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OJSC MAGNITOGORSK IRON AND STEEL WORKS (FRA:US559189) PJSC Magnitogorsk Iron and Steel Works: MMK Group Trading Update for Q3 2018

Directive transparence : information réglementée

16/10/2018 07:58

PJSC Magnitogorsk Iron and Steel Works (MMK)
PJSC Magnitogorsk Iron and Steel Works: MMK Group Trading Update for Q3 2018

16-Oct-2018 / 07:58 CET/CEST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.


 

 

 

 

MMK Group Trading Update for Q3 2018

ММК Group: Consolidated results

(thousand tonnes)

 

Q3 2018

Q2 2018

%

9M 2018

9M 2017

%

Finished products sales, of which:

3,052

2,848

7.2%

8,728

8,790

-0.7%

Long products

386

364

6.0%

1 034

1 032

0.1%

Flat hot-rolled products

1,315

1,103

19.2%

3,617

3,749

-3.5%

Thick plate (mill 5000)

208

195

6.7%

595

598

-0.5%

Flat cold-rolled products

301

278

8.6%

917

993

-7.6%

Downstream products, of which:

842

909

-7.3%

2,565

2,416

6.2%

Tin plate

27

37

-28.7%

100

94

6.4%

Galvanised steel

414

445

-7.1%

1,294

1,269

2.0%

Polymer-coated steel

177

203

-13.2%

532

467

13.9%

Band

37

36

1.6%

109

90

21.5%

Formed section

50

40

24.3%

125

78

59.9%

Pipes

18

19

-4.7%

48

57

-16.8%

Metalware

98

108

-9.2%

301

307

-1.8%

Other metal products

23

20

17.4%

57

54

5.6%

HVA products

1,351

1,381

-2.1%

4,077

4,006

1.8%

Share of HVA products

44.3%

48.5%

 

46.7%

45.6%

 

Coal concentrate production

808

746

8.3%

2,220

1,965

13.0%

Iron ore production

824

780

5.6%

2,355

2,430

-3.1%

Q3 2018 highlights vs. Q2 2018

       MMK Group's total sales of finished products in Q3 2018 totalled 3,052 thousand tonnes, up 7.2% quarter-on-quarter (q-o-q).

       MMK Group's sales of HVA products in Q3 2018 were 1,351 thousand tonnes, down 2.1% q-o-q. HVA products accounted for 44.3% of total sales.

       MMK Coal's coal concentrate production in Q3 2018 totalled 808 thousand tonnes, up 8.3% q-o-q.

 

9M 2018 highlights vs. 9M 2017

       MMK Group's total sales of finished products in 9M 2018 totalled 8,728 thousand tonnes, down 0.7% year-on-year (y-o-y).

       MMK Group's sales of HVA products in 9M 2018 were 4,077 thousand tonnes, up 1.8% y-o-y. The share of HVA products in total sales increased to 46.7%.

       MMK Coal's coal concentrate production in 9M 2018 totalled 2,220 thousand tonnes, up 13.0% y-o-y.


MMK Group highlights by key segments

PSJC MMK

(thousand tonnes)

 

Q3 2018

Q2 2018

%

9M 2018

9M 2017

%

Pig iron

2,621

2,276

15.2%

7,301

7,509

-2.8%

Crude steel

3,376

3,029

11.5%

9,552

9,569

-0.2%

Finished products sales, of which:

3,007

2,762

8.9%

8,599

8,546

0.6%

Long products

481

464

3.5%

1,372

1,368

0.3%

Flat hot-rolled products

1,422

1,221

16.5%

3,920

4,048

-3.2%

HVA products, of which:

1,104

1,076

2.5%

3,306

3,129

5.7%

Thick plate (mill 5000)

215

202

6.1%

616

610

1.0%

Flat cold-rolled products

355

348

2.0%

1,079

1,014

6.4%

Downstream products, of which:

534

526

1.5%

1,611

1,505

7.0%

Tin plate

27

36

-24.3%

99

98

1.1%

Galvanised steel

312

313

-0.2%

954

836

14.1%

Polymer-coated steel

87

88

-0.4%

266

340

-21.8%

Band

38

34

12.9%

111

91

22.4%

Formed section

47

39

19.5%

126

84

50.1%

Pipes

23

18

29.3%

55

57

-2.2%

Shipments by market:

 

 

 

 

 

 

Russia + CIS

2,339

2,278

2.7%

6,842

6,474

5.7%

Export

667

484

38.0%

1,756

2,072

-15.2%

(USD / tonne)

 

Q3 2018

Q2 2018

%

9M 2018

9M 2017

%

 Average price per tonne:

610

655

-6.7%

637

561

13.5%

Long products

528

566

-6.7%

553

474

16.7%

Flat hot-rolled products

550

588

-6.5%

573

480

19.4%

HVA products, of which:

723

769

-5.9%

747

705

6.0%

Thick plate (mill 5000)

691

818

-15.4%

779

750

3.9%

Flat cold-rolled products

613

641

-4.4%

626

566

10.6%

Downstream products, of which:

810

834

-2.9%

815

781

4.4%

Tin plate

790

826

-4.4%

812

859

-5.5%

Galvanised steel

797

814

-2.1%

793

738

7.5%

Polymer-coated steel

1,002

1,008

-0.6%

991

929

6.7%

Band

655

680

-3.7%

671

658

2.0%

Formed section

777

828

-6.2%

817

766

6.7%

Pipes

597

642

-6.9%

639

602

6.1%

       Pig iron output in Q3 2018 increased by 15.2% q-o-q. This was due to the completion of scheduled maintenance work at blast furnace No. 1 at the end of the previous quarter and the furnace's operations reaching full capacity.

       Higher pig iron output coupled with the completion of scheduled repairs to the oxygen converter led to an 11.5% q-o-q increase in crude steel output for the quarter.

       Sales of finished products in Q3 2018 grew 8.9% q-o-q to 3,007 thousand tonnes. Adequate amounts of steel and consistently high level of demand in the Company's sales markets allowed MMK not only to reach full capacity utilisation but also to keep warehouse stocks of finished products at a minimum.

       In Q3 2018, the Company continued to increase sales to the domestic market (up 2.7% q-o-q). The  pricing environment on external markets also allowed the Company to increase export sales by 183 thousand tonnes, or 38.0% q-o-q. As a result, domestic sales accounted for 77.8% of overall sales (82.5% in Q2 2018).

       In Q3 2018, sales of long products increased by 3.5% q-o-q to 481 thousand tonnes. This growth was due to the seasonal uptick in domestic demand for construction products, leading to increased capacity utilisation of long products production facilities.

       The significant increase in shipments of hot-rolled products in Q3 2018 (up 201 thousand tonnes, or 16.5% q-o-q) was due to completion of a stage of reconstruction of Mill 2500 and equipment upgrades.

       Shipments of HVA products in Q3 2018 increased 2.5% q-o-q and totalled 1,104 thousand tonnes. In 9M 2018, shipments of HVA products grew 177 thousand tonnes, or 5.7%, y-o-y. This growth was mainly due to the new hot-dip galvanizing line reaching full capacity, higher sales of cold-rolled products to the Lysva Metallurgical Plant, and higher sales of other HVA products on the domestic market.

       The increase in shipments of cold-rolled products in Q3 2018 by 2.0% q-o-q was due to higher exports of black tin steel on the backdrop of high capacities utilisation rates.

       In Q3 2018, shipments of Mill 5000 products grew 6.1% q-o-q with capacity utilisation of 100%. The increase was due to changes in the order mix, particularly lower orders for high-tech but less productive rolled steel from large-diameter pipe producers, which was offset by higher sales to other industries and higher export sales.

       In Q3 2018, galvanised steel and polymer-coated steel shipments remained flat q-o-q and amounted to 312 thousand tonnes and 87 thousand tonnes, respectively.

       The increase in shipments of galvanised steel in 9M 2018 by 118 thousand tonnes, or 14.1%, was due to the new hot-dip galvanizing line reaching full capacity which amid stable demand from the construction industry allowed the Company to substitute imports. Sales to carmakers also were higher q-o-q.

       Lower shipments of polymer-coated metal were due to both higher shipments of galvanised steel and changes in the reporting of product sales by Lysva Metallurgical Plant following its acquisition in late 2017.

       Sales of formed section in 9M 2018 grew 50.1% y-o-y due to consistently high demand from railcar manufacturers.

      The average sales price in US dollars in Q3 2018 decreased by 6.7% q-o-q to USD 610 per tonne. This decrease was due to the correction in global steel prices and devaluation of the rouble vs the dollar during the quarter.

 

CJSC Lysva Metallurgical Plant

(thousand tonnes)

 

Q3 2018

Q2 2018

%

9M 2018

9M 2017

%

Finished products sales, of which:

79

69

14.8%

194

88

120.8%

Electro-galvanised steel (automotive sheet)

0.6

0.4

45.2%

4

5

-20.2%

Galvanised steel with polymer coating

71

66

7.9%

178

80

122.9%

Galvanised steel with decorative coating (SteelArt)

7

2

254.6%

11

3

324.3%

 

       Sales of finished products in Q3 2018 amounted to 79 thousand tonnes, up 14.8% q-o-q. This growth was mainly due to the seasonal uptick in demand for construction metal.

      Sales of finished products in 9M 2018 grew by 106 thousand tonnes, or 120.8% q-o-q. This significant growth was mainly due to the low base effect in 9M 2017, which in turn was related to a shortage of working capital. Capacity utilisation rates and sales in 2018 have stabilized thanks to the plant becoming part of MMK Group.

 

Steel segment (Turkey)

(thousand tonnes)

 

Q3 2018

Q2 2018

%

9M 2018

9M 2017

%

ММК Metalurji finished products sales, of which:

137

198

-30.6%

565

712

-20.6%

Flat hot-rolled products

4

9

-59.6%

40

127

-68.4%

HVA products, of which:

133

188

-29.2%

525

586

-10.3%

Galvanised steel

113

149

-24.5%

410

458

-10.5%

Polymer-coated steel

21

39

-47.1%

116

128

-9.5%

ММК Metalurji finished products from ММК steel

91

187

-51.3%

430

504

-14.7%

 

       Sales of finished products in Q3 2018 totalled 137 thousand tonnes (down 30.6% q-o-q).

       Sales of finished products in 9M 2018 decreased by 20.6% y-o-y, mainly due to external headwinds, the challenging economic situation in Turkey, the sharp devaluation of the Turkish lira and a significant decline in the customers' financial solvency.

       The company is offsetting lower domestic demand by increasing export sales to Europe and North Africa.

 

MMK Coal

(thousand tonnes)

 

Q3 2018

Q2 2018

%

9M 2018

9M 2017

%

Coking coal mining

1,512

1,323

14.3%

3,699

2,457

50.6%

Coking coal processing

1,436

1,493

-3.8%

4,188

3,529

18.7%

Mined

1,332

1,325

0.5%

3,600

2,466

46.0%

Purchased

105

168

-37.6%

571

1,063

-46.3%

Coking coal concentrate

808

746

8.3%

2,220

1,965

13.0%

       Coking coal production in Q3 2018 increased by 14.3% q-o-q and amounted to 1,512 thousand tonnes. This increase was due to the completion of operations in a high ground pressure area at Chertinskaya-Koksovaya mine.

       Coal concentrate production in Q3 2018 amounted to 808 thousand tonnes, up 8.3% q-o-q. This growth was due to processing higher volumes of own and purchased materials thanks to the completion of the first stage of the reconstruction of enrichment facilities and an improvement in the quality of own coal.

       In 9M 2018, coking coal production increased by 50.6% y-o-y to 3,699 thousand tonnes. This growth was due to the commissioning of a new longwall at Chertinskaya-Koksovaya mine.

       In 9M 2018, coal concentrate production increased by 13.0% y-o-y to 2,220 thousand tonnes. This growth was due to higher volumes of own material processing, which in turn allowed the company to significantly cut coal purchases from the third parties.

Outlook

The Company expects that sales volumes and prices in Q4 2018 will be affected by the seasonal decline in business activity on the domestic market and the ongoing correction in global steel prices.

The Company will offset these factors by higher operational efficiency following the completion of all scheduled maintenance work and lower cost of sales for steel production (higher share of pig iron in burden).

    

 

MMK is one of the world's largest steel producers and a leading Russian metals company. The company's operations in Russia include a large steel producing complex encompassing the entire production chain, from preparation of iron ore to downstream processing of rolled steel. MMK turns out a broad range of steel products with a predominant share of high-value-added products. In 2017, the company produced 12.9 million tonnes of crude steel and 11.6 million tonnes of commercial steel products. MMK Group had sales in 2017 of USD 7,546 million and EBITDA of USD 2,032 million.

 

 

Contacts

Investor Relations Department:

Andrey Serov

+7 3519 24-52-97

serov.ae@mmk.ru

Communications Department:

Dmitry Kuchumov Dmitry Bulin

+7 499 238-26-13 +7 499 238-26-13

kuchumov.do@mmk.ru   bulin.dn@mmk.ru

 

 

 



ISIN: US5591892048
Category Code: TST
TIDM: MMK
LEI Code: 253400XSJ4C01YMCXG44
Sequence No.: 6208
EQS News ID: 733847

 
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