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PJSC Magnitogorsk Iron and Steel Works: MMK Group financial results for Q1 2021

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PJSC Magnitogorsk Iron and Steel Works (MMK)
21-Apr-2021 / 09:05 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.

MMK Group IFRS FINANCIAL RESULTS for q1 2021

 

21 APRIL 2021

Magnitogorsk, Russia

PJSC Magnitogorsk Iron & Steel Works ("MMK", or the "Group") (MICEX-RTS: MAGN; LSE: MMK), one of the world's largest steel producers, is pleased to announce its financial results for Q1 2021.

 

MMK GROUP FINANCIAL RESULTS

Q1 2021

USD mln

 

Q1 2021

Q4 2020

%

Q1 2021

Q1 2020

%

Revenue

2,185

1,852

18.0%

2,185

1,710

27.8%

EBITDA

726

474

53.2%

726

442

64.3%

EBITDA margin, %

33.2%

25.6%

7.6 p.p.

33.2%

25.8%

7.4 p.p.

Profit for the period

477

313

52.4%

477

131

264.1%

Free cash flow1

125

125

0.0%

125

115

8.7%

Net debt

145

-88

-

145

30

-

Net debt/EBITDA

0.08x

- 0.06x

-

0.08x

0.02x

-

Net working capital

1,050

745

40.9%

1,050

882

19.0%

L3M Net working capital/revenue

12.0%

10.1%

1.9 p.p.

12.0%

12.9%

- 0.9 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).

 

KEY FINANCIAL INDICATORS

FOR Q1 2021

VS Q4 2020

 

 

 

 

KEY FINANCIAL INDICATORS

FOR Q1 2021

VS Q1 2020

 

 

 

 

COMMENT BY MMK'S CEO

CEO

PAVEL SHILYAEV

 

«

Dear shareholders and colleagues,

 

The gradual recovery of Russia's economy that took shape at the end of the last year continued into the first quarter of 2021. The government's stimulus package launched last year continued to support all sectors of the economy, which in turn had a positive impact on apparent steel use and helped us demonstrate strong financial performance, corroborating once again that we are on a right track in our strategic development.

Ensuring a safe working environment remains our top priority. For instance, our LTISR substantially decreased in the first quarter year-on-year, witnessing a notable decline in the injury rate. I am pleased to note that our efforts to foster and improve our sustainability practices are recognised by wider community. In March 2021, the ISS international rating agency changed its ESG Corporate Rating outlook for MMK from "D+" to "C". The rating upgrade reflects our continued strong performance and commitment to UN corporate responsibility and sustainability initiatives.

In the first quarter, demand for steel was significantly driven by the continuing effect of the pent-up demand generated last year and supported by economic stimulus packages launched by governments around the world. In Russia, key steel consumers during the first quarter included the automotive industry and the construction sector. As for our sales structure, during the first quarter our domestic sales (Russia and CIS) were 73% and sales of premium products - 40% of total sales.

During the first quarter, we continued working on the new coke-oven battery project as well as performing preparatory works for the Cold-Rolling Mill 1700 start-up. The launch of the mill is tentatively slated for May. The revamped mill will boost our annual output of premium products by 0.8 mln tonnes. Previously announced plans for CAPEX expected in 2021 remain unchanged at USD 1 bn.

Financial stability remains a top priority for the Company. MMK's debt leverage remains among the industry's lowest at 0.08x Net Debt/EBITDA as of the end of the first quarter. The Group's high level of available liquidity (USD 1.4 bn) provides it with a strong cushion to successfully meet its strategic commitments.

 

 

MMK consistently generates sufficient cash flow and reiterates its commitment to our 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 Q1 2021 results, coupled with our confidence in our financial outlook amid the further economic recovery both in Russia and globally, the Board of Directors can recommend that MMK shareholders approve a dividend of RUB 1.795 per ordinary share (212% of FCF) for Q1 2021, in line with the Company's strategic commitment to maximize TSR.

»

 

MMK GROUP'S PERFORMANCE

ACROSS CORE SEGMENTS

STEEL SEGMENT RUSSIA

 

USD mln

 

Q1 2021

Q4 2020

%

Q1 2021

Q1 2020

%

Revenue

2,105

1,734

21.4%

2,105

1,602

31.2%

EBITDA

707

447

58.2%

707

421

67.9%

EBITDA margin, %

33.6%

25.8%

7.8 p.p.

33.6%

26.3%

7.3 p.p.

Cash cost of slab, USD/t

340

285

19.3%

340

267

27.3%

 

+ 21.4% Q-o-Q

REVENUE

 

+ 58.2% Q-o-Q

EBITDA

 

 

 

 

+ 19.3% Q-o-Q

SLAB CASH COST
 

The Russian steel segment's revenue for Q1 2021 increased by 21.4% to USD 2,105 mln driven by the growth in global prices for metal products and the continuing strong demand. The increase in revenue by 31.2% y-o-y was caused by the global business recovery and favourable pricing.

 

The segment's EBITDA for Q1 2021 grew by 58.2% q-o-q to USD 707 mln, as a result of growing sales margins amid an increase in global prices for metal products. EBITDA grew by 67.9% y-o-y, following the increase in revenue.

The Group's Q1 2021 profitability saw a positive boost to the sum of USD 11 mln for the quarter from the operational efficiency and cost optimisation programmes under our updated strategic initiatives.

The slab cash cost in Q1 2021 increased by 19.3% to USD 340 per tonne, mainly reflecting the rising prices for key raw materials. The slab cash cost grew by 27.3% y-o-y.

STEEL SEGMENT TURKEY

 

USD mln

 

Q1 2021

Q4 2020

%

Q1 2021

Q1 2020

%

Revenue

166

165

0.6%

166

113

46.9%

EBITDA

27

21

28.6%

27

3

9x

EBITDA margin, %

16.3%

12.7%

3.6 p.p.

16.3%

2.7%

13.6 p.p.

 

+ 0.6% Q-o-Q

REVENUE

 

 

 

 

The Turkish steel segment's revenue for Q1 2021 almost remained flat q-o-q to USD 166 mln, as higher steel prices fully offset lower sales. Revenue grew by 46.9% y-o-y, reflecting higher sales volumes and a favourable market environment.

The favourable environment coupled with measures to improve business efficiency increased the segment's EBITDA for Q1 2021 by 28.6% to USD 27 mln. Year-on-year, the Turkish steel segment's EBITDA grew ninefold to USD 27 mln due to the last year's low base caused by the pandemic and lockdown restrictions.

COAL MINING SEGMENT

 

USD mln

 

Q1 2021

Q4 2020

%

Q1 2021

Q1 2020

%

Revenue

60

46

30.4%

60

54

11.1%

EBITDA

25

7

257.1%

25

16

56.3%

EBITDA margin, %

41.7%

15.2%

26.5 p.p.

41.7%

29.6%

12.1 p.p.

 

+ 30.4% Q-o-Q

REVENUE

 

 

 

The coal mining segment's revenue for Q1 2021 increased by 30.4% q-o-q to USD 60 mln as a result of growing sales and prices for coal concentrate amid favourable market conditions. The segment's revenue grew 11.1% y-o-y.

Supported by higher prices for coal concentrate, the segment's EBITDA for Q1 2021 more than tripled to USD 25 mln. The segment's EBITDA grew 56.3% y-o-y.

CASH FLOW AND FINANCIAL POSITION

OF MMK GROUP

 

CAPEX AND CASH FLOW

 

 

 

 

DEBT

BURDEN

 

 

  

Dividends

OF MMK GROUP

 

 

OUTLOOK

 

 

 

 

 

CONFERENCE CALL

 

MMK Management will hold a conference call to discuss these financial results

 

 

 

 

Russia

UK

USA

 

Local access

+7 495 213 1767

+44 330 336 9125

+1 929 477 0402

 

Toll free

8 800 500 9283

0800 358 6377

888 204 4368

 

 

 

in Russian - 9577666

in English - 2042374

 

The call recording will be available for seven days on the following numbers:

Call recording ID:

in Russian - 9577666

in English - 2042374

 

 

Russia

UK

USA

 

Local access

8 10 800 2702 1012

+44 207 660 0134

+1 719 457 0820

 

 

 

 

 

ABOUT MMK

MMK is one of the world's largest steel producers and a leading Russian metals company. The Group's operations in Russia include a large steel-producing unit encompassing the entire production chain, from the preparation of iron ore to downstream processing of rolled steel. MMK turns out a broad range of steel products, with a predominant share of premium products. In 2020, MMK produced 11.6 mln tonnes of crude steel and sold 10.8 mln tonnes of commercial steel products.

ММK is an industry leader in terms of production costs and margins. Group revenue in 2020 totalled USD 6,395 mln, with an EBITDA of USD 1,492 mln. MMK boasts the industry's lowest debt burden. Net debt/EBITDA ratio was -0.06х at the end of 2020. The Group's investment-grade rating is confirmed by the leading global rating agencies Fitch, Moody's and S&P.

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 15.7%.

Please subscribe to our
official MMK channel on Telegram
to be the first to know
about key MMK news.

 

 

 

INVESTOR RELATIONS
DEPARTMENT

Veronika Kryachko
+7 915 380 6266 kryachko.vs@mmk.ru

 

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

 

KEY UPCOMING EVENTS IN 2021

Financial calendar

 

27 April

Integrated Annual Report 2020.

27-28 April

Non-deal roadshow (NDR), online

17-18 May

WOOD Prague Spring Simposium: ESG, online

18-20 May

BofA Global Metals, Mining & Steel Conference, online

19-21 May

Sberbank CIB Annual Investor Conference, online

 


ISIN:

US5591892048

Category Code:

QRF

TIDM:

MMK

LEI Code:

253400XSJ4C01YMCXG44

Sequence No.:

100178

EQS News ID:

1186937


 

End of Announcement

EQS News Service

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