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Severstal reports Q4 & FY2020 financial results

·12-min read

PAO Severstal (SVST)
04-Feb-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 Q4 & FY2020 financial results

 

- Delivering 8% EBITDA growth and 135% EPS growth q/q; EBITDA margin hits 41% -

 

Moscow, Russia -  4 February 2021 - PAO Severstal (MOEX: CHMF; LSE: SVST), one of the world's leading steel and steel-related mining companies, today announces its Q4 & FY2020 financial results for the period ended 31 December 2020.

 

CONSOLIDATED FINANCIAL RESULTS FOR Q4 AND FY2020

 

$ million, unless otherwise stated

Q4 2020

Q3 2020

Change, %

FY 2020

FY 2019

Change, %

Revenue

1,723

1,852

(7.0%)

6,870

8,157

(15.8%)

EBITDA1

710

656

8.2%

2,422

2,805

(13.7%)

EBITDA margin, %

41.2%

35.4%

5.8 ppts

35.3%

34.4%

0.9 ppts

Profit from operations

585

538

8.7%

1,930

2,327

(17.1%)

Operating margin, %

34.0%

29.0%

5.0 ppts

28.1%

28.5%

(0.4 ppts)

Free cash flow2

212

382

(44.5%)

838

1,099

(23.7%)

Net  profit

386

167

131.1%

1,016

1,767

(42.5%)

Basic EPS3, $

0.47

0.20

135.0%

1.23

2.14

(42.5%)

Net Debt/EBITDA4, $

0.84

0.77

 

0.84

0.56

 

 

Notes:

 

 

 

 

 

Q4 2020 vs. Q3 2020 ANALYSIS:

 

 

 

 

 

 

 

 

 

 

 

FY2020 vs. FY2019 ANALYSIS:

 

 

 

 

FINANCIAL POSITION HIGHLIGHTS:

 

 

 

 

 

Alexander Shevelev, CEO of Severstal Management, commented:

 

"In the unprecedented pandemic year our strategic priorities and transformational goals have proved to be even more relevant and timely than before - relentless focus on costs, commitment to serve our clients, and pursuit of new business opportunities - have allowed us to preserve full capacity throughout the period, provide job security and continue with our long-term development plans.

 

Though we have avoided large-scale outbreaks of COVID-19 at our operations, regrettably we recorded a 3% growth in the Company's LTIFR in 2020 and there were four fatalities of our staff. In order to achieve our goal of zero fatalities, we have made significant changes in our safety department, including personnel changes, certifying our key assets under ISO 45001 regulations and we also launched our 'Lethal Risk Management' project. In 2021 we will continue to introduce a number of new initiatives to tackle current safety issues.

 

In Q4 2020, steel and raw material prices reached multi-year highs. Currently, the market environment is especially advantageous to steelmakers who have vertically integrated business models with their own supply of raw materials. Despite declines in revenues due to negative macro factors during the first half of the year, we have retained our profitability levels at 35.3% for the year. In the fourth quarter we achieved a record high EBITDA margin of 41.2%.

 

Additionally, I am pleased to say that in Q4 2020 we successfully launched our key investment projects: BF#3 and the first unit of coking battery #11. These two projects are expected to result in several million dollars of efficiency gains starting in the current calendar year.

 

Severstal's financial position remains strong, with a Net Debt/EBITDA ratio of 0.84 times at the end of Q4 2020, and the Board remains confident in its outlook and is recommending a dividend of 36.27 roubles per share for Q4 2020".

 

 

SEVERSTAL RUSSIAN STEEL (RSD)

 

$ million, unless otherwise stated

Q4 2020

Q3 2020

Change, %

FY 2020

FY 2019

Change, %

Revenue

1,708

1,851

(7.7%)

6,845

8,025

(14.7%)

EBITDA

395

412

(4.1%)

1,528

1,528

0.0%

EBITDA margin, %

23.1%

22.3%

0.8 ppts

22.3%

19.0%

3.3 ppts

 

 

 

 

RSD sales of steel products declined by 17% q/q to 2.45 mln tonnes in Q4 2020 (Q3 2020: 2.95 mln tonnes) reflecting the 'high base' effect in sales volumes from Q3 2020, a higher share of exports with a longer realisation period and a q/q production decline.

The share of domestic steel shipments in the Company's sales mix was 65% (Q3 2020: 65%). In Q4 2020 Severstal increased the share of semi-finished and hot rolled products in its export sales.

The share of high value-added (HVA) products within the sales portfolio increased to 53% (Q3 2020: 50%). Severstal increased sales volumes of high value-added metalware products by 10% in Q4 2020, which resulted in lower long product sales q/q.

The weighted average selling price for the whole range of steel products in Q4 2020 continued to rise, growing by 7% q/q following an increase in the previous quarter. This is a result of positive steel pricing dynamics for export destinations and a higher share of HVA products in the sales mix q/q.

RSD top line declined by 7.7% q/q to $1,708 million (Q3 2020: $1,851 million) due to a sales volumes decline q/q. EBITDA declined by 4.1% q/q to $395 million (Q3 2020: $412 million). The EBITDA margin remained almost flat at 23.1% (Q3 2020: 22.3%).

The total non-integrated cash cost of slab production per tonne at the Cherepovets Steel Mill in Q4 2020 increased by $23/t q/q to $293/t (Q3 2020: $270/t) affected by higher input cost. The integrated cash cost of slab in Q4 2020 declined by $13/t q/q to $160/t (Q3 2020: $173/t).

SEVERSTAL RESOURCES

$ million, unless otherwise stated

Q4 2020

Q3 2020

Change, %

FY 2020

FY 2019

Change, %

Revenue

550

473

16.3%

1,825

2,169

(15.9%)

EBITDA

344

261

31.8%

958

1,248

(23.2%)

EBITDA margin, %

62.5%

55.2%

7.3 ppts

52.5%

57.5%

(5.0 ppts)

 

Sales volumes of coking coal concentrate from Vorkutaugol increased by 3% q/q to 1.26 mln tonnes as a result of 1ZH concentrate output growth q/q.

 

Sales volumes of iron ore pellets increased by 8% to 2.83 mln tonnes (Q3 2020: 2.61 mln tonnes) on the back of q/q iron ore pellet production growth at Karelsky Okatysh.

 

Sales volumes of iron ore concentrate declined by 11% to 1.74 mln tonnes (Q3 2020: 1.96 mln tonnes), primarily driven by higher output at the Yakovlevskiy mine, offset by lower production at Karelsky Okatysh due to seasonal factors and improved pellet sales.

 

Revenue from the Resources Division increased to $550 million in Q4 2020 (Q3 2020: $473 million). EBITDA increased by 31.8% q/q to $344 million (Q3 2020: $261 million). The EBITDA margin increased to 62.5%.

 

At Vorkutaugol, the cash cost of coal concentrate per tonne declined to $52t (Q3 2020: $72/t). The cash cost of iron ore pellets per tonne at Karelsky Okatysh increased to $25/t (Q3 2020: $22/t). At Olcon, the cash cost per tonne of iron ore concentrate was $23/t (Q3 2020: $22/t).

 

DIVIDEND

 

The Board of Directors is recommending a dividend of 36.27 roubles per share for Q4 2020. 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

 

In Q4 2020, a surge in steel prices was driven by a supply deficit in the global steel market with revived demand in ex-China. Raw material prices have been increasing, supported by an expansion of steelmakers' margins and production increase q/q. It is unclear how long the high prices for steel and raw materials globally will continue, but Severstal anticipates that the positive momentum in steel and raw material prices observed in November and December 2020 will positively impact Q1 2021 results.

 

 

 

 

Russian domestic steel demand in 2020 fell only by 3% y/y, and demand within Severstal's product range dropped by 2%. Construction sector demonstrated 1.5% growth. In 2021 Russian steel demand is expected to recover by 3-4% y/y, driven by an improved construction activity and oil & gas sector recovery.

 

Despite the number of potential headwinds on both export and domestic markets, including possible further waves of outbreaks of COVID-19, Severstal's low cost position allows us to be competitive and the Board remains confident in the resilience of the Company's business model relative to its local and global peers.

 

 

NOTES

 

 

 

For further information, please contact:

 

Severstal Investor Relations

Evgeny Belov

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

evgenii.belov@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 Q4 & 12M 2020 results for investors and analysts hosted by Alexey Kulichenko, Chief Financial Officer, will be held on 4 February 2021 at 12.30 (London)/ 15.30 (Moscow). 

 

Conference ID: 1988308
International Dial:

+44 (0)330 336 9411 (local access)

0800 279 7204 (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 Passcode: 1988308

 

International Dial:

+44 (0)20 3859 5407 (local)
0 808 101 1153 (toll-free)

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

 

 

***

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


ISIN:

US8181503025

Category Code:

FR

TIDM:

SVST

LEI Code:

213800OKDPTV6K4ONO53

Sequence No.:

92882

EQS News ID:

1165694


 

End of Announcement

EQS News Service

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