Severstal reports Q3 & 9M 2018 operational results (732469)

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 PAO Severstal (SVST) 
Severstal reports Q3 & 9M 2018 operational results 
 
11-Oct-2018 / 09:00 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 Q3 & 9M 2018 operational results 
 
     Moscow, Russia - 11 October 2018 - PAO Severstal (MICEX-RTS: CHMF; LSE: 
         SVST), one of the world's leading vertically integrat­­ed steel and 
 steel-related mining companies, today announces its operational results for 
            Q3 & 9M 2018. 
 
            Q3 2018 GROUP HIGHLIGHTS 
 
  · Hot metal output increased 2% in Q3 2018 to 2.30 mln tonnes (Q2 2018: 
  2.26 mln tonnes) compared with the previous quarter after short-term 
  maintenance works at BF#4 and BF#5. Crude steel production increased 2% to 
  3.06 mln tonnes (Q2 2018: 3.00 mln tonnes) in line with pig iron 
  production growth. 
 
  · Consolidated steel product sales declined 5% to 2.71 mln tonnes in Q3 
  2018 compared with the previous quarter (Q2 2018: 2.84 mln tonnes), due to 
  short-term maintenance works at rolling-mill facilities. The share of 
  domestic sales remained high at 65% (Q2 2018: 64%). 
 
  · The share of high value-added (HVA) products within the sales portfolio 
  increased two ppts to 48% (Q2 2018: 46%), driven by an increase in sales 
  volumes of colour-coated and large diameter pipe (LDP) products. At the 
  same time Severstal reduced semi-finished and hot-rolled coil (HRC) sales. 
 
  · Coking coal concentrate sales volumes from Vorkutaugol grew 27% largely 
  driven by higher production volumes of "2ZH", "GZHO" and "Concentrate K" 
  grades following the long-wall repositionings at Komsomolskaya and 
  Vorkutinskaya mines in Q2. 
 
  · Iron ore pellet sales decreased 18% to 2.55 mln tonnes (Q2 2018: 3.12 
  mln tonnes) after the realisation of a share of finished goods in transit 
  in Q2, carried over from the previous quarter. 
 
  · Iron ore concentrate sales increased to 1.42 mln tonnes (Q2 2018: 1.36 
  mln tonnes) driven by growth in production at the Olcon and Yakovlevskiy 
  mines. 
 
            9M 2018 GROUP HIGHLIGHTS 
 
  · Hot metal output increased 1% to 6.91 mln tonnes in 9M 2018 compared 
  with the previous period (9M 2017: 6.81 mln tonnes), due to fewer 
  maintenance works in 9M 2018 and declining idle time at BF's. Crude steel 
  production increased 5% to 9.10 mln tonnes (9M 2017: 8.64 mln tonnes), 
  driven by an improvement in steel production efficiency following the 
  launch of ladle furnace #2 in July 2017 as well as higher production 
  volumes from Balakovo mini-mill. Meanwhile, the Company continues its 
  efficiency programmes aimed at decreasing raw material consumption ratios 
  in the steel production process. 
 
  · Consolidated steel product sales improved to 8.42 mln tonnes in 9M 2018 
  (9M 2017: 8.14 mln tonnes), primary reflecting growth in sales of 
  semi-finished products compared with the previous year. The high share of 
  HVA products remained flat at 46% in 9M 2018 (9M 2017: 46%). 
 
  · Average selling prices for the majority of steel products grew 
  substantially, between 6%-20%, for 9M 2018, reflecting global trends as 
  well as sales and marketing initiatives run by Severstal. 
 
  · The higher iron ore concentrate sales y-o-y for 9M 2018 partially 
  reflects the consolidation of the Yakovlevskiy mine. 
 
      SUMMARY OF KEY PRODUCTION, SALES VOLUMES 
 
Production,  Q3 2018 Q2 2018 Change, % 9M 2018 9M 2017 Change, % 
thousands of 
tonnes 
Crude Steel   3,064   3,001     2%      9,098   8,639     5% 
(Russian 
Steel) 
Hot metal     2,307   2,259     2%      6,913   6,814     1% 
(Russian 
Steel) 
 
Sales        Q3 2018 Q2 2018 Change, % 9M 2018 9M 2017 Change, % 
volumes, 
thousands of 
tonnes 
Coking coal    953     750      27%     2,331   2,462    (5%) 
concentrate* 
Iron ore      2,554   3,123    (18%)    8,054   7,836     3% 
pellets 
Iron ore      1,424   1,364     4%      4,080   3,114     31% 
concentrate 
Total steel   2,712   2,844    (5%)     8,420   8,135     4% 
products 
(Consolidate 
d) 
Total steel   2,722   2,857    (5%)     8,453   8,167     4% 
products 
(Russian 
Steel) 
 
High value   Q3 2018 Q2 2018 Change, % 9M 2018 9M 2017 Change, % 
added steel 
products, % 
Severstal      48%     46%    2 ppts     46%     46%    0 ppts 
(Consolidate 
d) 
Severstal      48%     46%    2 ppts     46%     46%    0 ppts 
Russian 
Steel 
 
      SEVERSTAL'S CONSOLIDATED SALES (NET OF INTERCOMPANY SALES) 
 
Sales volumes, thousands   Q3 2018  Q2  Change,  9M  9M  Change, 
of tonnes                          2018    %    2018 201    % 
                                                      7 
Coal:                   381        342    11%   1,12 1,2  (12%) 
                                                 7   81 
Coking coal             109         35   n.a.   190  69   175% 
concentrate 
Steam coal              272        307   (11%)  937  1,2  (23%) 
                                                     12 
Iron ore:              1,671       2,16  (23%)  5,27 4,4   20% 
                                    5            7   05 
Iron ore pellets       1,465       2,05  (29%)  4,70 4,3   8% 
                                    4            7   54 
Iron ore                206        111    86%   570  51   n.a. 
concentrate 
Semi-finished           97         185   (48%)  538  301   79% 
products 
Rolled products:       2,148       2,21  (3%)   6,53 6,4   1% 
                                    9            3   67 
Hot-rolled coil         946        969   (2%)   2,87 3,0  (5%) 
                                                 8   44 
Hot-rolled plate        218        226   (4%)   642  565   14% 
Cold-rolled coil        280        321   (13%)  990  1,0  (3%) 
                                                     18 
Galvanised and          211        218   (3%)   627  478   31% 
metallic coated 
coil 
Colour coated           122        105    16%   294  318  (8%) 
coil 
Long products           371        380   (2%)   1,10 1,0   6% 
                                                 2   44 
Downstream              467        440    6%    1,34 1,3  (1%) 
products:                                        9   68 
Metalware               150        146    3%    424  486  (13%) 
products 
Large diameter          128         86    49%   333  249   34% 
pipes 
Other tubes,            189        208   (9%)   592  633  (6%) 
pipes, formed 
shapes 
 
      SEVERSTAL RESOURCES 
 
· Coking coal concentrate sales volumes from Vorkutaugol grew 27%, largely 
driven by higher production volumes of "2ZH", "GZHO" and "Concentrate K" 
following the repositioning of long-walls at the Komsomolskaya and 
Vorkutinskaya mines in Q2. Internal coking coal concentrate procurement 
declined to 88% in Q3 2018 as the Company increased sales to third parties 
due to a favourable pricing environment in the local market. 
 
· Steam coal sales at Vorkutaugol declined 11% q/q reflecting a lower 
production rate at Vorgashorskaya mine in Q3 and seasonally weaker 
domestic demand. 
 
· Iron ore pellet sales declined by 18% and totalled 2.55 mln tonnes (Q2 
2018: 3.12 mln tonnes) after the realisation of a share of finished goods 
in transit in Q2, carried over from the previous quarter. 
 
· Iron ore concentrate sales increased to 1.42 mln tonnes (Q2 2018: 1.36 
mln tonnes) driven by production growth at the Olcon and Yakovlevskiy 
mines. 
 
Sales        Q3 2018 Q2 2018 Change, % 9M 2018 9M 2017 Change, % 
volumes, 
thousands of 
tonnes 
Coal:         1,226   1,057     16%     3,269   3,675    (11%) 
Coking coal    953     750      27%     2,331   2,462    (5%) 
concentrate* 
Steam coal     273     307     (11%)     938    1,213    (23%) 
Iron ore:     3,978   4,487    (11%)   12,134  10,950     11% 
Iron ore      2,554   3,123    (18%)    8,054   7,836     3% 
pellets 
Iron ore      1,424   1,364     4%      4,080   3,114     31% 
concentrate 
 
SEVERSTAL RUSSIAN STEEL ('RSD') 
 
· RSD steel product sales declined to 2.72 mln tonnes compared with the 
previous quarter (Q2 2018: 2.86 mln tonnes) due to short-term maintenance 
works at rolling-mill facilities. Domestic sales remained high at 65% (Q2 
2018: 64%). 
 
· The share of high value-added (HVA) products within the sales portfolio 
increased two ppts to 48% (Q2 2018: 46%) as the company increased 
colour-coated and large diameter pipe product sales. At the same time 
Severstal reduced semi-finished and hot-rolled coil (HRC) sales. 
 
· Semi-finished product sales decreased as a result of lower volumes of 
slab sold, due to maintenance works at rolling mills in Q3. At the same 
time, the decrease in semi-finished product sales q/q reflects a 
"high-base" effect of billet sales in Q2 2018. 
 
· Severstal increased colour-coated sales, which resulted in lower sales 
of hot-dip galvanised (HDG) and cold-rolled coil volumes. 
 
· LDP sales volumes grew 49% q/q as a result of higher production volumes 
of LDP and a sell-off of finished goods at the Izhora Pipe Mill. In March 
2018, the Izhora Pipe Mill was awarded a tender to supply approximately 
165 thousand tonnes of LDPs for Gazprom projects during 2018-2019. 
 
· Average selling prices for the majority of steel products declined in Q3 
2018 in line with global benchmarks. The decline in LDP average selling 
price in 9M 2018 was offset by higher sales volumes of thick plate. 
 
Sales volumes,  Q3 2018   Q2   Change, % 9M 2018  9M   Change, 
thousands of             2018                    2017     % 
tonnes 
Total steel      2,722  2,857    (5%)     8,453  8,167    4% 
products 
Semi-finished     97     185     (48%)     538    301    79% 
products 
Rolled           2,157  2,232    (3%)     6,565  6,497    1% 
products: 
Hot-rolled coil   947    969     (2%)     2,879  3,044   (5%) 

Hot-rolled        218    226     (4%)      642    566    13% 
plate 
Cold-rolled       280    321     (13%)     990   1,018   (3%) 
coil 
Galvanised and    211    218     (3%)      627    478    31% 
metallic coated 
coil 
Colour coated     122    105      16%      294    318    (8%) 
coil 
Long products     379    393     (4%)     1,133  1,073    6% 
Downstream        468    440      6%      1,350  1,369   (1%) 
products: 
Metalware         151    146      3%       425    486   (13%) 
products 
Large diameter    128     86      49%      333    249    34% 
pipes 
Other tubes,      189    208     (9%)      592    634    (7%) 
pipes, formed 
shapes 
 
Sales price,    Q3 2018   Q2   Change, % 9M 2018  9M   Change, 
$/tonne                  2018                    2017     % 
Semi-finished     493    511     (4%)      468    389    20% 
products 
Hot-rolled coil   545    590     (8%)      562    479    17% 
Hot-rolled        679    729     (7%)      716    610    17% 
plate 
Cold-rolled       616    639     (4%)      627    585     7% 
coil 
Galvanised and    763    782     (2%)      761    716     6% 
metallic coated 
coil 
Colour coated     963    948      2%       943    872     8% 
coil 
Long products     482    503     (4%)      494    418    18% 
Metalware         925    979     (6%)      970    876    11% 
products 
Large diameter   1,006  1,047    (4%)     1,116  1,412  (21%) 
pipes 
Other tubes,      601    629     (4%)      611    568     8% 
pipes, formed 
shapes 
 
Notes: 
 
1) All production data is reported in thousands of tonnes; 
 
2) Sales prices are stated on EXW basis; 
 
3) Segmental data includes intercompany sales; 
 
4) Semi-finished products include pig iron, slabs, billets, ingots, steel 
casting and forgings; 
 
5) Large diameter pipes include all pipes with a diameter between 820 and 
1420 mm. 
 
Contacts 
 
Investor Relations 
 
Evgeny Belov 
 
T: [phone] ext. 6445 
 
[e-mail] 
 
Public Relations 
 
Anastasia Mishanina 
 
T: [phone] ext. 6457 
 
[e-mail] 
 
Severstal's financial communications agency - Hudson Sandler 
 
Andrew Hayes / Emily Dillon / Dan de Belder 
 
T: [phone] 
 
*** 
 
 P?? Severstal is one of the world's leading vertically integrated steel and 
  steel related mining companies, with assets in Russia, Ukraine, Latvia and 
     Poland. Severstal is listed on RTS and MICEX and the company's GDRs are 
  traded on the LSE. Severstal reported revenue of $7,848 million and EBITDA 
       of $2,577 million in 2017. Severstal's crude steel production in 2017 
            reached 11.7 million tonnes www.severstal.com 
 
ISIN:          US8181503025 
Category Code: TST 
TIDM:          SVST 
LEI Code:      213800OKDPTV6K4ONO53 
Sequence No.:  6168 
EQS News ID:   732469 
 
End of Announcement EQS News Service 
 
 

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October 11, 2018 02:01 ET (06:01 GMT)