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PAO Severstal: Severstal reports Q2 2021 financial and operational results

·20-min read

PAO Severstal (SVST)
16-Jul-2021 / 10:00 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 2021 financial and operational results

 

- EBITDA margin expanded to 56%; Delivering 42% EBITDA and 88% FCF growth qoq -

 

Moscow, Russia -  16 July 2021 - PAO Severstal (MOEX: CHMF; LSE: SVST), one of the world's leading steel and steel-related mining companies, increased its revenue by 33% qoq to $2,946 mln, EBITDA reached $1,647 mln (+42% qoq), EBITDA margin increased to 55.9% (+3.5 ppts qoq).

 

KEY CONSOLIDATED OPERATIONAL AND FINANCIAL RESULTS

 

 

Q2 2021

Q1 2021

qoq

6m 2021

6m 20206

yoy

Financials, $ million

 

 

 

 

 

 

Revenue

2,946

2,219

32.8%

5,165

3,295

56.8%

EBITDA1

1,647

1,162

41.7%

2,809

1,056

166%

EBITDA margin, %

55.9%

52.4%

3.5 ppts

54.4%

32.0%

22.4 ppts

Free cash flow2

936

497

88.3%

1,433

244

5.9x

Net profit

1,139

721

58.0%

1,860

463

4x

Net debt/EBITDA3

0.37

0.52

(28.8%)

0.37

0.82

(54.9%)

Basic EPS4, $

1.36

0.87

56.3%

2.24

0.56

4x

Production, kt

 

 

 

 

 

 

Hot metal

2,627

2,674

(2%)

5,301

4,741

12%

Crude steel

2,776

2,961

(6%)

5,737

5,657

1%

Sales, kt

 

 

 

 

 

 

Steel products, incl.:

2,678

2,630

2%

5,308

5,127

4%

HVA

1,308

1,222

7%

2,530

2,250

12%

Iron ore products

1,310

1,024

28%

2,334

3,172

(26%)

Coal

282

345

(18%)

627

757

(17%)

Health and safety

 

 

 

 

 

 

LTIFR (staff) 5

0.57

0.50

14%

0.53

0.89

(40%)

LTIFR (staff + contractors)

0.63

0.69

(9%)

0.66

n/a

n/a

 

Notes:

 

 

 

 

 

 

 

Q2 2021 vs. Q1 2021 ANALYSIS:

 

Operational results

 

Financial results

 

 

6M 2021 vs. 6M 2020 ANALYSIS:

 

Operational results

 

Financial results

 

Financial position

 

DIVIDEND

 

 

MARKET UPDATE AND OUTLOOK

 

 

Alexander Shevelev, CEO of Severstal Management, commented:

 

"The COVID-19 pandemic continues to challenge regions across the world, and Russia is no exception. The number of new cases has grown significantly in recent weeks. The health of our employees is Severstal's number one priority, and we have intensified all preventive measures. As an essential part of our efforts to reduce the risk of infection, we have started an information campaign encouraging our employees and contractors to get vaccinated. Today more than 50% of our staff already has immunity through vaccination or antibodies after infection and we aim to reach 80% by the end of the summer.

Another vital health and safety focus is workplace injury prevention. LTIFR for both our staff and contractors declined in Q2 2021 to 0.63. However, the LTIFR for our staff was unfortunately up 14% to 0.57 qoq and regrettably we had two fatalities in Q2 2021: one fatality among staff and one among contractors.

We also continue to improve our environmental strategy. Thus we set a medium-term goal to reduce the carbon intensity of CO2 emissions per tonne of steel by 10% by 2030. The medium-term target will be achieved through projects including the technical re-equipment of production facilities and the introduction of the best available technologies at all the Company's assets (press-release).   

As for the macro-environment, Q2 2021 was remarkably strong. The continued global economic recovery supported steel and raw materials prices across all key regions. This led to a robust set of financial results in the reporting quarter. Revenue grew by 33% qoq to $2.9bn due to an increase in average prices coupled with a growth in sales volumes and an improved product mix, with the share of HVA products expanding by 3 ppts qoq to 49%. EBITDA rose by 42% to $1.6bn following a widening of revenue and price spreads.

Management's continuing efforts focused on cash generation resulted in a record FCF of $0.9bn (+88% qoq). Our net debt/EBITDA ratio decreased to 0.37, which helped us to recommend a dividend in line with our policy.

Severstal's strong performance in Q2 2021 has demonstrated the benefits of our business model and sales flexibility. Although we expect steel and commodity prices to soften later this year, the Board of Directors remains confident in our ability to deliver industry-leading margins and strong returns."

 

SEGMENTS PERFORMANCE

 

Severstal Russian Steel (RSD)

 

$ million, unless otherwise stated

Q2 2021

Q1 2021

qoq

6m 2021

6m 20201

yoy

Steel sales, kt

2,691

2,642

2%

5,333

5,147

4%

Semis

317

259

22%

576

205

181%

Commercial

1,066

1,161

(8%)

2,227

2,692

(17%)

HVA

1,308

1,222

7%

2,530

2,250

12%

Revenue

2,759

2,154

28.1%

4,913

3,286

49.5%

EBITDA

1,021

689

48.2%

1,710

721

137.2%

EBITDA margin, %

37%

32%

5 ppts

34.8%

21.9%

12.9 ppts

 

 

Notes:

 

 

Severstal Resources

 

$ million, unless otherwise stated

Q2 2021

Q1 2021

qoq

6m 2021

6m 2020

yoy

Сoal sales, kt

1,149

1,298

(11%)

2,447

2,815

(13%)

Iron ore sales, kt

4,659

4,142

12%

8,801

8,872

(1%)

Revenue

999

747

33.7%

1,746

802

117.7%

EBITDA

733

525

39.6%

1,258

353

256.4%

EBITDA margin, %

73.4%

70.3%

3.1 ppts

72.1%

44.0%

28.1 ppts

 

NOTES

 

 

 

 

A conference call on Q2 2021 results for investors and analysts hosted by Alexey Kulichenko, Chief Financial Officer, will be held on 16 July 2021 at 12.00 (London)/ 14.00 (Moscow). 

 

 

 

Call Conference ID: 8735792


International Dial:

+44 (0)330 336 9434 (local access)

0800 279 7209 (toll-free)

Russian Dial: 
+7 495 646 9190 (local access)

8 10 8002 8675011 (toll-free)

 

 

The call will be recorded and there will be a replay facility available for seven days as follows:

 

Replay pass code: 8735792

 

International Dial:

+44 (0)20 3859 5407 (local)

0 808 101 1153 (toll-free)

Russian Dial:
810 800 2702 1012 (toll-free)

 

 

ANNEX

 

 

1. Consolidates sales by product

 

Sales volumes, kt

Q2 2021

Q1 2021

qoq

6m 2021

6m 20201

yoy

Coal:

282

345

(18%)

627

757

(17%)

Coking coal concentrate

38

35

9%

73

169

(57%)

Steam coal

244

310

(21%)

554

588

(6%)

Iron ore:

1,310

1,024

28%

2,334

3,172

(26%)

Iron ore pellets

1,309

978

34%

2,287

2,988

(23%)

Iron ore concentrate

1

46

(98%)

47

184

(74%)

Steel:

2,678

2,630

2%

5,308

5,127

4%

Semi-finished products

317

259

22%

576

205

181%

Hot-rolled steel and plate

1,102

1,191

(7%)

2,293

2,770

(17%)

Cold-rolled steel

280

257

9%

537

408

32%

Galvanized steel

255

275

(7%)

530

406

31%

Color coated coil

119

83

43%

202

211

(4%)

Long steel

162

158

3%

320

373

(14%)

Metalware

175

142

23%

317

281

13%

Large diameter pipes

75

60

25%

135

44

n/a

Other tubes, pipes, formed shapes

193

205

(6%)

398

429

(7%)

 

 

2. Russian Steel Division sales by product 

 

Sales volumes, kt

Q2 2021

Q1 2021

qoq

6m 2021

6m 20201

yoy

Total steel products

2,691

2,642

2%

5,333

5,147

4%

Semi-finished products

317

259

22%

576

205

181%

Hot-rolled coil and plate

1,101

1,192

(8%)

2,293

2,770

(17%)

Cold-rolled coil

280

257

9%

537

408

32%

Galvanised and metallic coated coil

255

275

(7%)

530

406

31%

Colour coated coil

119

83

43%

202

211

(4%)

Long products

174

169

3%

343

391

(12%)

Metalware products

176

143

23%

319

282

13%

Large diameter pipes

75

60

25%

135

44

n/a

Other tubes, pipes, formed shapes

194

204

(5%)

398

430

(7%)

 

 

 

3. Russian Steel Division sales by destination 

 

Sales volumes, kt

Q2 2021

Q1 2021

qoq

6m 2021

6m 20201

yoy

Total steel products

2,691

2,642

2%

5,333

5,147

4%

Russia

1,482

1,256

18%

2,738

2,963

(8%)

Export

1,209

1,386

(13%)

2,595

2,184

19%

 

 

 

 

 

 

4. Russian Steel Division average prices 

 

Sales price, $/tonne

Q2 2021

Q1 2021

qoq

6m 2021

6m 20201

yoy

Semi-finished products

624

527

18%

581

376

55%

Hot-rolled coil and plate

846

627

35%

732

453

62%

Cold-rolled coil

1,001

752

33%

882

556

59%

Galvanized and metallic coated coil

1,213

852

42%

1,026

639

61%

Colour coated coil

1,427

1,120

27%

1,300

782

66%

Long products

673

558

21%

616

423

46%

Metalware products

1,097

1,059

4%

1,080

862

25%

Large diameter pipes

752

714

5%

735

785

(6%)

Other tubes, pipes, formed shapes

941

718

31%

826

500

65%

Weighted average selling price

906

696

30%

802

513

56%

 

 

 

5. Resource Division sales

kt

Q2 2021

Q1 2021

qoq

6m 2021

6m 2020

yoy

Coal

1,149

1,298

(11%)

2,447

2,815

(13%)

Coking coal concentrate

905

988

(8%)

1,893

2,227

(15%)

Steam coal

244

310

(21%)

554

588

(6%)

Iron ore

4,659

4,142

12%

8,801

8,872

(1%)

Iron ore pellets

3,001

2,645

13%

5,646

5,499

3%

Iron ore concentrate

1,658

1,497

11%

3,155

3,373

(6%)

 

 

6. Vorkutaugol operating highlights

kt

Q2 2021

Q1 2021

qoq

6m 2021

6m 2020

yoy

Run of mine: coal production,

2,047

2,294

(11%)

4,341

5,231

(17%)

Coking coal concentrate sales

905

988

(8%)

1,893

2,227

(15%)

Internal consumption

867

953

(9%)

1,820

2,058

(12%)

Third party

38

35

9%

73

169

(57%)

 

 

7. Karelsky Okatysh ("KO") iron ore pellets production and sales volumes

kt

Q2 2021

Q1 2021

qoq

6m 2021

6m 2020

yoy

Production

2,916

2,851

2%

5,767

5,420

6%

Pellets sales

3,001

2,645

13%

5,646

5,499

3%

Internal consumption

2,238

2,293

(2%)

4,531

5,499

(18%)

Third party

763

352

117%

1,115

0

n/a

 

 

8. Iron ore concentrate sales volumes

kt

Q2 2021

Q1 2021

qoq

6m 2021

6m 2020

yoy

Olcon

1,088

996

9%

2,084

2,106

(1%)

Korpanga

570

501

14%

1,071

896

20%

KO

0

0

n/a

0

371

n/a

Total

1,658

1,497

11%

3,155

3,373

(6%)

 

 

For further information, please contact:

 

Severstal Investor Relations

Vladimir Zaluzhsky, Nikita Klimantov

T: +7 (495) 926-77-66

vladimir.zaluzhsky@severstal.com

na.klimantov@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

 

 

 

 

 

***

PАО 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 $6,870 mln and EBITDA of $2,422 mln in 2020. Severstal's crude steel production in 2020 reached 11.3 mln tonnes. www.severstal.com

 


ISIN:

US8181503025

Category Code:

IR

TIDM:

SVST

LEI Code:

213800OKDPTV6K4ONO53

OAM Categories:

3.1. Additional regulated information required to be disclosed under the laws of a Member State

Sequence No.:

117744

EQS News ID:

1219500


 

End of Announcement

EQS News Service

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