PAO Severstal (SVST)
Severstal reports Q2 & H1 2020 operational results
13-Jul-2020 / 09:01 MSK
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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 Q2 & H1 2020 operational results
Moscow, Russia - 13 July 2020 - 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 Q2 & H1 2020.
Q2 2020 GROUP HIGHLIGHTS
· Hot metal output decreased 3% q/q to 2.33 mln tonnes in Q2 2020 (Q1
2020: 2.41 mln tonnes) due to maintenance works at BF#1, #4 and #5.
· Crude steel production decreased 2% q/q to 2.81 mln tonnes in Q2 2020
(Q1 2020: 2.85 mln tonnes) as a result of the decline in hot metal output.
· Consolidated steel product sales decreased 7% q/q to 2.55 mln tonnes in
Q2 2020 (Q1 2020: 2.75 mln tonnes) reflecting lower crude steel production
and a higher portion of export sales, which have a longer realisation
period. In addition the Company increased stock of finished goods at the
end of the quarter.
· The share of steel export shipments remained high at 44% (Q1 2020: 45%)
in response to a slowdown in domestic demand caused by lockdown measures
implemented in Russia.
· The share of high value-added (HVA) products within the sales portfolio
amounted to 43% in Q2 2020 (Q1 2020: 42%), reflecting a higher level of
colour coated shipments and lower sales of semi-finished products and hot
rolled coil.
· Coking coal concentrate sales volumes from Vorkutaugol increased 34% q/q
to 1.28 mln tonnes in Q2 2020 as a result of planned production growth.
· Iron ore pellet sales decreased 15% to 2.53 mln tonnes (Q1 2020: 2.97
mln tonnes). In response to weaker pricing dynamics for pellets in Q2
2020, Karelsky Okatysh reallocated a portion of its volumes into iron ore
concentrate, achieving a higher rate of end-to-end efficiency of internal
consumption at CherMK.
· Iron ore concentrate sales volumes increased 30% q/q to 1.90 mln tonnes
(Q1 2020: 1.47 mln tonnes) driven by production growth at Karelsky
Okatysh, and a recovery in production levels following a planned decline
in Q1 at Olcon.
H1 2020 GROUP HIGHLIGHTS
· Hot metal output increased 2% y/y in H1 2020 to 4.74 mln tonnes (H1
2019: 4.67 mln tonnes) driven by reduced maintenance downtime and higher
energy efficiency rates. Crude steel production decreased to 5.66 mln
tonnes (H1 2019: 6.10 mln tonnes) following the sale of the Balakovo
mini-mill in 2019.
· Iron ore concentrate sales volumes increased 24% y/y to 3.37 mln tonnes
(H1 2019: 2.73 mln tonnes) primarily reflecting the ramp-up of the
Yakovlevskiy mine and higher production levels at Karelsky Okatysh.
· Coking coal concentrate sales volumes from Vorkutaugol increased 12% y/y
driven by planned production growth.
· The share of HVA products in the sales mix declined 2 ppts to 43% in H1
2020 reflecting higher sales volumes of semi-finished products and hot
rolled coil.
· The average steel selling prices for H1 2020 declined from 9% to 23%
across the product range reflecting global benchmark dynamics.
SUMMARY OF KEY PRODUCTION, SALES VOLUMES
Production, Q2 2020 Q1 2020 Change, % H1 2020 H1 2019 Change, %
thousands of
tonnes
Crude Steel 2,807 2,850 (2%) 5,657 6,101 (7%)
(Russian
Steel)
Hot metal 2,331 2,410 (3%) 4,741 4,667 2%
(Russian
Steel)
Sales Q2 2020 Q1 2020 Change, % H1 2020 H1 2019 Change, %
volumes,
thousands of
tonnes
Coking coal 1,276 951 34% 2,227 1,989 12%
concentrate
Iron ore 2,532 2,967 (15%) 5,499 5,731 (4%)
pellets
Iron ore 1,904 1,469 30% 3,373 2,729 24%
concentrate
Total steel 2,551 2,749 (7%) 5,300 5,669 (7%)
products
(Consolidate
d)
Total steel 2,561 2,759 (7%) 5,320 5,691 (7%)
products
(Russian
Steel)
High value Q2 2020 Q1 2020 Change, % H1 2020 H1 2019 Change, %
added steel
products, %
Severstal 43% 42% 1 ppts 43% 45% (2 ppts)
(Consolidate
d)
Severstal 43% 42% 1 ppts 43% 45% (2 ppts)
Russian
Steel
SEVERSTAL'S CONSOLIDATED SALES (NET OF INTERCOMPANY SALES)
Sales volumes, Q2 2020 Q1 Change, % H1 2020 H1 Change,
thousands of 2020 2019 %
tonnes
Coal: 370 387 (4%) 757 920 (18%)
Coking coal 104 65 60% 169 265 (36%)
concentrate
Steam coal 266 322 (17%) 588 655 (10%)
Iron ore: 1,511 1,661 (9%) 3,172 3,342 (5%)
Iron ore 1,461 1,527 (4%) 2,988 2,790 7%
pellets
Iron ore 50 134 (63%) 184 552 (67%)
concentrate
Semi-finished 100 192 (48%) 292 190 54%
products
Rolled 2,084 2,170 (4%) 4,254 4,624 (8%)
products:
Hot - rolled 1,179 1,197 (2%) 2,376 2,142 11%
coil
Hot - rolled 219 252 (13%) 471 458 3%
plate
Cold - rolled 198 210 (6%) 408 517 (21%)
coil
Galvanised and 196 219 (11%) 415 491 (15%)
metallic coated
coil
Colour coated 113 98 15% 211 243 (13%)
coil
Long products 179 194 (8%) 373 773 (52%)
Downstream 367 387 (5%) 754 855 (12%)
products:
Metalware 135 146 (8%) 281 266 6%
products
Large diameter 25 19 32% 44 203 (78%)
pipes
Other tubes, 207 222 (7%) 429 386 11%
pipes, formed
shapes
SEVERSTAL RESOURCES
· Coking coal concentrate sales volumes from Vorkutaugol increased 34% q/q
to 1.28 mln tonnes in Q2 2020 as a result of planned production growth.
· Iron ore pellet sales decreased 15% to 2.53 mln tonnes (Q1 2020: 2.97
mln tonnes). In response to weaker pricing dynamics for pellets in Q2
2020, Karelsky Okatysh reallocated a portion of its volumes into iron ore
concentrate, achieving a higher rate of end-to-end efficiency of internal
consumption at CherMK.
· Iron ore concentrate sales volumes increased 30% q/q to 1.90 mln tonnes
(Q1 2020: 1.47 mln tonnes) driven by production growth at Karelsky
Okatysh, and a recovery in production levels following a planned decline
in Q1 at Olcon.
Sales Q2 2020 Q1 2020 Change, % H1 2020 H1 2019 Change, %
volumes,
thousands
tonnes
Coal: 1,542 1,273 21% 2,815 2,644 6%
Coking coal 1,276 951 34% 2,227 1,989 12%
concentrate
Steam coal 266 322 (17%) 588 655 (10%)
Iron ore: 4,436 4,436 0% 8,872 8,460 5%
Iron ore 2,532 2,967 (15%) 5,499 5,731 (4%)
pellets
Iron ore 1,904 1,469 30% 3,373 2,729 24%
concentrate
SEVERSTAL RUSSIAN STEEL ('RSD')
· RSD steel product sales decreased 7% q/q to 2.56 mln tonnes in Q2 2020
(Q1 2020: 2.76 mln tonnes), reflecting lower crude steel production and a
higher portion of export sales, which have a longer realisation period. In
addition the Company increased stock of finished goods at the end of the
quarter.
· The share of steel export shipments remained high at 44% (Q1 2020: 45%)
in response to a slowdown in domestic demand caused by lockdown measures
implemented in Russia.
· The share of high value-added (HVA) products within the sales portfolio
amounted to 43% (Q1 2020: 42%), reflecting the increase in colour coated
shipments and lower sales of semi-finished products and hot rolled coil.
· LDP sales volumes remained low in Q2 2020 at 25,000 tonnes, due to
specifics of the product mix and the accumulation of stock levels at the
Izhora Pipe Mill (ITZ), which are due for realisation in H2 2020. In July
2020, ITZ won a tender to supply PAO Gazprom with 320,000 tonnes of large
diameter pipes in 2021-2022. In response to a contraction in domestic
demand the Company expects to reallocate a portion of its sales volumes to
export destinations in H2 2020.
· The weighted average selling price for the whole range of steel products
in Q2 2020 declined by just 4%, despite the weaker price dynamics of
global benchmarks. Severstal successfully maintained higher average
selling prices over the period as a result of its customer-focused
approach, the flexibility of its distribution channels and the high
proportion of HVA products within its portfolio.
Sales volumes, Q2 2020 Q1 Change, % H1 2020 H1 Change,
thousands of 2020 2019 %
tonnes
Total steel 2,561 2,759 (7%) 5,320 5,691 (7%)
products
Semi-finished 100 192 (48%) 292 190 54%
products
Rolled 2,093 2,179 (4%) 4,272 4,644 (8%)
products:
Hot - rolled 1,178 1,198 (2%) 2,376 2,142 11%
coil
Hot - rolled 219 252 (13%) 471 458 3%
plate
Cold - rolled 198 210 (6%) 408 517 (21%)
coil
Galvanised and 196 219 (11%) 415 491 (15%)
metallic coated
coil
Colour coated 113 98 15% 211 243 (13%)
coil
Long products 189 202 (6%) 391 793 (51%)
Downstream 368 388 (5%) 756 857 (12%)
products:
Metalware 135 147 (8%) 282 268 5%
products
Large diameter 25 19 32% 44 203 (78%)
pipes
Other tubes, 208 222 (6%) 430 386 11%
pipes, formed
shapes
Sales price, Q2 2020 Q1 Change, % H1 2020 H1 Change,
$/tonne 2020 2019 %
Semi-finished 388 388 0% 388 433 (10%)
products
Hot - rolled 417 435 (4%) 427 504 (15%)
coil
Hot-rolled 545 607 (10%) 578 647 (11%)
plate
Cold - rolled 528 582 (9%) 556 609 (9%)
coil
Galvanised and 643 633 2% 638 720 (11%)
metallic coated
coil
Colour coated 790 774 2% 782 889 (12%)
coil
Long products 417 429 (3%) 423 468 (10%)
Metalware 837 884 (5%) 862 965 (11%)
products
Large diameter 778 794 (2%) 785 1,021 (23%)
pipes
Other tubes, 477 523 (9%) 500 577 (13%)
pipes, formed
shapes
Q2 & H1 2020 ESG (ENVIRONMENTAL, SOCIAL, GOVERNANCE) HIGHLIGHTS
· During the COVID-19 pandemic, minimising health risks to our employees
is Severstal's key priority. Our preventive and protective measures
include remote working where possible, limiting movement around sites,
sanitation and disinfection, and temperature checking on arrival at work.
We are continuing to purchase and distribute personal protective
equipment, i.e. masks, respirators, safety glasses, hand sanitisers.
· The LTIFR* for H1 2020 increased by 20% y/y to 0.85 (H1 2019: 0.71). At
the same time, the number of incidents with contractors decreased to 16 in
H1 2020 from 22 in H1 2019.
· Tragically, there were four fatal incidents in Q1 2020: three of our
staff members and one contractor. In Q2 2020 there were no fatalities. Two
of our employees died when methane was emitted during degassing activity
at the Vorkutinskaya mine. We are investigating each of these cases in
detail and taking preventative measures to ensure that similar incidents
do not take place in the future.
Health and Q2 2020 Q1 2020 Change, H1 H1 2019 Change,
Safety % 2020 %
LTIFR 0.89 0.81 10% 0.85 0.71 20%
· At Severstal Russian Steel, total emissions of air pollutants remained
almost unchanged in H1 2020 at 142,700 tonnes (H1 2019: 142,500 tonnes).
This reflected a 2.8 times increase in the sulphur content of Olenegorsk
iron ore concentrate but also the sale of Mini-Mill Balakovo in 2019. Air
pollutant emissions per tonne of steel products increased in H1 2020 by 8%
y/y to 24.9 kg per tonne of steel.
· At Severstal Resources, total emissions of air pollutants fell by 1% y/y
in H1 2020 to 99,500 tonnes (H1 2019: 100,400 tonnes).
Environment** Q2 2020 Q1 2020 Change, H1 2020 H1 Change,
% 2019** %
*
Atmospheric 66.4 76.3 (13%) 142.7 142.5 0%
emission of
pollutants,
thousand
tonnes
(Russian
Steel)
Atmospheric 45.3 54.2 (16%) 99.5 100.4 (1%)
emission of
pollutants,
thousand
tonnes
(Severstal
Resources)
Specific 23.3 26.4 (12%) 24.9 23.1 8%
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 regulations and
is reported to the relevant Russian authorities on an annual basis and
reviewed by them
***Minor changes in data for H1 2019 took place due to a review of
methodology and emissions intensity calculation per tonne of liquid steel,
instead of crude steel
**** Steel production at Cherepovets Steel Mill and Severstal Long Product
Mill Balakovo (the latter for Jan - Jul 2019)
Notes:
1) Sales prices are stated on EXW basis;
2) Segmental data includes intercompany sales;
3) Semi-finished products include pig iron, slabs, billets, ingots, steel
casting and forgings;
4) 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 Leach / Emily Dillon
T: +44 (0) 20 7796 4133
***
P?? Severstal is one of the world's leading vertically integrated steel and
steel related mining companies, with assets in Russia, Latvia and Poland.
Severstal is listed on RTS and MICEX and the company's GDRs are traded on
the LSE. Severstal reported revenue of $8,157 million and EBITDA of $2,805
million in 2019. Severstal's crude steel production in 2019 reached 11.8
million tonnes. www.severstal.com [1]
ISIN: US8181503025
Category Code: TST
TIDM: SVST
LEI Code: 213800OKDPTV6K4ONO53
Sequence No.: 75195
EQS News ID: 1091839
End of Announcement EQS News Service
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