
PJSC Magnitogorsk Iron and Steel Works (MMK)
PJSC Magnitogorsk Iron and Steel Works: MMK Group Trading Update for Q4 and
FY 2019
21-Jan-2020 / 08:31 CET/CEST
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.
21 January 2020
Magnitogorsk, Russia
MMK Group Trading Update for Q4 and FY 2019
PJSC Magnitogorsk Iron & Steel Works' ("MMK", or "the Company") (MICEX-RTS:
MAGN; LSE: MMK), one of the world's largest steel producers, is pleased to
announce its Trading Update for Q4 and FY 2019.
Q4 2019 HIGHLIGHTS
· Pig iron output increased by 1.7% quarter-on-quarter (q-o-q) due to
improved productivity of blast furnaces.
· Steel output was down by 3.9% q-o-q due to the seasonal decline in
demand.
· MMK Group's total sales of finished products totalled 2,781 thousand
tonnes, down 4.0% q-o-q.
· MMK Group's sale of HVA products were 1,296 thousand tonnes, down 8.6%
q-o-q. The share of HVA products in total sales amounted to 46.6%. The
volume of shipments of HVA products were down q-o-q due to replenishment
of coated steel stocks at warehouses and seasonally weak demand.
· MMK Coal's coal concentrate production totalled 721 thousand tonnes, up
14.7% q-o-q.
FY 2019 HIGHLIGHTS
· Pig iron output increased by 1.6% year-on-year (y-o-y). This was due to
a reduction in the volume of maintenance work at blast furnace facilities
compared to last year.
· Steel output was down by 1.6% y-o-y due to decreased demand for steel as
a result of the reconstruction of Mill 2500.
· MMK Group's total sales of finished products totalled 11,316 thousand
tonnes, down 3.0% y-o-y.
· MMK Group's sales of HVA products were 5,477 thousand tonnes, up 0.9%
y-o-y. The share of HVA products in total sales increased to 48.4%.
· MMK Coal's coal concentrate production totalled 2,614 thousand tonnes,
down 12.9% y-o-y.
MARKET REVIEW
· In the end of Q4 2019, there was a recovery of prices on the global
market for hot-rolled steel amid an increase in consumer demand, with
shipments being scheduled for early 2020. The improved export prices
environment resulted in growth in spot prices for hot-rolled steel in
Russia in January 2020. However, the growth rate was slower compared to
the global market due to seasonal factors.
· Global iron ore market: iron ore supply is recovering from a fall in Q2
2019. Exports from Australia rose to a very high level in Q4 2019, but
exports from Brazil remain an issue. However, supply and demand in the
current period are almost even.
· Russian iron ore market: supply exceeds demand, commodity companies are
forced to increase spot sales to China in order not to reduce the
production of raw materials, and demand from the EU steelmakers remains
reduced. Base prices are following Chinese indices.
MMK GROUP: CONSOLIDATED RESULTS
(thousand tonnes)
Q4 Q3 % FY FY %
2019 2019 2019 2018
Crude steel production 3,070 3,194 -3.9% 12,463 12,664 -1.6%
Pig iron production 2,604 2,560 1.7% 10,013 9,860 1.6%
Coal concentrate 721 629 14.7% 2,614 3,001 -12.9%
production
Iron ore production 678 646 5.0% 2,769 3,185 -13.1%
Finished products sales, 2,781 2,897 -4.0% 11,316 11,664 -3.0%
including:
Long products 313 340 -8.0% 1,352 1,390 -2.7%
Flat hot-rolled products 1,173 1,139 3.0% 4,486 4,849 -7.5%
HVA products, including: 1,296 1,418 -8.6% 5,477 5,426 0.9%
Thick plate (mill 5000) 211 251 -15.7% 1,036 779 32.9%
Flat cold-rolled 260 247 5.3% 1,006 1,209 -16.7%
products
Downstream products, 824 920 -10.4% 3,435 3,438 -0.1%
including:
Tin plate 30 36 -16.0% 141 133 5.5%
Galvanised steel 426 489 -12.9% 1,813 1,743 4.0%
Polymer-coated steel 150 184 -18.5% 666 697 -4.5%
Band 33 27 20.8% 120 143 -16.4%
Formed section 39 49 -19.3% 167 169 -1.1%
Pipes 16 18 -11.7% 57 63 -9.4%
Metalware 117 100 16.7% 416 409 1.7%
Other metal products 13 17 -22.2% 56 81 30.5%
Share of HVA products 46.6% 48.9% 48.4% 46.5%
MMK GROUP HIGHLIGHTS BY KEY SEGMENTS
PJSC «MMK»
(thousand tonnes)
Q4 Q3 % FY FY %
2019 2019 2019 2018
Crude steel production 3,070 3,194 -3.9% 12,463 12,664 -1.6%
Pig iron production 2,604 2,560 1.7% 10,013 9,860 1.6%
Finished products, 2,709 2,787 -2.8% 10,958 11,411 -4.0%
including:
Long products 404 470 -14.1% 1,783 1,795 -0.7%
Flat hot-rolled products 1,257 1,207 4.1% 4,810 5,236 -8.1%
HVA products, including: 1,048 1,109 -5.5% 4,365 4,380 -0.3%
Thick plate (mill 5000) 209 256 -18.5% 1,019 828 23.0%
Flat cold-rolled 339 322 5.0% 1,275 1,430 -10.9%
products
Downstream products, 501 531 -5.6% 2,071 2,121 -2.4%
including:
Tin plate 32 35 -7.8% 143 133 7.6%
Galvanised steel 311 327 -5.0% 1,287 1,269 1.4%
Polymer-coated steel 68 77 -11.5% 296 339 -12.6%
Band 32 26 22.0% 114 139 -18.4%
Formed section 31 40 -22.7% 152 168 -9.2%
Pipes 28 26 4.6% 79 73 7.6%
Shipments by market:
Russia + CIS 2,274 2,541 -10.5% 9,701 9,029 7.4%
Export 435 246 77.0% 1,256 2,381 -47.2%
· The volume of shipments in Q4 2019 declined by 2.8% q-o-q and amounted
to 2,709 thousand tonnes, mainly due to the seasonal business slowdown on
the domestic market. The volume of sales of finished products in FY 2019
declined by 4.0% y-o-y and amounted to 10,958 thousand tonnes. This was
mainly due to the reconstruction of hot-rolling Mill 2500 during 2019.
· Despite the decline in domestic shipments in Q4 2019 by 10.5% q-o-q to
2,274 thousand tonnes, in FY 2019 the Company increased domestic shipments
by 7.4% y-o-y to 9,701 thousand tonnes, thus increasing the share of sales
on the domestic market (including CIS) to 88.5% from 79% in 2018.
· The volume of shipments of long products in Q4 2019 declined by 14.1%
q-o-q and amounted to 404 thousand tonnes. This was due to seasonally weak
demand for construction products, as well as the capital overhaul of the
Company's long products equipment in Q4 2019. Sales of long products in FY
2019 declined by 0.7% y-o-y and amounted to 1,783 thousand tonnes. At the
same time, the capacity utilization rate of long products equipment was
close to 100%.
· The volume of sales of hot-rolled products for Q4 2019 grew by 4.1%
q-o-q and amounted to 1,257 thousand tonnes, which was due to the increase
of export sales as a result of lower domestic demand and since there were
no capital overhauls during the quarter. The volume of shipments of
hot-rolled products for FY 2019 declined by 8.1% q-o-q and amounted to
4,810 thousand tonnes, which was due to the replacement of roughing train
as part of the reconstruction of Mill 2500 in Spring/Summer 2019.
· The volume of shipments of HVA products for Q4 2019 were down 5.5% q-o-q
due to replenishment of coated steel stocks at warehouses and seasonally
weak demand. The volume of shipments of HVA products for FY 2019 were
nearly flat y-o-y and amounted to 4,365 thousand tonnes, which was due to
lower shipments of cold-rolled products amid maintenance of the rolling
equipment and higher sales of Mill 5000's thick plate.
· The increase in the volume of shipments of cold-rolled products for Q4
2019 by 5.0% q-o-q to 339 thousand tonnes was mainly due to the completion
of a stage of reconstruction at hot-rolling Mill 2500. The decrease in the
volume of shipments of cold-rolled products for FY 2019 by 10.9% y-o-y to
1,275 thousand tonnes was mainly due to the lack of semi-finished rolled
products due to the reconstruction of hot-rolling Mill 2500.
· In Q4 2019, the shipment volume of Mill 5000 products decreased by 18.5%
q-o-q and amounted to 209 thousand tonnes amid 100% capacity utilisation
rate. This decrease was due to the more complex product mix. In FY 2019,
the Company had a record shipment volume of Mill 5000 products which
amounted to 1,019 thousand tonnes, up 23.0% y-o-y thanks to high demand in
large-diameter pipes from the oil and gas industry.
· In Q4 2019, shipments of galvanised steel decreased by 5.0% q-o-q and
amounted to 311 thousand tonnes. This decrease was due to a more complex
sales mix and replenishment of warehouse stocks amid seasonally weak
demand from the construction sector. In FY 2019, sales of galvanised steel
increased by 1.4% y-o-y and amounted to 1,287 thousand tonnes. This
increase was due to high demand from the construction sector on the
domestic market and increased shipments to carmakers.
· Replenishment of warehouse stocks and seasonally weak demand for
construction products had a negative impact on the shipments of
polymer-coated steel in Q4 2019, which were down by 11.5% and amounted to
68 thousand tonnes. In FY 2019, sales of polymer-coated steel declined by
12.6% y-o-y to 296 thousand tonnes mainly since galvanised steel delivered
higher margins.
(USD / tonne)
Q4 Q3 % FY FY %
2019 2019 2019 2018
Average price per tonne: 534 616 -13.3% 589 621 -5.2%
Long products 452 493 -8.3% 485 541 -10.4%
Flat hot-rolled products 446 551 -19.1% 513 555 -7.6%
HVA products, including: 670 740 -9.5% 715 734 -2.6%
Thick plate (mill 5000) 705 752 -6.3% 731 744 -1.6%
Flat cold-rolled products 564 631 -10.6% 600 621 -3.4%
Downstream products, 727 800 -9.1% 778 806 -3.5%
including:
Tin plate 798 840 -5.0% 809 803 0.7%
Galvanised steel 705 777 -9.3% 758 784 -3.3%
Polymer-coated steel 869 961 -9.6% 933 983 -5.1%
Band 668 703 -5.0% 677 665 1.8%
Formed section 837 841 -0.5% 821 809 1.5%
Pipes 494 583 -15.3% 544 623 -12.7%
· The average selling price, expressed in US dollars, for FY 2019
decreased by 5.2% y-o-y and amounted to USD 589 per tonne. This decrease
was mainly due to a significant correction in global steel prices which
peaked in mid-Q4 2019.
Lysvensky Metallurgical Plant
(thousand tonnes)
Q4 Q3 % FY FY %
2019 2019 2019 2018
Finished products, including: 60 66 -9.6% 260 249 4.7%
Galvanised steel 10 21 -55.0% 35 7 430.3%
Galvanised steel with polymer 46 39 17.4% 209 230 -8.9%
coating
Galvanised steel with 4 6 -28.2% 16 12 29.7%
decorative coating (SteelArt)
· The decrease in production of finished products by 9.6% in Q4 2019 q-o-q
was linked to the seasonal decline in demand for construction metal
products.
· Production growth in FY 2019 amounted to 4.7% y-o-y due to the
implementation of the promotional programme for construction products,
including SteelArt.
MMK Metalurji (Turkey)
(thousand tonnes)
Q4 Q3 % FY FY %
2019 2019 2019 2018
Finished products, including: 158 188 -15.9% 720 767 -6.2%
Flat hot-rolled products 2 2 -19.9% 20 42 -53.8%
HVA products, including: 156 186 -15.8% 700 724 -3.4%
Galvanised steel 121 146 -17.3% 556 566 -1.9%
Polymer-coated steel 36 40 -10.4% 144 158 -8.7%
Finished products from ??? 78 82 -5.0% 376 513 -26.8%
steel
· Sales of finished products in Q4 2019 totalled 158 thousand tonnes (down
15.9% q-o-q). This fall was mainly due to a fall in sales of galvanised
steel for export and on the domestic market.
· Decrease in sales volumes for FY 2019 by 6.2% y-o-y was mainly due to
the difficult economic situation in the Turkish market. Despite this, the
Company managed to partially compensate for the weakening of domestic
demand by reorienting sales to the European and Middle Eastern markets,
increasing export shipments by 33% y-o-y.
MMK Coal
(thousand tonnes)
Q4 Q3 % FY FY %
2019 2019 2019 2018
Coking coal mining 1,337 1,092 22.4% 4,870 4,927 -1.1%
Coking coal processing 1,281 1,091 17.4% 4,710 5,640 -16.5%
Mined 1,267 983 29.0% 4,438 4,962 -10.6%
Purchased 14 109 -87.2% 258 660 -61.0%
Toll 14 17 -19.5%
Coking coal concentrate 721 629 14.7% 2,614 3,001 -12.9%
· Coking coal production in Q4 2019 increased by 22.4% q-o-q and amounted
to 1,337 thousand tonnes. This increase was related to the complex
geological conditions in Q3 2019. In FY 2019, coking coal production
decreased by 1.1% y-o-y, amounting to 4,870 thousand tonnes. This decrease
was due to mine face operations in the area of mining and geological
breaches.
· Coal concentrate production in Q4 2019 increased by 14.7% q-o-q as a
result of the completion of reconstruction at the beneficiation plant.
Reduction of coking coal concentrate output for FY 2019 by 12.9% y-o-y was
due to technical re-equipment and adjustments at the beneficiation plant
after reconstruction in Q2 2019.
OUTLOOK
· The Company expects a favourable pricing environment on the domestic
market in Q1 2020. This should be supported by favourable pricing
conditions on the Asian markets, as well as a significant increase in
prices for rolled steel in Turkey as a result of higher prices for
imported ferrous scrap, limited supply of hot-rolled steel in the Black
Sea region and a number of other positive factors.
· The Company expects that prices for key raw materials in Q1 2020 will be
similar to the end of 2019 levels, which should be supported by
stabilization on the iron ore market following the 2019 peaks, as well as
the supply surplus on the coal concentrate market.
· The Company's management expects that the above-mentioned factors will
have a positive impact on MMK Group's performance in Q1 2020, despite
seasonally weak demand, as well as reconstruction work at hot-rolling Mill
2500 which will be initiated in March 2020 in line with the current
investment programme.
· The Company's performance should be also supported by measures to
increase operational efficiency and high capacity utilization of
high-margin production units.
About MMK
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.
??? is an industry leader in terms of production costs and margin. MMK Group
had revenue in 2018 of USD 8,214 mln and EBITDA of USD 2,418 mln. MMK's debt
load is the lowest for the industry. Net debt/EBITDA ratio was -0.08? at the
end of 2018. The Company's investment-grade rating is confirmed by the
leading global rating agencies Fitch, Moody's, S&P.
MMK's ordinary shares are traded on Moscow Exchange, while its depositary
receipts are traded on the London Stock Exchange. Free float amounts to
15.7%.
Key coming events in 2020 (Financial calendar [1])
5 February Q4 and FY 2019 IFRS financials
14 April Q1 2020 Trading Update
29 April Q1 2020 IFRS financials
14 July Q2 and 6M 2020 Trading Update
29 July Q2 and 6M 2020 IFRS financials
13 October Q3 and 9M 2020 Trading Update
22 October Q3 and 9M 2020 IFRS financials
Investor contacts
Veronika Kryachko
???.: +7 (3519) 25-75-01
E-mail: kryachko.vs@mmk.ru
Media contacts
Dmitry Kuchumov Oleg Egorov
???.: +7 (499) 238-26-13 ???.: +7 (499) 238-26-13
E-mail: kuchumov.do@mmk.ru E-mail: egorov.oa@mmk.ru
ISIN: US5591892048
Category Code: TST
TIDM: MMK
LEI Code: 253400XSJ4C01YMCXG44
Sequence No.: 41654
EQS News ID: 957513
End of Announcement EQS News Service
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(END) Dow Jones Newswires
January 21, 2020 02:31 ET (07:31 GMT)
