PAO Severstal (SVST)
Severstal reports Q2 2019 operational results
12-Jul-2019 / 09:02 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.
Severstal reports Q2 2019 operational results
Moscow, Russia - 12 July 2019 - 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 2019.
Q2 2019 GROUP HIGHLIGHTS
· Hot metal output declined q/q in Q2 2019 to 2.30 mln tonnes (Q1 2019:
2.36 mln tonnes) due to short-term maintenance works at BF#1, BF#4 and
BF#5. Crude steel production remained almost flat at 3.06 mln tonnes (Q1
2019: 3.04 mln tonnes) mainly reflecting EAF steel output growth.
· Consolidated steel product sales remained unchanged q/q at 2.84 mln
tonnes in Q2 2019 (Q1 2019: 2.83 mln tonnes). The share of domestic sales
rose to 70% due to the increased attractiveness of domestic sales (Q1
2019: 65%).
· The share of high value-added (HVA) products within the sales portfolio
increased 2 ppts to 46% (Q1 2019: 44%), reflecting a decline in sales of
semi-finished, hot rolled coil products and higher sales of galvanised,
colour-coated and large diameter pipes (LDPs).
· Coking coal concentrate sales volumes from Vorkutaugol declined 7% due
to planned short-term modernisation works at coal beneficiation facilities
in Q2 2019. Meanwhile run-of-mine (ROM) coal production at Vorkutaugol in
Q2 2019 increased 13% q/q.
· Iron ore pellet sales increased 2% to 2.90 mln tonnes (Q1 2019: 2.83 mln
tonnes) due to seasonal factors despite a q/q decline in production.
· Iron ore concentrate sales volumes increased 10% to 1.43 mln tonnes (Q1
2019: 1.30 mln tonnes) following production growth.
H1 2019 GROUP HIGHLIGHTS
· Hot metal output increased 1% y/y in H1 2019 to 4.67 mln tonnes (H1
2018: 4.61 mln tonnes) driven by the improved efficiency of maintenance
works and the higher quality of raw materials. Crude steel production
increased to 6.10 mln tonnes (H1 2018: 6.03 mln tonnes) mainly reflecting
EAF steel output growth and higher productivity of aggregates.
· Coking coal concentrate sales volumes from Vorkutaugol increased 44% y/y
driven by coal production growth. Iron ore concentrate sales volumes
increased 3% y/y to 2.73 mln tonnes (H1 2018: 2.66 mln tonnes) mainly
reflecting ramp-up of the Yakovlevskiy mine.
· The share of HVA products remained high in H1 2019 at 45% which
primarily reflects higher sales of galvanised and colour-coated sales
following the launch of new product lines, which reached their full
utilisation rates in Q1 2019, as well as higher sales of hot rolled thick
plate y/y.
SUMMARY OF KEY PRODUCTION, SALES VOLUMES
Production, Q2 2019 Q1 2019 Change, % H1 2019 H1 2018 Change, %
thousands of
tonnes
Crude Steel 3,057 3,044 0% 6,101 6,034 1%
(Russian
Steel)
Hot metal 2,304 2,363 (2%) 4,667 4,606 1%
(Russian
Steel)
Sales Q2 2019 Q1 2019 Change, % H1 2019 H1 2018 Change, %
volumes,
thousands of
tonnes
Coking coal 958 1,031 (7%) 1,989 1,378 44%
concentrate
Iron ore 2,899 2,832 2% 5,731 5,500 4%
pellets
Iron ore 1,428 1,301 10% 2,729 2,656 3%
concentrate
Total steel 2,837 2,832 0% 5,669 5,708 (1%)
products
(Consolidate
d)
Total steel 2,848 2,843 0% 5,691 5,731 (1%)
products
(Russian
Steel)
High value Q2 2019 Q1 2019 Change, % H1 2019 H1 2018 Change, %
added steel
products, %
Severstal 46% 44% 2 ppts 45% 46% (1 ppts)
(Consolidate
d)
Severstal 46% 44% 2 ppts 45% 45% (0 ppts)
Russian
Steel
SEVERSTAL'S CONSOLIDATED SALES (NET OF INTERCOMPANY SALES)
Sales volumes, thousands Q2 2019 Q1 Change, H1 H1 Change,
of tonnes 2019 % 2019 201 %
8
Coal: 388 532 (27%) 920 746 23%
Coking coal 108 157 (31%) 265 81 n/a
concentrate
Steam coal 280 375 (25%) 655 665 (2%)
Iron ore: 1,686 1,65 2% 3,34 3,6 (7%)
6 2 06
Iron ore pellets 1,488 1,30 14% 2,79 3,2 (14%)
2 0 42
Iron ore 198 354 (44%) 552 364 52%
concentrate
Semi-finished 69 121 (43%) 190 441 (57%)
products
Rolled products: 2,313 2,31 0% 4,62 4,3 5%
1 4 85
Hot-rolled coil 1,040 1,10 (6%) 2,14 1,9 11%
2 2 32
Hot-rolled plate 225 233 (3%) 458 424 8%
Cold-rolled coil 242 275 (12%) 517 710 (27%)
Galvanised and 254 237 7% 491 416 18%
metallic coated
coil
Colour coated 141 102 38% 243 172 41%
coil
Long products 411 362 14% 773 731 6%
Downstream 455 400 14% 855 882 (3%)
products:
Metalware 140 126 11% 266 274 (3%)
products
Large diameter 106 97 9% 203 205 (1%)
pipes
Other tubes, 209 177 18% 386 403 (4%)
pipes, formed
shapes
SEVERSTAL RESOURCES
· Coking coal concentrate sales volumes from Vorkutaugol declined 7% due
to planned short-term modernisation works at coal beneficiation facilities
in Q2 2019. Meanwhile run-of-mine (ROM) coal production at Vorkutaugol in
Q2 2019 increased 13% q/q.
· Steam coal sales at Vorkutaugol decreased 25% q/q, reflecting a seasonal
slowdown in consumption at the end of the heating season.
· Iron ore pellet sales increased 2% to 2.90 mln tonnes (Q1 2019: 2.83 mln
tonnes) due to seasonal factors despite a q/q decline in production.
· Iron ore concentrate sales volumes increased 10% to 1.43 mln tonnes (Q1
2019: 1.30 mln tonnes) following seasonal output growth.
Sales Q2 2019 Q1 2019 Change, % H1 2019 H1 2018 Change, %
volumes,
thousands of
tonnes
Coal: 1,238 1,406 (12%) 2,644 2,043 29%
Coking coal 958 1,031 (7%) 1,989 1,378 44%
concentrate
Steam coal 280 375 (25%) 655 665 (2%)
Iron ore: 4,327 4,133 5% 8,460 8,156 4%
Iron ore 2,899 2,832 2% 5,731 5,500 4%
pellets
Iron ore 1,428 1,301 10% 2,729 2,656 3%
concentrate
SEVERSTAL RUSSIAN STEEL ('RSD')
· RSD steel product sales remained almost unchanged at 2.85 mln tonnes in
Q2 2019 compared with the previous quarter (Q1 2019: 2.84 mln tonnes).
· The share of domestic sales rose to 70% due to the increased
attractiveness of domestic sales (Q1 2019: 65%).
· The share of high value-added (HVA) products within the sales portfolio
increased 2 ppts to 46% (Q1 2019: 44%), driven by a decline in sales of
semi-finished, hot rolled coil products and higher sales of galvanised,
colour-coated and LDPs.
· LDP sales volumes grew 9% q/q which reflects the realisation of
accumulated stock of large diameter pipes for the Poland-Slovakia Gas
Interconnection project (Eustream) produced in 2018 and shipped in the
previous quarter. In February 2019 Izhora Pipe Mill (IPM) won several
tenders to supply PAO Gazprom with over 200,000 tonnes of large diameter
pipes. The products will be used in the development of gas transmission
capacities for the Unified Gas Supply System in the North-West Region
(NEGP), as well as the construction of the Kovykta-Chayanda section of the
Power of Siberia gas pipeline.
· Average selling prices for the majority of steel products increased in
Q2 2019 in line with benchmarks.
Sales volumes, Q2 2019 Q1 Change, % H1 2019 H1 Change,
thousands of 2019 2018 %
tonnes
Total steel 2,848 2,843 0% 5,691 5,731 (1%)
products
Semi-finished 69 121 (43%) 190 441 (57%)
products
Rolled 2,322 2,322 0% 4,644 4,408 5%
products:
Hot-rolled coil 1,040 1,102 (6%) 2,142 1,932 11%
Hot-rolled 225 233 (3%) 458 424 8%
plate
Cold-rolled 242 275 (12%) 517 710 (27%)
coil
Galvanised and 254 237 7% 491 416 18%
metallic coated
coil
Colour coated 141 102 38% 243 172 41%
coil
Long products 420 373 13% 793 754 5%
Downstream 457 400 14% 857 882 (3%)
products:
Metalware 142 126 13% 268 274 (2%)
products
Large diameter 106 97 9% 203 205 (1%)
pipes
Other tubes, 209 177 18% 386 403 (4%)
pipes, formed
shapes
Sales price, Q2 2019 Q1 Change, % H1 2019 H1 Change,
$/tonne 2019 2018 %
Semi-finished 450 423 6% 433 462 (6%)
products
Hot-rolled coil 514 494 4% 504 571 (12%)
Hot-rolled 659 635 4% 647 734 (12%)
plate
Cold-rolled 629 592 6% 609 632 (4%)
coil
Galvanised and 729 709 3% 720 759 (5%)
metallic coated
coil
Colour coated 918 849 8% 889 929 (4%)
coil
Long products 484 449 8% 468 499 (6%)
Metalware 981 948 3% 965 995 (3%)
products
Large diameter 1,033 1,008 2% 1,021 1,185 (14%)
pipes
Other tubes, 585 568 3% 577 616 (6%)
pipes, formed
shapes
Q2 & H1 2019 ESG (ENVIRONMENTAL, SOCIAL, GOVERNANCE) HIGHLIGHTS
· The health and safety of our employees and contractors is the Group's
foremost priority. Severstal constantly scrutinises health and safety
performance across its operations, and targets zero fatalities. In Q2
2019, the Group's LTIFR* decreased 44% q/q to 0.51 (Q1 2019: 0.91). In H1
2019 LTIFR reduced 37% compared with the comparative period to 0.71 (H1
2018 - 1.12).
· In H1 2019 there were no fatalities of our staff, however, there were
unfortunately two contractor fatalities. We are investigating each of
these cases to prevent similar incidents from taking place in the future.
· In H1 2019 Severstal started implementing its Health and Safety 2025
strategy, which aims at a sustainable reduction of occupational accidents
(to reduce LTIFR by 50% compared with 2017 and to eliminate all
work-related fatalities) including through introducing innovative
technologies (computer vision, controlling systems). The development and
implementation of effective tools is focused on three areas:
· Preventing health and safety rule violation;
· Identifying hazards which are not currently being managed and assessing
their risk level with the maximum involvement of workers;
· Managing workers' conditions and preventing hazards emerging due to any
deterioration.
Health and Q2 2018 Q1 2018 Change, H1 H1 2018 Change,
Safety % 2019 %
LTIFR 0.51 0.91 (44%) 0.71 1.12 (37%)
· At Severstal Russian Steel's atmospheric emissions of pollutants
decreased 8% in H1 2019, to 142,500 tonnes compared with the previous
period (H1 2018: 154,400 tonnes). Atmospheric emission of pollutants per
tonne of steel products fell by 9% to 23.3 kg per tonne of steel in H1
2019. Atmospheric emissions of pollutants were reduced through the
reduction of carbon monoxide emissions at the coke battery due to lower
consumption of solid fuel and limestone in sinter plant-3, increased iron
ore concentration and a reduction of silicon oxides in the concentrate.
· At Severstal Resources atmospheric emissions of pollutants decreased 7%
in H1 2019 compared with the previous period and totalled 100,200 tonnes
(H1 2018: 107,800 tonnes). This was achieved through the utilisation of a
larger volume of degassing methane at Vorkutaugol compared with H1 2018.
Environment** Q2 2019 Q1 2019 Change, H1 2019 H1 Change,
% 2018** %
*
Atmospheric 67.7 74.8 (10%) 142.5 154.4 (8%)
emission of
pollutants,
thousand
tonnes
(Russian
Steel)
Atmospheric 50.2 50.0 0% 100.2 107.8 (7%)
emission of
pollutants,
thousand
tonnes
(Severstal
Resources)
Specific 22.1 24.6 (10%) 23.3 25.6 (9%)
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 one 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 2018 took place due to changes in scope:
starting in 2019, the scope included the following Severstal Group
subsidiaries: Severstal Steel Solutions, Severstal Distribution, Severstal
Vtorchermet, Severstal Airlines, Severstal-SMC-Vsevolozhsk, Severstal TPZ
Sheksna and Yakovlevsky Mine
**** Steel production at Cherepovets Steel Mill and Severstal Long Product
Mill Balakovo.
Notes:
1) All production data is reported in thousands of tonnes;
2) Sales prices are stated on EXW basis;
3) Segmental data includes intercompany sales;
4) Semi-finished products include pig iron, slabs, billets, ingots, steel
casting and forgings;
5) 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 $8,580 million and EBITDA of $3,142
million in 2018. Severstal's crude steel production in 2018 reached 12.0
million tonnes. www.severstal.com [1]
ISIN: US8181503025
Category Code: TST
TIDM: SVST
LEI Code: 213800OKDPTV6K4ONO53
Sequence No.: 13221
EQS News ID: 840393
End of Announcement EQS News Service
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