EquityStory.RS, LLC-News: Industrial Metallurgical Holding / Key word(s): Half Year Results
IMH announces IFRS consolidated financial results for 1H 2020
24 August 2020
Industrial Metallurgical Holding (IMH), one of the largest global suppliers of merchant pig iron and Russia's biggest merchant coke exporter, announces IFRS financial results for 1H 2020.
IMH key financial indicators:
*IFRS data as of 31.12.2019
Key segments operational results
Production and sale of merchant products:
In 1H 2020, pig iron output and sales declined by 4% y-o-y due to the overhaul of blast furnace No. 3 in March and April 2020, which helped enhance the furnace's capacity and reliability.
Coke output and shipments decreased by 2% and 6%, respectively, as a result of weaker demand following the introduction of COVID-19 restrictions across the globe, including the suspension of operations at some of the production sites of coke consumers. Coke sales were also affected by a drop in intra-Group consumption caused by a blast furnace overhaul at Tulachermet. The waning demand in export markets was partially offset by increased sales to Tula Steel.
Production of raw materials:
In 1H 2020, coal production rose by 39% thanks to the stable performance of the Group's mining assets.
The output of coal concentrate in 1H 2020 slid by 7% y-o-y due to a higher ash content in processed coal.
The output of iron ore concentrate in the reporting period declined by 2% y-o-y as a result of weaker demand from Tulachermet due to the overhaul of blast furnace No. 3.
Key segments financial results
Ore & Pig Iron segment
Debt portfolio management
As at 30 June 2020, the Group had RUB 9,002 mln of cash and cash equivalents, which is 9% below the level of 31 December 2019. Undrawn confirmed limits under existing credit facilities came close to RUB 43 bln. These amounts comfortably cover the Group's short-term debt and other current liabilities.
The Group's total and net debt was up by 4% and 6% respectively, impacted by FX differences which caused an increase in the cost of Eurobonds and the RUB equivalent of the accrued interest. Net debt / EBITDA ratio went down as compared to 31 December 2019 and stood at 3.48x.
Almost half of the debt portfolio (46%) is represented by Eurobonds and series BO-05 Russian rouble bonds. Other loans have been provided by major Russian banks.
Development of production assets
February 2020. Uchastok Koksovy obtained the permission to put into operation a total of 2,513 metres of new non-public railway lines at the Vostochnaya station of the Kiselyovsk Loading and Transportation Company. Each of the new tracks at the Vostochnaya station is capable of holding at least 70 rail cars to make departure trains. Total costs of the project amounted to RUB 165 mln.
March 2020. KMAruda passed an integrated management system audit and was certified to ISO 45001:2018 (Occupational Health and Safety Management Systems) and ISO 50001:2018 (Energy Management Systems). ISO 45001:2018 replaced OHSAS 18001:2007. The main difference of the new standard is a risk-oriented approach to analysing health and safety threats to both employees and all the stakeholders.
Sergey Frolov, Vice President for Strategy and Communications of IMH Management Company, commented on the 1H 2020 financial and operating performance:
"Amid the global pandemic, the Group prioritised the safety of its employees. Since mid-March, we have been implementing an action plan to prevent the spread of infectious diseases and ensure stable operation of our assets. All employees who are not directly involved in the production process work remotely. The staff have been provided with personal protective equipment, while premises and high-touch surfaces have been subject to intensive disinfection protocols. Temperature checks are applied to all people entering our facilities. The compliance with sanitary rules and regulations is closely monitored. We are proud to state that we have managed to prevent a massive spread of COVID-19 and maintain uninterrupted operation of our assets.
Commenting on our financial performance, I am happy to note that despite a turbulent environment and suspension of some of our traditional markets, the Group increased its operating profit and EBITDA. In early 2020, a significant share of our pig iron export was redirected to China, which saw its consumption grow on the back of a number of fundamental factors, including quick economic recovery after the pandemic and environmental policy that facilitates the replacement of obsolete blast-furnace steelmaking with greener electric arc furnaces using merchant pig iron.
The return on sales grew due to a notable increase in coal production. Combined with lower coal and iron ore prices, this increase significantly reduced the cost of merchant products.
Higher sales to Tula Steel, a facility situated in the immediate vicinity of Tulachermet, made a substantial contribution to the growth of operating profit. These shipments helped achieve significant savings because of lower transportation costs. In addition, this new customer accounted for 41% of all Tulachermet's pig iron sales in 1H 2020, helping to balance the market and increase return on our third-party sales.
Thanks to our prudent financial policy, we improved our net debt / EBITDA ratio compared to the previous reporting period to 3.48x. A moderate debt increase was driven by RUB/USD rate fluctuations causing an increase in the cost of Eurobonds and accrued interest.
The Group significantly increased its general market and financial stability. We are moving on with our production process optimisation and labour productivity improvement programmes
and keep our investment programme unchanged. Our priority is to commission the underlying horizon at KMAruda's iron ore asset, which will allow us to meet internal demand for high-quality iron ore concentrate. On top of that, we are considering the launch of blast furnace No. 1 at Tulachermet to increase our pig iron output.
Our debt portfolio policy also remains unchanged. Our strategic goal is to reduce net debt/EBITDA ratio to below 2x. Furthermore, we keep implementing our deleveraging programme."
Industrial Metallurgical Holding (IMH) is a Russian vertically integrated group of companies specialising in production of pig iron, extraction and processing of coking coal and iron ore, foundry castling and powder metallurgy. IMH is one of the world's largest suppliers of merchant pig iron and Russia's biggest producer of merchant coke. The Group's key production facilities are located in the Kemerovo, Belgorod, Tula and Kaluga regions of the Russian Federation.
Head of Strategic Communications
 EBITDA calculated in accordance with the Eurobond loan agreement (LPN, Reg S / 144A)
|Company:||Industrial Metallurgical Holding|
|2nd Verkhniy Mikhailovskiy proezd, 9|
|Phone:||+7 495 725 56 80|
|Fax:||+7 495 633 13 12|
|EQS News ID:||1122335|
|End of News||EquityStory.RS, LLC News Service|