PAO Severstal (SVST)
PAO Severstal: Severstal reports Q1 2021 financial and operational results
16-Apr-2021 / 10:01 MSK
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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Severstal reports Q1 2021 financial and operational results
- EBITDA margin hits 52%; Delivering 64% EBITDA growth and 134% FCF growth q/q -
Moscow, Russia - 16 April 2021 - PAO Severstal (MOEX: CHMF; LSE: SVST), one of the world's leading steel and
steel-related mining companies, today announces its Q1 2021 operational and financial results for the period ended 31
March 2021.
CONSOLIDATED OPERATIONAL AND FINANCIAL RESULTS FOR THE FIRST QUARTERED 31 MARCH 2021
USD million, unless otherwise stated Q1 2021 Q4 2020 Change, % Q1 2021 Q1 20201 Change, %
Revenue 2,219 1,723 28.8% 2,219 1,740 27.5%
EBITDA2 1,162 710 63.7% 1,162 555 109.4%
EBITDA margin, % 52.4% 41.2% 11.2 ppts 52.4% 31.9% 20.5 ppts
Profit from operations 1,021 585 74.5% 1,021 425 140.2%
Operating margin, % 46.0% 34.0% 12.0 ppts 46.0% 24.4% 21.6 ppts
Free cash flow3 497 212 134.4% 497 54 820.4%
Net profit 721 386 86.8% 721 72 901.4%
Basic EPS4, USD 0.87 0.47 85.1% 0.87 0.09 866.7%
Net Debt/EBITDA5, x 0.52 0.84 (38.1%) 0.52 0.57 (8.8%)
LTIFR (staff)/LTIFR (staff+contractors)6 0.50/0.69 0.55 (9%)/n/a 0.50/0.69 0.81 (38%)/n/a
Crude steel production, kt 2,961 2,767 7% 2,961 2,850 4%
Hot metal production, kt 2,674 2,398 12% 2,674 2,410 11%
Total steel products sales, kt 2,630 2,441 8% 2,630 2,660 (1%)
Share of high value added steel products, % 46% 53% (7 ppts) 46% 42% 4 ppts
Notes: 1. These data include adjustments made in connection with
the change in presentation described in Severstal's
quarterly financial statements. 2. EBITDA represents profit from
operations plus depreciation and amortisation of productive assets
(including the
Group's share in depreciation and amortisation of associates and
joint ventures) adjusted for gain/(loss) on
disposals of PPE and intangible assets and its share in
associates' and joint ventures' non-operating income/
(expenses). A reconciliation of EBITDA to profit from operations
is presented in Severstal's quarterly financial
statements. 3. Free Cash Flow ("FCF") is determined as the
aggregate amount of the following items: Net cash from
operating
activities, CAPEX, proceeds from disposal of PPE and intangible
assets, interest received and dividends received. A
reconciliation of FCF to net cash from operating activities is
presented in Severstal's quarterly financial
statements. 4. Basic EPS is calculated as profit for the period
divided by the weighted average number of shares outstanding
during the period: 826 million shares for Q1 2021 and Q4 2020,
and 825 million shares for Q1 2020. 5. Net Debt/EBITDA ratio is
calculated as net debt divided by EBITDA for the last 12 months and
is included in
Severstal's quarterly financial statements. Net debt equals the
total debt less cash and cash equivalents at the
end of the reporting period. 6. LTIFR refers to Lost Time Injury
Frequency Rate, the number of lost time injuries occurring in a
workplace per 1
million hours worked. The scope covers injuries and hours worked
for staff and contractors, using the cumulative
data from the beginning of the calendar year.
Q1 2021 vs. Q4 2020 ANALYSIS: ? Crude steel production increased
7% q/q to 2.96 million tonnes (Q4 2020: 2.77 million tonnes),
driven by a higher
number of castings in Q1 2021 and an increase in the weight of
each casting. ? Hot metal output increased 12% q/q in Q1 2021 to
2.67 million tonnes (Q4 2020: 2.40 million tonnes) following
the
launch of BF#3. ? Steel product sales increased 8% q/q to 2.63
million tonnes in Q1 2021 (Q4 2020: 2.44 million tonnes)
following
higher output volumes and the completion of short-term
maintenance works in the previous quarter. ? The Company increased
its share of steel export shipments to 52% (Q4 2020: 35%) due to
the more favourable export
price dynamics and higher demand. ? The share of high
value-added (HVA) products within the sales portfolio amounted to
46% (Q4 2020: 53%) mainly
reflecting increased volumes of hot-rolled coil, long products
and semi-finished products. ? Group revenue increased by 28.8% q/q
to USD2,219 million (Q4 2020: USD1,723 million) reflecting higher
steel sales
volumes and favourable price dynamics. ? Group EBITDA increased
by 63.7% q/q to USD1,162 million (Q4 2020: USD710 million), driven
by higher revenues.
Severstal's vertically integrated business model delivered an
EBITDA margin of 52.4%, maintaining the Group's
position as the global leader by EBITDA margin in the steel
industry. ? Free Cash Flow increased by 134.4% q/q to USD497
million in Q1 2021 (Q4 2020: USD212 million), which primarily
reflects
positive changes in net working capital q/q and higher earnings.
? Net profit totaled USD721 million (Q4 2020: USD386 million),
including a FX loss of USD47 million. ? Cash CAPEX amounted to
USD278 million (Q4 2020: USD311 million). ? Net debt declined to
USD1,589 million at the end of Q1 2021 (Q4 2020: USD2,029 million).
? Severstal is committed to returning value to its shareholders
whilst maintaining a comfortable level of debt.
Severstal's financial position remains strong with a Net
debt/EBITDA ratio of 0.52 as at the end of Q1 2021. The
Board of Directors has therefore recommended a dividend of 46.77
roubles per share for Q1 2021.
Q1 2021 vs. Q1 2020 ANALYSIS: ? Hot metal output increased 11%
y/y in Q1 2021 to 2.67 million tonnes (Q1 2020: 2.41 million
tonnes) following the
launch of BF#3. ? Crude steel production increased 4% y/y to
2.96 million tonnes (Q1 2020: 2.85 million tonnes), driven by a
higher
number of castings in Q1 2021 and an increase in the weight of
each casting. ? Steel product sales decreased 1% y/y to 2.63
million tonnes in Q1 2021 (Q1 2020: 2.66 million tonnes). ? The
Company increased its share of steel export shipments to 52% (Q1
2020: 43%) due to the more favourable export
price dynamics and higher demand. ? The share of high
value-added (HVA) products within the sales portfolio increased to
46% y/y (Q1 2020: 42%). ? Group revenue increased by 27.5% y/y to
USD2,219 million in Q1 2021 (Q1 2020: USD1,740 million) due to
stronger pricing
dynamics. ? Group EBITDA was 109.4% higher y/y at USD1,162
million (Q1 2020: USD555 million), reflecting increased revenues.
The
Group's EBITDA margin reached record high 52.4% (Q1 2020:
31.9%). ? The Company generated USD497 million of Free Cash Flow
(Q1 2020: USD54 million), mainly reflecting positive changes in
net working capital y/y and higher earnings.
FINANCIAL POSITION HIGHLIGHTS: ? At the end of Q1 2021, cash and
cash equivalents increased to USD921 million (Q4 2020: USD583
million). ? Gross debt slightly declined to USD2,510 million (Q4
2020: USD2,612 million). ? Net debt declined to USD1,589 million at
the end of Q1 2021 (Q4 2020: USD2,029 million). The Net debt/EBITDA
ratio was
0.52 at the end of Q1 2021 (Q4 2020: 0.84). Severstal's Net
debt/EBITDA ratio remains one of the lowest among steel
companies globally and allows the Company to maintain a
comfortable level of debt, whilst continuing to return
value to its shareholders. ? The Group's liquidity position
remains strong, with USD921 million in cash and cash equivalents in
addition to unused
committed credit lines and overdraft facilities of USD1,139
million, more than covering the Company's short-term
principal debt of USD718 million.
Alexander Shevelev, CEO of Severstal Management, commented:
"From Q1 2021, Severstal will begin reporting its quarterly
financial results a week earlier than previously, shortening the
gap between the end of a reporting period and the publication of
our financial results. Accordingly, in future, also with effect
from Q1, Severstal's quarterly operational and financial
performance will be issued as a single document. Severstal was one
of the first issuers in the Russian market to publish its Annual
Report at the same time as its full-year financial results.
Similarly, we are adopting global best practice of publishing
unified operational and financial results for investors'
convenience.
We will continue to report our safety performance quarterly. We
are pleased to report no fatalities with our staff in this period.
Starting Q1 2021, we will report quarterly data on the LTIFR for
our staff and contractors, and we included contractors in the scope
of previously announced safety goals, thus making them more
ambitious. I am especially proud to say that LTIFR for our staff
declined in Q1 2021 to 0.50.
Severstal's strong performance in Q1 2021 has once again
demonstrated the strength of our business model as well as the
rewards of our ongoing transformation programme. In Q1 we achieved
a record high EBITDA margin of 52.4%.
Our crude steel output and steel product sales volumes went up
7% and 8% respectively in Q1 q/q after the launch of the new blast
furnace #3 in Q4 2020 and continued internal improvements at our
existing casting machines. Increased steel products sales were
partly diverted to export markets where prices were more
attractive. We anticipate our domestic steel sales to increase in
Q2 with the start of the construction season in Russia.
The share of HVA products in our product portfolio decreased in
Q1 to a more normalised level of 46% from the one-off 53% in Q4
2020. Our long-term goal for the level of HVA in our product sales
mix remains 53%, and projects such as the Continuous pickling unit
#4 launched in Q1 2021 will support this. Our sales practices will
continue to develop, focusing on increasing shipments to Russia's
major infrastructure and industrial projects, tolling schemes, and
growing the number of small and mid-sized clients in the
portfolio".
SEVERSTAL RUSSIAN STEEL (RSD)
USD million, unless otherwise stated Q1 2021 Q4 2020 Change, % Q1 2021 Q1 20201 Change, %
Revenue 2,154 1,708 26.1% 2,154 1,733 24.3%
EBITDA 689 395 74.4% 689 370 86.2%
EBITDA margin, % 32.0% 23.1% 8.9 ppts 32.0% 21.4% 10.6 ppts
Notes: 1. These data include adjustments made in connection with
the change in presentation described in Severstal's
quarterly financial statements.
RSD topline increased by 26.1% q/q to USD2,154 million (Q4 2020:
USD1,708 million). EBITDA increased by 74.4% q/q to USD689 million
(Q4 2020: USD395 million). The EBITDA margin increased to 32.0% (Q4
2020: 23.1%).
The total non-integrated cash cost of slab production per tonne
at the Cherepovets Steel Mill in Q1 2021 increased q /q to USD372/t
(Q4 2020: USD293/t) affected by higher input cost. The integrated
cash cost of slab in Q1 2021 increased by USD25/t q/q to USD185/t
(Q4 2020: USD160/t).
Sales volumes, kt Q1 2021 Q4 2020 Change, % Q1 2021 Q1 20201 Change, %
Total steel products 2,642 2,452 8% 2,642 2,670 (1%)
Semi-finished products 259 212 22% 259 145 79%
Rolled products: 1,976 1,748 13% 1,976 2,137 (8%)
Hot - rolled coil and plate 1,192 1,025 16% 1,192 1,413 (16%)
Cold - rolled coil 257 257 0% 257 210 22%
Galvanised and metallic coated coil 275 233 18% 275 214 29%
Colour coated coil 83 98 (15%) 83 98 (15%)
Long products 169 135 25% 169 202 (16%)
Downstream products: 407 492 (17%) 407 388 5%
Metalware products 143 161 (11%) 143 147 (3%)
Large diameter pipes 60 59 2% 60 19 n/a
Other tubes, pipes, formed shapes 204 272 (25%) 204 222 (8%)
Notes: 1. These data include adjustments made in connection with
the change in presentation described in Severstal's
quarterly financial statements.
RSD sales of steel products increased by 8% q/q to 2.64 million
tonnes in Q1 2021 (Q4 2020: 2.45 million tonnes) following higher
output and completion of short-term maintenance works in the
previous quarter.
The Company increased its share of steel export shipments to 52%
(Q4 2020: 35%) due to the more favourable export price dynamics and
increased demand.
The share of high value-added (HVA) products within the sales
portfolio amounted to 46% in Q1 2021(Q4 2020: 53%) reflecting
increased volumes of hot-rolled coil, long products and
semi-finished products q/q.
Sales price, USD/tonne Q1 2021 Q4 2020 Change, % Q1 2021 Q1 20201 Change, %
Semi-finished products 527 410 29% 527 371 42%
Hot - rolled coil and plate 627 486 29% 627 468 34%
Cold - rolled coil 752 539 40% 752 582 29%
Galvanised and metallic coated coil 852 665 28% 852 635 34%
Colour coated coil 1,120 851 32% 1,120 774 45%
Long products 558 450 24% 558 429 30%
Metalware products 1,059 868 22% 1,059 884 20%
Large diameter pipes 714 770 (7%) 714 794 (10%)
Other tubes, pipes, formed shapes 718 527 36% 718 523 37%
Weighted average selling price 696 551 26% 696 523 33%
Notes: 1. These data include adjustments made in connection with
the change in presentation described in Severstal's
quarterly financial statements.
The weighted average selling price for the whole range of steel
products in Q1 2021 continued to rise, growing by 2 6% q/q
following an increase in the previous quarter. This is a result of
positive steel pricing dynamics for export destinations, where
prices reached 10-year-high values.
SEVERSTAL RESOURCES
USD million, unless otherwise stated Q1 2021 Q4 2020 Change, % Q1 2021 Q1 2020 Change, %
Revenue 747 550 35.8% 747 400 86.8%
EBITDA 525 344 52.6% 525 171 207.0%
EBITDA margin, % 70.3% 62.5% 7.8 ppts 70.3% 42.8% 27.5 ppts
Coking coal concentrate sales, kt 988 1,257 (21%) 988 951 4%
Steam coal sales, kt 310 302 3% 310 322 (4%)
Iron ore pellets sales, kt 2,645 2,830 (7%) 2,645 2,967 (11%)
Iron ore concentrate sales, kt 1,497 1,735 (14%) 1,497 1,469 2%
Sales volumes of coking coal concentrate from Vorkutaugol
decreased by 21% q/q to 0.99 million tonnes (Q4 2020: 1.26 million
tonnes) as a result of 1ZH concentrate output decline q/q affected
by long wall repositioning, partly offset by increased output of
2ZH and GZhO concentrate.
Sales volumes of iron ore pellets declined 7% to 2.65 million
tonnes (Q4 2020: 2.83 million tonnes) due to accumulated stock
volumes.
Iron ore concentrate sales volumes declined 14% to 1.50 million
tonnes (Q4 2020: 1.74 million tonnes) reflecting reduced volumes at
Olcon and Karelsky Okatysh due to seasonal factors.
Revenue from the Resources Division increased to USD747 million
in Q1 2021 (Q4 2020: USD550 million). EBITDA increased by 52.6% q/q
to USD525 million (Q4 2020: USD344 million). The EBITDA margin
increased to 70.3%.
At Vorkutaugol, the cash cost of coal concentrate per tonne
increased to USD69/t (Q4 2020: USD52/t). The cash cost of iron ore
pellets per tonne at Karelsky Okatysh increased to USD29/t (Q4
2020: USD25/t). At Olcon, the cash cost per tonne of iron ore
concentrate was USD33/t (Q4 2020: USD23/t).
DIVID
The Board of Directors is recommending a dividend of 46.77
roubles per share for Q1 2021. Approval of the dividend is expected
to take place at the Company's AGM on 21 May 2021. The record date
for participation in the AGM is 26 April 2021. The recommended
record date for the dividend payment is 1 June 2021. The approval
of the record date for the dividend payment is also expected to
take place at the Company's AGM on 21 May 2021.
OUTLOOK
The negative effect of the pandemic on the steel industry did
not last as long as expected. China, the world's biggest steel
market, grew by 10% in 2020 after the country established control
over the virus and launched stimulus measures, pushing
steel-related commodity prices upwards. The idling of some steel
capacity, low product inventory levels and supply disruptions in
other markets contributed to a significant price rally and created
a steel product deficit as a result of quickly recovering
demand.
The global iron ore market was also in deficit in Q1 2021. The
26% q/q increase in the price of 62% iron ore fines was fuelled by
strong steel production in China and seasonally lower exports from
Australia and Brazil. The coking coal benchmark price also rose by
18% in Q1 2021 due to restocking in Asia.
Despite increased volatility on international steel and mining
markets, Severstal's financial position remains strong and the
Board is confident in the company's outlook and is recommending a
dividend of 46.77 roubles per share for Q1 2021.
NOTES 1. Full financial statements are available at
http://www.severstal.com/eng/ir/results_and_reports/financial_results/
index.phtml 2. The Annual Report 2020 is available at
http://www.severstal.com/eng/ir/results_and_reports/annual_reports/
index.phtml 3. Starting from Q1 2021 Severstal's quarterly
financial results will be published a week earlier than in
previous
years, accordingly the operational and financial results will be
released at the same time in one document.
For further information, please contact:
Severstal Investor Relations
Vladimir Zaluzhsky, Elena Korotkova
T: +7 (495) 926-77-66
vladimir.zaluzhsky@severstal.com
es.korotkova@severstal.com
Severstal Public Relations
Anastasia Mishanina
T: +7 (495) 926-77-66
anastasia.mishanina@severstal.com
Severstal's financial communications agent - Hudson Sandler
Andrew Leach / Emily Dillon
T: +44 (0) 20 7796 4133
A conference call on Q1 2021 results for investors and analysts
hosted by Alexey Kulichenko, Chief Financial Officer, will be held
on 16 April 2021 at 12.00 (London)/ 14.00 (Moscow).
Conference ID: 7669050 International Dial:
+44 (0)330 336 9125 (local access)
0800 358 6377 (toll-free)
Russian Dial: +7 495 213 1767 (local access)
8 800 500 9283 (toll-free)
The call will be recorded and there will be a replay facility
available for seven days as follows:
Replay Passcode: 7669050
International Dial:
+44 (0)20 3859 5407 (local) 0 808 101 1153 (toll-free)
Russian Dial: 810 800 2702 1012 (toll-free)
***
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 MOEX and the
company's GDRs are traded on the LSE. Severstal reported revenue of
USD6,870 million and EBITDA of USD2,422 million in 2020.
Severstal's crude steel production in 2020 reached 11.3 million
tonnes. www.severstal.com
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ISIN: US8181503025
Category Code: QRF
TIDM: SVST
LEI Code: 213800OKDPTV6K4ONO53
Sequence No.: 99449
EQS News ID: 1185499
End of Announcement EQS News Service
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