DJ PJSC Magnitogorsk Iron and Steel Works: MMK Group financial results for Q1 2021
PJSC Magnitogorsk Iron and Steel Works (MMK) PJSC Magnitogorsk Iron and Steel Works: MMK Group financial results for Q1 2021 21-Apr-2021 / 09:05 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. =---------------------------------------------------------------------------------------------------------------------- MMK Group IFRS FINANCIAL RESULTS for q1 2021 PJSC Magnitogorsk Iron & Steel Works ("MMK", or the "Group") (MICEX-RTS: MAGN; LSE: MMK), one of the world's largest steel producers, is pleased to announce its financial results for Q1 2021. 21 APRIL 2021 Magnitogorsk, Russia
MMK GROUP FINANCIAL RESULTS
Q1 2021
USD mln Q1 2021 Q4 2020 % Q1 2021 Q1 2020 % Revenue 2,185 1,852 18.0% 2,185 1,710 27.8% EBITDA 726 474 53.2% 726 442 64.3% EBITDA margin, % 33.2% 25.6% 7.6 p.p. 33.2% 25.8% 7.4 p.p. Profit for the period 477 313 52.4% 477 131 264.1% Free cash flow1 125 125 0.0% 125 115 8.7% Net debt 145 -88 - 145 30 - Net debt/EBITDA 0.08x - 0.06x - 0.08x 0.02x - Net working capital 1,050 745 40.9% 1,050 882 19.0% L3M Net working capital/revenue 12.0% 10.1% 1.9 p.p. 12.0% 12.9% - 0.9 p.p.
1 - Free cash flow is calculated as net cash from operating activities plus interest received and proceeds from disposal of PPE and intangible assets, net of purchase of PPE and intangible assets (CAPEX).
- MMK Group's revenue increased by 18.0% quarter-on-quarter (q-o-q) to USD 2,185 mln, which reflects a growth in steel prices in Russia and globally. KEY FINANCIAL INDICATORS - EBITDA for Q1 2021 grew to USD 726 mln, up 53.2% q-o-q, reflecting revenue growth fuelled by favourable market developments. EBITDA margin increased by 7.6 p.p. to 33.2%. FOR Q1 2021 VS Q4 2020 - Net profit was USD 477 mln, up 52.4% q-o-q as a result of higher margins. - FCF for the quarter remained flat at USD 125 mln, driven by working capital build-up amid higher prices for metal products and an increase in the share of export sales with longer sales realisation period, as well as restocking ahead of the construction season. - MMK Group's revenue increased by 27.8% year-on-year (y-o-y), driven by higher sales due to the completion of the modernisation at Hot-Rolling Mill 2500 and an upward trend in market prices for metal products. KEY FINANCIAL INDICATORS - EBITDA increased by 64.3% y-o-y reflecting higher revenues. EBITDA margin was up 7.4 p.p. to 33.2%. FOR Q1 2021 VS Q1 2020 - Net profit for Q1 2021 more than tripled year-on-year reflecting the increased business margins amid the recovering global markets. - FCF for the quarter increased by 8.7% year-on-year and amounted to USD 125 mln.
COMMENT BY MMK'S CEO
Dear shareholders and colleagues, CEO PAVEL SHILYAEV « The gradual recovery of Russia's economy that took shape at the end of the last year continued into the first quarter of 2021. The government's stimulus package launched last year continued to support all sectors of the economy, which in turn had a positive impact on apparent steel use and helped us demonstrate strong financial performance, corroborating once again that we are on a right track in our strategic development. Ensuring a safe working environment remains our top priority. For instance, our LTISR substantially decreased in the first quarter year-on-year, witnessing a notable decline in the injury rate. I am pleased to note that our efforts to foster and improve our sustainability practices are recognised by wider community. In March 2021, the ISS international rating agency changed its ESG Corporate Rating outlook for MMK from "D+" to "C". The rating upgrade reflects our continued strong performance and commitment to UN corporate responsibility and sustainability initiatives. In the first quarter, demand for steel was significantly driven by the continuing effect of the pent-up demand generated last year and supported by economic stimulus packages launched by governments around the world. In Russia, key steel consumers during the first quarter included the automotive industry and the construction sector. As for our sales structure, during the first quarter our domestic sales (Russia and CIS) were 73% and sales of premium products - 40% of total sales. During the first quarter, we continued working on the new coke-oven battery project as well as performing preparatory works for the Cold-Rolling Mill 1700 start-up. The launch of the mill is tentatively slated for May. The revamped mill will boost our annual output of premium products by 0.8 mln tonnes. Previously announced plans for CAPEX expected in 2021 remain unchanged at USD 1 bn. Financial stability remains a top priority for the Company. MMK's debt leverage remains among the industry's lowest at 0.08x Net Debt/EBITDA as of the end of the first quarter. The Group's high level of available liquidity (USD 1.4 bn) provides it with a strong cushion to successfully meet its strategic commitments. MMK consistently generates sufficient cash flow and reiterates its commitment to our dividend policy. Reliable dividend payouts are a key element of our operations, aimed at creating more value for all shareholders of the Company. Considering the Q1 2021 results, coupled with our confidence in our financial outlook amid the further economic recovery both in Russia and globally, the Board of Directors can recommend that MMK shareholders approve a dividend of RUB 1.795 per ordinary share (212% of FCF) for Q1 2021, in line with the Company's strategic commitment to maximize TSR. »
MMK GROUP'S PERFORMANCE
ACROSS CORE SEGMENTS
STEEL SEGMENT RUSSIA
USD mln Q1 2021 Q4 2020 % Q1 2021 Q1 2020 % Revenue 2,105 1,734 21.4% 2,105 1,602 31.2% EBITDA 707 447 58.2% 707 421 67.9% EBITDA margin, % 33.6% 25.8% 7.8 p.p. 33.6% 26.3% 7.3 p.p. Cash cost of slab, USD/t 340 285 19.3% 340 267 27.3% + 21.4% Q-o-Q REVENUE The Russian steel segment's revenue for Q1 2021 increased by 21.4% to USD 2,105 mln driven by the growth in global prices for metal products and the continuing strong demand. The increase in revenue by 31.2% + 58.2% Q-o-Q y-o-y was caused by the global business recovery and favourable pricing. EBITDA The segment's EBITDA for Q1 2021 grew by 58.2% q-o-q to USD 707 mln, as a result of growing sales margins amid an increase in global prices for metal products. EBITDA grew by 67.9% y-o-y, following the increase in revenue. The Group's Q1 2021 profitability saw a positive boost to the sum of USD 11 mln for the quarter from the operational efficiency and cost optimisation programmes under our updated strategic initiatives. The slab cash cost in Q1 2021 increased by 19.3% to USD 340 per tonne, mainly reflecting the rising + 19.3% Q-o-Q prices for key raw materials. The slab cash cost grew by 27.3% y-o-y. SLAB CASH COST
STEEL SEGMENT TURKEY
USD mln Q1 2021 Q4 2020 % Q1 2021 Q1 2020 % Revenue 166 165 0.6% 166 113 46.9% EBITDA 27 21 28.6% 27 3 9x EBITDA margin, % 16.3% 12.7% 3.6 p.p. 16.3% 2.7% 13.6 p.p. + 0.6% Q-o-Q REVENUE The Turkish steel segment's revenue for Q1 2021 almost remained flat q-o-q to USD 166 mln, as higher steel prices fully offset lower sales. Revenue grew by 46.9% y-o-y, reflecting higher sales volumes and a favourable market environment. The favourable environment coupled with measures to improve business efficiency increased the segment's EBITDA for Q1 2021 by 28.6% to USD 27 mln. Year-on-year, the Turkish steel segment's EBITDA grew ninefold to USD 27 mln due to the last year's low base caused by the pandemic and lockdown restrictions.
COAL MINING SEGMENT
USD mln Q1 2021 Q4 2020 % Q1 2021 Q1 2020 % Revenue 60 46 30.4% 60 54 11.1% EBITDA 25 7 257.1% 25 16 56.3% EBITDA margin, % 41.7% 15.2% 26.5 p.p. 41.7% 29.6% 12.1 p.p. + 30.4% Q-o-Q The coal mining segment's revenue for Q1 2021 increased by 30.4% q-o-q to USD 60 mln as a result of REVENUE growing sales and prices for coal concentrate amid favourable market conditions. The segment's revenue grew 11.1% y-o-y. Supported by higher prices for coal concentrate, the segment's EBITDA for Q1 2021 more than tripled to USD 25 mln. The segment's EBITDA grew 56.3% y-o-y.
CASH FLOW AND FINANCIAL POSITION
OF MMK GROUP
- In Q1 2021, CAPEX decreased by 38.0% q-o-q to USD 142 mln, following the project implementation schedule, and grew 9.2% y-o-y. - The increase in export sales and inventory stockpiling ahead of the construction season driven by CAPEX AND higher steel prices resulted in a USD 360 mln working capital build-up in Q1 2021, with the net CASH FLOW working capital to revenue ratio for Q1 2021 rising by 1.9 p.p. to 12.0%. - FCF for Q1 2021 remained flat quarter-on-quarter at USD 125 mln, as a result of an increase in working capital. FCF increased by 8.7% year-on-year. - The Group's total debt for Q1 2021 was USD 955 mln, down from USD 970 mln in Q4 2020. The Group's debt slightly grew year-on-year from USD 899 mln. DEBT - As of the end of Q1 2021, the Group held USD 810 mln in cash and deposits in its accounts. BURDEN - The Group's net debt as of the end of Q1 2021 totalled USD 145 mln, while its net debt/EBITDA ratio was 0.08?, one of the lowest among leading global steelmakers. Dividends - The Group remains committed to its dividend policy and previous statements. Considering that CAPEX for the year will exceed the normalised level, and given our high margins, the Board of Directors is OF MMK GROUP convinced that the Group sits in a stable position and can recommend the shareholders to approve the payment of a dividend of RUB 1.795 per share (212% of FCF for the quarter) for Q1 2021. - The favourable conditions in global markets coupled with seasonal growth in demand in Russia will positively impact the Group's sales in Q2 2021. In May 2021, the reverse Cold-Rolling Mill 1700 is expected to be commissioned. Given our 100% utilisation rate of premium products facilities, we expect to see a further improvement in the structure of the Group's sales portfolio. - The start of the construction season in Russia along with positive dynamics of global steel prices on OUTLOOK the back of the remaining deficit in international markets will support the growth of MMK Group's steel product prices in Q2 2021. - CAPEX for Q2 2021 is expected to grow q-o-q, in line with the implementation schedule for projects pursued under the Group's strategy. - Operational excellence initiatives under our updated strategy will further boost the Group's profitability in Q2 2021. MMK Management will hold a conference call to discuss these financial results - Date: CONFERENCE CALL 21 April 2021 - Time: 4:30 pm Moscow time 2:30 pm London time 9:30 am New York time Russia UK USA Local access +7 495 213 1767 +44 330 336 9125 +1 929 477 0402 Toll free 8 800 500 9283 0800 358 6377 888 204 4368 - Conference ID: in Russian - 9577666 in English - 2042374 - Webcast: To register for the webcast, please use this link. The call recording will be available for seven days on the following numbers: Call recording ID: in Russian - 9577666 in English - 2042374 Russia UK USA Local access 8 10 800 2702 1012 +44 207 660 0134 +1 719 457 0820 - A presentation of the financial results and the IFRS financial statements can be found at: http:// mmk.ru/for_investor/financial_statements/ ABOUT MMK Please MMK is one of the world's largest steel producers and a leading Russian metals company. The Group's subscribe to operations in Russia include a large steel-producing unit encompassing the entire production chain, from our the preparation of iron ore to downstream processing of rolled steel. MMK turns out a broad range of steel official MMK products, with a predominant share of premium products. In 2020, MMK produced 11.6 mln tonnes of crude channel on steel and sold 10.8 mln tonnes of commercial steel products. Telegram to be the ??K is an industry leader in terms of production costs and margins. Group revenue in 2020 totalled USD first to 6,395 mln, with an EBITDA of USD 1,492 mln. MMK boasts the industry's lowest debt burden. Net debt/EBITDA know ratio was -0.06? at the end of 2020. The Group's investment-grade rating is confirmed by the leading about key global rating agencies Fitch, Moody's and S&P. MMK news. MMK's ordinary shares are traded on the Moscow Exchange, while its depositary receipts are traded on the London Stock Exchange. Free float amounts to 15.7%. INVESTOR RELATIONS DEPARTMENT +7 915 380 6266 kryachko.vs@mmk.ru KEY UPCOMING EVENTS IN 2021 Financial calendar ESG DEPARTMENT 27 April Integrated Annual Report 2020. Yaroslava Vrubel 27-28 April Non-deal roadshow (NDR), online +7 982 282 9682 vrubel.ys@mmk.ru 17-18 May WOOD Prague Spring Simposium: ESG, online 18-20 May BofA Global Metals, Mining & Steel Conference, online COMMUNICATIONS DEPARTMENT 19-21 May Sberbank CIB Annual Investor Conference, online +7 985 219 2874 kuchumov.do@mmk.ru Oleg Egorov +7 903 971 8837 egorov.oa@mmk.ru ----------------------------------------------------------------------------------------------------------------------- ISIN: US5591892048 Category Code: QRF TIDM: MMK LEI Code: 253400XSJ4C01YMCXG44 Sequence No.: 100178 EQS News ID: 1186937 End of Announcement EQS News Service =------------------------------------------------------------------------------------ Image link: https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=show_t_gif&application_id=1186937&application_name=news
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April 21, 2021 03:06 ET (07:06 GMT)