EquityStory.RS, LLC-News: ChelPipe Group / Key word(s): Annual Results
ChelPipe Group Announces Its 2019 Financial Results
2020-02-21 / 10:12 MSK
The issuer is solely responsible for the content of this announcement.
21 February
ChelPipe Group Announces Its 2019 Financial Results
PJSC "Chelyabinsk Pipe Plant" (ChelPipe Group), a leading Russian steel pipe
producer and provider of integrated solutions to companies in the oil&gas
and energy sector, announces its consolidated financial results for 2019 in
accordance with International Financial Reporting Standards (IFRS).
FY 2019 financial highlights
- Revenue increased by 7.5% and reached a record amount of RUB 192,278
million thanks to steady revenue growth from sales of steel pipes at
international markets;
- Gross profit increased by 22.4% to RUB 54,191 million due to the
expansion of the Company's product line, excellent results in the LDP
(large-diameter pipe) segment and growing profitability in Seamless
Industrial and Seamless OCTG;
- Adjusted EBITDA[1] increased by 12.8% to RUB 31,828 million. Adjusted
EBITDA (EBITDA) margin increased by 0.8 p.p. comparing to 2018 and reached
16.6%;
- Free cash flow[2] increased by 10.6% to RUB 11,123 million as result of
increase of EBITDA, which has largely been converted into cash flow.
- Capital expenditures amounted to RUB 7,558 million with an increase of
37.6% from the previous as a result of Company's focus on projects aimed
at transformation of the Group into a client-centric company,
digitalisation, and carrying out projects to improve operational
efficiency and sustainability initiatives.
- Net debt[3] / EBITDA ratio was 2.1x at the end of 2019 comparing to 2.4x
at the end of 2018.
2020 outlook
- ChelPipe Group plans to focus on achieving the key goals outlined in its
2024 strategy: improving operational efficiency, customer experience and
developing offers to its clients by gradually increasing its presence in
adjacent markets and expanding the geography of shipments.
- The Company intends to continue increasing its share of high value-added
(HVA) products in order to increase marginal profit.
- ChelPipe Group has established a minimum target for dividend payouts in
2020 and 2021 of at least RUB 7.5 billion each year in accordance with the
Company's approved dividend policy. Dividends declaration and payment will
be carried out in accordance with resolutions of corporate governance
bodies, including decision of General Shareholders Meeting.
Boris Kovalenkov, CEO of ChelPipe Group, said:
"In 2019, ChelPipe Group delivered sustained growth in financial performance
driven to a significant extent by the Company's export strategy and
operational excellence programme. The Company reports a rise in both EBITDA
and EBITDA margin. We expect that vertical integration in the seamless pipe
segment and focus on developing the high-margin niche product range will
allow the Group to maintain its strong financial position going forward.
We were able to maintain a high degree of cash conversion - 80% on average
and up to 95% for individual projects in the LDP segment - thanks to earlier
investments in major overhauls of our production capacities. Last year, we
continued our efforts to reduce debt burden and to optimise our credit
portfolio. The Company successfully tapped the international bond market by
placing Eurobonds with a coupon of 4.50% p.a. and high share of
international investors - 72%.
ChelPipe Group continues to focus on building a client-centric business and
remains committed to our METAllurgy corporate philosophy based on the
principles of sustainable development and a balance among the interests of
all stakeholders: customers, investors, shareholders, employees and
society."
Key financial and operating results for 2019 and 2018
(in RUB million, unless 2019 2018 Change, %
otherwise stated)
Financial results
Revenue 192,278 178,840 7.5%
Gross profit 54,191 44,286 22.4%
Operating profit 22,543 20,126 12.0%
Net profit 9,955 7,726 28.9%
EBITDA 31,828 28,223 12.8%
EBITDA margin, % 16.6 15.8 0.8 p.p.
Free cash flow 11,123 10,057 10.6%
CAPEX 7,558 5,492 37.6%
Financial position (as of 31 December)
2019 2018 Change, %
Net debt 67,060 68,421 (2)%
Net debt/ EBITDA 2.1x 2.4x -
Operating results
Pipe shipments, kt, 2,070 1,916 8.0%
including:
To the Russian market 1,334 1,417 (5.9)%
For export 736 499 47.5%
Revenue and profit
ChelPipe Group's revenue reached a record high during the reporting period.
One of the key drivers was the sale of products manufactured by the pipe and
trunk pipeline division for major infrastructure projects abroad.
While the Company has maintained its volume of pipe shipments since 2017,
revenue over the past two years has grown by 21.5% due to an increase in the
share of HVA products.
The increase in gross profit was driven by the expansion of the Company's
product line, excellent results in the LDP (large-diameter pipe) segment and
growing profitability in Seamless Industrial and Seamless OCTG.
EBITDA and EBITDA margin
EBITDA amounted to RUB 31,828 million for 2019 with an increase of 12.8%.
ChelPipe Group's EBITDA margin increased by 0.8 p.p. to 16.6% thanks to
vertical integration, a focus on the production of HVA products and the
positive impact of the Company's operational efficiency programme.
CAPEX
ChelPipe Group completed the implementation of large-scale projects to
develop state-of-the-art production facilities. The Company's investments
are currently aimed at developing niche HVA products, implementing
client-centric transformation programmes, expanding digitalisation and
improving operational efficiency, as well as implementing sustainability
initiatives.
Financial position
As of the end of 2019, net debt amounted to RUB 67,060 million. Net debt/
EBITDA ratio was 2.1x, which is in line with the Company's strategy to
consistently reduce its debt burden up until the end of 2024. In the
reporting period, the Company successfully placed its first-ever issue of
Eurobonds in the amount of USD 300 million, which made it possible to
optimise the Company's loan portfolio.
Dividends
ChelPipe Group declared dividends twice in 2019: RUB 4.7 billion based on
2018 results (paid in 2019) and RUB 3.0 billion based on 9M 2019 results
(paid in 2020). In the beginning of 2020, the Company approved a new
dividend policy, according to which dividends will be paid out at least
twice a year - the amount will depend on the Company's debt burden. This
decision is aimed at increasing both the Company's shareholder value and
shareholder return.
Highlights following the reporting period
? On 31 January 2020, ChelPipe Group's Board of Directors approved the
Group's development strategy to 2024, which aims to ensure consistent and
sustainable business growth by transforming the Group into a
client-centric company.
? On 31 January 2020, ChelPipe Group's Board of Directors approved a new
dividend policy.
Media contacts
ChelPipe Group
Head of ChelPipe Group's press service
Tatyana Cherepanova
+7 495 775-35-55 ext. 44 89
+7 982 610 85 07
T.Cherepanova@chelpipe.ru
EM
Denis Denisov
+7 985 410 35 44
denisov@em-comms.com
About ChelPipe Group
ChelPipe Group is one of the 10 largest pipe manufacturers in the world. The
company produces about 2 million tonnes of pipe products per year, selling
64% of its production in Russia and exporting the remaining 36% to 52
countries around the world (according to 2019 results).
The Group stands out among Russian players thanks to its production range
and highly diversified client portfolio. The company produced 18% of all
pipes manufactured by Russian companies in 2019. Its market share for
large-diameter pipes and oil country tubular goods, both high-margin
sectors, was 31% and 19%, respectively.
ChelPipe Group comprises iron and steel plants such as Chelyabinsk Pipe
Plant, Pervouralsk New Pipe Plant, a complex of warehouses supplying the
Group's pipe products to Russian regions, a company specialising in sourcing
and processing of scrap metal (META), facilities producing pipeline
equipment (SOT, ETERNO, MSA (Czech Republic)), and the Rimera Group
responsible for oilfield services.
Thanks to the use of safe technologies and materials, ChelPipe Group's
modernised enterprises have a minimal environmental impact and produce
environmentally friendly products. The company supports social projects and
provides conditions that allow its employees to enjoy a healthy lifestyle.
This Press Release does not constitute or form part of, and should not be
construed as, any offer to sell or issue or invitation to purchase or
subscribe for, or any solicitation of any offer to purchase or subscribe
for, any securities of Public Joint Stock Company "Chelyabinsk Pipe Plant"
(the "Company" and together with its consolidated subsidiaries the "Group"),
nor shall it or any part of it nor the fact of its distribution form the
basis of, or be relied on in connection with, any contract or investment
decision in relation thereto nor does it constitute a recommendation
regarding the securities of the Company.
The information in this Press Release may include forward-looking
statements, which are based on current expectations, projections and
assumptions about future events. These forward-looking statements include
all matters that are not historical facts. These forward-looking statements
as well as those included in any other information discussed in the Press
Release are subject to known or unknown risks, uncertainties and assumptions
about the Group and its investments, including, among other things, the
development of its business, its growth plan, trends in its operating
industry, its future capital expenditures and acquisitions. In light of
these risks, uncertainties and assumptions, the events in the
forward-looking statements may not occur and actual results, performance or
achievements may materially differ from any future results, performance or
achievements that may be expressed or implied in this Press Release.
No representation or warranty is made that any forward-looking statement
will come to pass or that any forecast results will be achieved. There are a
number of factors that could cause actual results and developments to differ
materially from those expressed or implied by these statements and
forecasts. Forward-looking statements speak as of the date of this Press
Release and no one undertakes to release any update or revision of any such
forward looking statement, whether as a result of new information, future
events or otherwise. No statement in this Press Release is intended to be a
profit forecast. Accordingly, undue reliance should not be placed on any
forward-looking statement contained in this Press Release.
Certain information contained in this Press Release is subject to rounding
adjustments. Accordingly, any discrepancies between the totals and the sums
of the amounts listed are due to rounding. Certain financial information and
operating data relating to the Group contained in this Press Release has not
been audited and in some cases is based on management information and
estimates, and is subject to change. This Press Release also includes
certain non-IFRS measures, which have not been subject to a financial audit
for any period and which may differ materially from similarly-titled
measures used by other companies.
The information in this Press Release has not been independently verified.
The information and opinions contained in this Press Release are provided as
at the date of the Press Release and are subject to amendment, completion
and change without notice. In giving this Press Release, neither the
Company, nor any of their respective subsidiary undertakings or affiliates,
or its or their respective directors, officers, employees, advisers or
agents, undertakes any obligation to amend, correct or update this Press
Release or to provide the recipient with access to any additional
information that may arise in connection with it.
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[1] Adjusted EBITDA is determined as profit/loss adjusted by finance income
and costs, income tax, depreciation and amortization, foreign exchange
gain/loss, change in fair value of derivatives, gain/loss on disposal of
subsidiaries, gain/loss on disposal of property plant and equipment and
intangible assets, impairment of loans and interest receivable, impairment
of assets (property plant and equipment, intangible assets, advances for
capital construction and intangible assets), impairment of goodwill, social
and charity expenses not related to operating activities.
[2] Free cash flow is a net cash generated from operating activities less
the cash paid for acquisition of property, plant and equipment and
intangible assets.
[3] Net debt is a total amount of non-current and current borrowings
recognized in the consolidated statement of financial position less cash and
cash equivalents.
2020-02-21 MSK Dissemination of a Corporate News, transmitted by
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Language: English
Company: ChelPipe Group
5, Lesnaya St., Bld. V
125047 Moskow
Russia
Phone: +7 (495) 775 35 55
E-mail: info@chelpipe.ru
Internet: https://chelpipegroup.com
ISIN: XS2010044548, US16325LAA52
Listed: Foreign Exchange(s) Moscow
EQS News ID: 980757
End of News EquityStory.RS, LLC News Service
980757 2020-02-21 MSK
(END) Dow Jones Newswires
February 21, 2020 02:12 ET (07:12 GMT)
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