Severstal | 18 January 2019 г. | 14:30

Severstal reports Q4 & FY2018 operational results

Severstal reports Q4 & FY2018 operational results

PAO Severstal (MICEX-RTS: CHMF; LSE: SVST), one of the world’s leading vertically integrat¬¬ed steel and steel-related mining companies, today announces its operational results for Q4 and FY2018.

• Hot metal output decreased 3% q/q in Q4 2018 to 2.23 mln tonnes (Q3 2018: 2.31 mln tonnes), due to BF#2 short-term maintenance works. Crude steel production declined by 4% to 2.94 mln tonnes (Q3 2018: 3.06 mln tonnes) reflecting a decrease in pig iron production and seasonal slowdown of production at Balakovo mini-mill.

• Consolidated steel product sales increased 2% q/q to 2.76 mln tonnes in Q4 2018 (Q3 2018: 2.71 mln tonnes), following short-term maintenance works at rolling-mill facilities in the previous quarter. The share of domestic sales declined to 62% as a result of seasonal slowdown in domestic consumption (Q3 2018: 65%).

• The share of high value-added (HVA) products within the sales portfolio decreased four ppts to 44% (Q3 2018: 48%), driven by an increase in semi-finished and hot rolled coil sales and declining sales volumes of large diameter pipes, colour coated and hot rolled thick plate.

• Coking coal concentrate sales volumes from Vorkutaugol continued to grow, increasing 9% q/q following 27% increase in Q3. This was largely driven by higher production volumes at the Zapolyarnaya and Komsomolskaya mines.

• Iron ore pellet sales increased 15% to 2.94 mln tonnes (Q3 2018: 2.55 mln tonnes) as a result of higher production volumes and stock sell-off in Q4.

• Hot metal output remained almost unchanged in 2018 at 9.15 mln tonnes, however crude steel production increased 3% to 12.04 mln tonnes (FY2017: 11.65 mln tonnes). This was driven by an improvement in steel production efficiency following the launch of ladle furnace #2 and higher production volumes from Balakovo mini-mill. Meanwhile, the Company is continuing its efficiency programmes aimed at decreasing raw material consumption ratios in the steel production process.

• Consolidated steel product sales increased 2% y/y to 11.18 mln tonnes in FY2018 (FY2017: 10.92 mln tonnes), reflecting crude steel production growth. The high share of HVA products remained high at 46% in FY2018 (FY2017: 46%).

• Average selling prices for the majority of steel products grew substantially, by 5%-12% in FY2018, reflecting global trends as well as Severstal’s sales and marketing initiatives.

• The higher iron ore concentrate sales y-o-y for FY2018 partially reflects the consolidation of the Yakovlevskiy mine and an uptick in production volumes at Olcon.

• Coking coal concentrate sales volumes at Vorkutaugol increased by 2% to 3.37 mln tonnes in 2018.

• As announced at Severstal’s Capital Markets Day in November 2018, the Company plans to achieve coking coal concentrate production volumes growth of up to approximately 5.6mt per annum at the Vorkutaugol mines and plans to ramp-up Yakovlevskiy mine to approximately 5mt per annum in 2023, which will result in a higher level of vertical integration.

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