DJ PJSC Magnitogorsk Iron and Steel Works: MMK Group Financial Results for Q4 and 12M 2021
PJSC Magnitogorsk Iron and Steel Works (MMK) PJSC Magnitogorsk Iron and Steel Works: MMK Group Financial Results for Q4 and 12M 2021 28-Feb-2022 / 08:45 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.
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MMK Group IFRS FINANCIAL PJSC Magnitogorsk Iron & Steel Works ("MMK", or the "Group") (MICEX-RTS: MAGN; LSE: MMK),
RESULTS for q4 and 12M one of the world's largest steel producers, is pleased to announce its financial results for
2021 Q4 and 12M 2021.
28 february 2022
Magnitogorsk, Russia
MMK GROUP FINANCIAL RESULTS
Q4 2021
USD mln
Q4 2021 Q3 2021 % 12M 2021 12M 2020 %
Revenue 3,398 3,031 12.1 11,869 6,395 85.6
EBITDA 972 1,157 - 16.0 4,290 1,492 187.5
EBITDA margin, % 28.6% 38.2% - 9.6 p.p. 36.1% 23.3% 12.8 p.p.
Profit for the period 794 819 - 3.1 3,121 604 416.7
Free cash flow1 534 409 30.6 1,613 557 189.6
Net debt - 393 141 - - 393 - 88 -
Net debt/EBITDA - 0.09x 0.04x - - 0.09x - 0.03x -
Net working capital 1,432 1,643 -12.8 1,432 745 92.2
L3M Net working capital/revenue 10.5% 13.6% - 3.1 p.p. 10.5% 10.7% - 0.2 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 12.1% quarter-on-quarter (q-o-q) to USD 3,398 mln, which
reflects an increase in sales volumes partially offset by a correction in global steel prices.
KEY FINANCIAL -- EBITDA declined by 16.0% q-o-q to USD 972 mln, mainly due to lower global steel prices.
INDICATORS EBITDA margin decreased by 9.6 p.p. to 28.6%.
FOR Q4 2021
VS Q3 2021 -- Net profit declined by 3.1% q-o-q to USD 794 mln. At the same time, the effect of the price
decrease was partially offset by the restoration of the provision for the impairment of the Turkish
asset in the amount of USD 250 mln.
-- Free cash flow grew 30.6% q-o-q to USD 534 mln, reflecting an inflow from working capital
amid lower inventories.
-- MMK Group's revenue for 12M 2021 increased by 85.6% year-on-year (y-o-y) to USD 11,869 mln,
reflecting higher sales due to the completion of Hot-Rolling Mill 2500's modernisation and an upward
trend in global price indices on the steel market.
KEY FINANCIAL -- In 2021, EBITDA more than doubled year-on-year to USD 4,290 mln, reflecting stronger
INDICATORS revenue and a low base in 2020. EBITDA margin was up 12.8 p.p. to 36.1%.
FOR 12M 2021
VS 12M 2020 -- Net profit for 12M 2021 increased significantly year-on-year to USD 3,121 mln, mainly
reflecting increased production volumes and sales efficiency amid positive trends in global markets.
-- Free cash flow for 12M 2021 more than doubled to USD 1,613 mln due to stronger EBITDA.
COMMENT BY MMK'S CEO
Dear shareholders and colleagues,
CEO
PAVEL «
SHILYAEV The occupational health and safety of MMK employees remains our top priority. Our open and proactive
communication with MMK employees and contractors on the importance of vaccination continues to yield
results. By the end of the fourth quarter, about 90% of all employees had been vaccinated, while the
percentage of boosted employees was about 28%.
All structural units of MMK focus on improving their occupational safety culture while continuously tackling the root
causes of accidents, which reflects a decrease in the LTIFR by 6.1% to 0.62 y-o-y.
Looking at our environmental responsibility, specific air emissions fell 7.8% y-o-y in 2021 to 14.1 kg per tonne of
crude steel, driven by an increase in the share of scrap in the steelmaking charge on the back of increased EAF steel
output. I am proud to note that in the fourth quarter MMK ranked first in the ESG transparency ranking of companies and
banks by the rating agency Expert RA.
By ramping up Hot-Rolling Mill 2500 to full capacity in 2021, we boosted our sales of hot-rolled products by 37% y-o-y,
which was also reflected in our sales mix by region and by product. The share of domestic sales (Russia and CIS) was
72%, down 9 p.p. y-o-y, amid recovery of traditional export volumes of hot-rolled products. At the same time, despite
higher sales of premium products in absolute terms, their share in the 2021 sales mix was 42%, down 7.5 p.p. y-o-y amid
increased output of hot-rolled products. We expect the growth in demand from the pipe industry observed in the fourth
quarter to continue through 2022, supporting sales of premium products.
In Q4 2021, we continued the construction of the coke-oven battery No. 12 and decided to employ syngas injection
technology to reduce CO2 emissions in partnership with SMS Group during the construction of Blast Furnace No. 11. Apart
from our operational excellence goals, we expect that the commissioning of both facilities will reduce our CO2
emissions by more than 2.8 mln tonnes, which will bring us even closer to our decarbonisation targets.
Financial stability remains a top priority for the Company. MMK's debt leverage remains among the industry's lowest at
-0.09x Net Debt/EBITDA as of the end of the fourth quarter, while the Group's high level of available liquidity (USD
3.1 bn) provides it with a strong cushion to successfully meet its strategic commitments.
MMK consistently generates a sufficient cash flow and reiterates its commitment to its stated 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 Q4 2021 results, coupled with our confidence in our
financial outlook, the Board of Directors can recommend that MMK shareholders approve a dividend of RUB
3.550 per ordinary share (100% of FCF) for Q4 2021, in line with the Company's strategic commitment to
maximise TSR.
»
MMK GROUP'S PERFORMANCE
ACROSS CORE SEGMENTS
STEEL SEGMENT RUSSIA
USD mln Q4 2021 Q3 2021 % 12M 2021 12M 2020 %
Revenue 2,956 2,860 3.4 11,100 5,972 85.9
EBITDA 749 1,050 - 28.7 3,909 1,440 171.5
EBITDA margin, % 25.3% 36.7% - 11.4 p.p. 35.2% 24.1% - 11.1 p.p.
Cash cost of slab, USD/t 431 437 - 1.4 400 269 48.7
+ 3.4% Q-o-Q
REVENUE The Russian steel segment's revenue for Q4 2021 grew 3.4% to USD 2,956 mln, driven by higher sales amid
strong demand in Russia and globally. The year-on-year increase in revenue by 85.9% to USD 11,100 mln was
driven by the global recovery in demand and a growth of market quotes.
- 28.7% Q-o-Q The segment's EBITDA for Q4 2021 declined by 28.7% q-o-q to USD 749 mln due to global price correction
and the impact of export duties. EBITDA for 12M 2021 more than doubled year-on-year to USD 3,909 mln from
EBITDA last year's low base, reflecting positive dynamics of demand and market quotes.
The Group's Q4 2021 profitability saw a positive boost from the operational efficiency and cost
optimisation programmes under our updated strategic initiatives. In Q4 2021, the impact of these
programmes totalled USD 28 mln.
The slab cash cost in Q4 2021 decreased by 1.4% to USD 431 per tonne, driven by an increase in the share
of iron ore in the blast furnace charge amid falling global prices. In 2021, the slab cash cost grew
- 1.4% Q-o-Q 48.7% y-o-y to USD 400 per tonne, reflecting a surge in the prices for key raw materials driven by
macroeconomic trends.
SLAB CASH
COST
STEEL SEGMENT TURKEY
USD mln Q4 2021 Q3 2021 % 12M 2021 12M 2020 %
Revenue 452 330 37.0 1,184 518 128.6
EBITDA 59 67 - 11.9 203 34 497.1
EBITDA margin, % 13.1% 20.3% - 7.2 p.p. 17.1% 6.6% 10.6 p.p.
+ 37.0% Q-o-Q
The Turkish steel segment's revenue for Q4 2021 increased by 37.0% q-o-q to USD 452 mln, reflecting
REVENUE higher sales amid the restart of hot-rolled coil production. The segment's revenue for 2021 more than
doubled to USD 1,184 mln due to stronger sales amid the launch of HRC production and a favourable global
pricing environment.
The segment's EBITDA dropped 11.9% to USD 59 mln in Q4 2021, driven by a correction in steel prices amid
a slowdown in business activity. The segment's EBITDA for 2021 totalled USD 203 mln, almost six times up
- 11.9% Q-o-Q from the previous year's low base, backed by stronger steel demand and favourable global market
conditions.
EBITDA
USD mln Q4 2021 Q3 2021 % 12M 2021 12M 2020 %
Revenue 192 116 65.5 445 179 148.6
EBITDA 118 62 90.3 235 13 1,707.7
EBITDA margin, % 61.5% 53.4% 8.1 p.p. 52.8% 7.3% 45.5 p.p.
+ 65.5% Q-o-Q
REVENUE The coal mining segment's revenue for Q4 2021 increased by 65.5% q-o-q to USD 192 mln as a result of
higher coal concentrate prices amid favourable global pricing. In 2021, revenue more than doubled
year-on-year to USD 445 mln, spurred on by the recovery of business activity in Russia and globally, as
well as growing global coal prices.
The segment's EBITDA for Q4 2021 almost doubled to USD 118 mln, supported by the continued upward trend
in global prices for coal concentrate. Our 2021 EBITDA grew to USD 235 mln thanks to higher coal
concentrate prices and sales amid the global market recovery.
CASH FLOW AND FINANCIAL POSITION
OF MMK GROUP
-- In Q4 2021, CAPEX increased by 77.9% q-o-q to USD 418 mln, reflecting the implementation
and financing schedule for projects pursued under the Group's strategy. Year-on-year, CAPEX grew
63.1% to USD 1,132 mln.
CAPEX AND -- In Q4 2021, the net working capital to revenue ratio decreased by 3.1 p.p. to 10.5%,
CASH FLOW primarily due to depleted inventories of finished products amid steady demand from customers.
-- FCF for Q4 2021 grew 30.6% to USD 534 million, primarily driven by an inflow from working
capital amid lower inventories. In 2021, FCF almost tripled year-on-year to USD 1,613 mln.
-- The Group's total debt for Q4 2021 was USD 971 mln, down from USD 1,040 mln in Q3 2021. The
debt burden for 12M 2021 stood flat year-on-year (USD 970 mln).
DEBT -- At year-end 2021, the Group held USD 1,364 mln in cash and deposits in its accounts.
BURDEN
-- The Group's net debt in 2021 dipped below zero to negative USD 393 mln, while its net debt/
EBITDA ratio was negative 0.09x, the lowest among leading global steelmakers.
Dividends -- The Group remains committed to its dividend policy and previous statements. Considering our
high margins, the Board of Directors is convinced that the Group sits in a stable position and can
OF MMK GROUP recommend the shareholders to approve the payment of a dividend of RUB 3.550 per share (100% of FCF
for the quarter) for Q4 2021.
-- Higher steel output at the Turkish asset in Q1 2022 will have a positive impact on the
Group's sales volumes, offsetting the costs to overhaul blast furnace and converter facilities in
Magnitogorsk.
-- Stable demand in Russia combined with high utilisation rates for facilities manufacturing
OUTLOOK premium products will positively impact the Group's sales mix.
-- CAPEX for Q1 2022 is expected to decrease significantly q-o-q, in line with the
implementation schedule for projects pursued under the Group's strategy.
-- Operational excellence measures implemented under MMK's updated strategic initiatives will
further boost the Group's profitability in Q1 2022.
MMK Management will hold a conference call to discuss these financial results
-- Date:
CONFERENCE CALL 28 February 2022
-- Time:
4:30 pm Moscow time
1:30 pm London time
8:30 am New York time
Russia UK USA
Local access +7 495 646 5137 +44 (0) 330 336 9601 +1 646 828 8073
Toll free 8 10 800 2865 5011 0800 279 6877 800 289 0720
-- Conference ID:
in Russian - 3424814
in English - 2306036
-- 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 - 3424814
in English - 2306036
Russia UK USA
Local access 8 10 800 2702 1012 +44 (0) 207 660 0134 +1 719 457 0820
-- A presentation of the financial results and the IFRS financial statements can be found at:
https://mmk.ru/en/investor/results-and-reports/financial-results/
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 2021, MMK produced 13.6 mln tonnes of crude channel on
steel and sold 12.5 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
11,869 mln, with an EBITDA of USD 4,290 mln. MMK boasts the industry's lowest debt burden. Net debt/EBITDA know
ratio was -0.09? at the end of 2021. 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 20.2%.
INVESTOR RELATIONS KEY UPCOMING EVENTS IN 2022
DEPARTMENT
Financial calendar
Veronika Kryachko
+7 915 380 6266
kryachko.vs@mmk.ru
23-24 March Non-deal roadshow (NDR), online
ESG DEPARTMENT Yaroslava Vrubel +7 982 282 9682 vrubel.ys@mmk.ru COMMUNICATIONS DEPARTMENT Dmitry Kuchumov +7 985 219 2874 kuchumov.do@mmk.ru Oleg Egorov +7 903 971 8837 egorov.oa@mmk.ru
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ISIN: US5591892048 Category Code: ACS TIDM: MMK LEI Code: 253400XSJ4C01YMCXG44 Sequence No.: 145559 EQS News ID: 1289345 End of Announcement EQS News Service =------------------------------------------------------------------------------------
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February 28, 2022 02:45 ET (07:45 GMT)
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