Severstal reports Q2 2019 operational results (840393)

 
 PAO Severstal (SVST) 
Severstal reports Q2 2019 operational results 
 
12-Jul-2019 / 09:02 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 Q2 2019 operational results 
 
 Moscow, Russia - 12 July 2019 - 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 Q2 2019. 
 
            Q2 2019 GROUP HIGHLIGHTS 
 
  · Hot metal output declined q/q in Q2 2019 to 2.30 mln tonnes (Q1 2019: 
  2.36 mln tonnes) due to short-term maintenance works at BF#1, BF#4 and 
  BF#5. Crude steel production remained almost flat at 3.06 mln tonnes (Q1 
  2019: 3.04 mln tonnes) mainly reflecting EAF steel output growth. 
 
  · Consolidated steel product sales remained unchanged q/q at 2.84 mln 
  tonnes in Q2 2019 (Q1 2019: 2.83 mln tonnes). The share of domestic sales 
  rose to 70% due to the increased attractiveness of domestic sales (Q1 
  2019: 65%). 
 
  · The share of high value-added (HVA) products within the sales portfolio 
  increased 2 ppts to 46% (Q1 2019: 44%), reflecting a decline in sales of 
  semi-finished, hot rolled coil products and higher sales of galvanised, 
  colour-coated and large diameter pipes (LDPs). 
 
  · Coking coal concentrate sales volumes from Vorkutaugol declined 7% due 
  to planned short-term modernisation works at coal beneficiation facilities 
  in Q2 2019. Meanwhile run-of-mine (ROM) coal production at Vorkutaugol in 
  Q2 2019 increased 13% q/q. 
 
  · Iron ore pellet sales increased 2% to 2.90 mln tonnes (Q1 2019: 2.83 mln 
  tonnes) due to seasonal factors despite a q/q decline in production. 
 
  · Iron ore concentrate sales volumes increased 10% to 1.43 mln tonnes (Q1 
  2019: 1.30 mln tonnes) following production growth. 
 
            H1 2019 GROUP HIGHLIGHTS 
 
  · Hot metal output increased 1% y/y in H1 2019 to 4.67 mln tonnes (H1 
  2018: 4.61 mln tonnes) driven by the improved efficiency of maintenance 
  works and the higher quality of raw materials. Crude steel production 
  increased to 6.10 mln tonnes (H1 2018: 6.03 mln tonnes) mainly reflecting 
  EAF steel output growth and higher productivity of aggregates. 
 
  · Coking coal concentrate sales volumes from Vorkutaugol increased 44% y/y 
  driven by coal production growth. Iron ore concentrate sales volumes 
  increased 3% y/y to 2.73 mln tonnes (H1 2018: 2.66 mln tonnes) mainly 
  reflecting ramp-up of the Yakovlevskiy mine. 
 
  · The share of HVA products remained high in H1 2019 at 45% which 
  primarily reflects higher sales of galvanised and colour-coated sales 
  following the launch of new product lines, which reached their full 
  utilisation rates in Q1 2019, as well as higher sales of hot rolled thick 
  plate y/y. 
 
      SUMMARY OF KEY PRODUCTION, SALES VOLUMES 
 
Production,  Q2 2019 Q1 2019 Change, % H1 2019 H1 2018 Change, % 
thousands of 
tonnes 
Crude Steel   3,057   3,044     0%      6,101   6,034     1% 
(Russian 
Steel) 
Hot metal     2,304   2,363    (2%)     4,667   4,606     1% 
(Russian 
Steel) 
 
Sales        Q2 2019 Q1 2019 Change, % H1 2019 H1 2018 Change, % 
volumes, 
thousands of 
tonnes 
Coking coal    958    1,031    (7%)     1,989   1,378     44% 
concentrate 
Iron ore      2,899   2,832     2%      5,731   5,500     4% 
pellets 
Iron ore      1,428   1,301     10%     2,729   2,656     3% 
concentrate 
Total steel   2,837   2,832     0%      5,669   5,708    (1%) 
products 
(Consolidate 
d) 
Total steel   2,848   2,843     0%      5,691   5,731    (1%) 
products 
(Russian 
Steel) 
 
High value   Q2 2019 Q1 2019 Change, % H1 2019 H1 2018 Change, % 
added steel 
products, % 
Severstal      46%     44%    2 ppts     45%     46%   (1 ppts) 
(Consolidate 
d) 
Severstal      46%     44%    2 ppts     45%     45%   (0 ppts) 
Russian 
Steel 
 
      SEVERSTAL'S CONSOLIDATED SALES (NET OF INTERCOMPANY SALES) 
 
Sales volumes, thousands   Q2 2019  Q1  Change,  H1  H1  Change, 
of tonnes                          2019    %    2019 201    % 
                                                      8 
Coal:                   388        532   (27%)  920  746   23% 
Coking coal             108        157   (31%)  265  81    n/a 
concentrate 
Steam coal              280        375   (25%)  655  665  (2%) 
Iron ore:              1,686       1,65   2%    3,34 3,6  (7%) 
                                    6            2   06 
Iron ore pellets       1,488       1,30   14%   2,79 3,2  (14%) 
                                    2            0   42 
Iron ore                198        354   (44%)  552  364   52% 
concentrate 
Semi-finished           69         121   (43%)  190  441  (57%) 
products 
Rolled products:       2,313       2,31   0%    4,62 4,3   5% 
                                    1            4   85 
Hot-rolled coil        1,040       1,10  (6%)   2,14 1,9   11% 
                                    2            2   32 
Hot-rolled plate        225        233   (3%)   458  424   8% 
Cold-rolled coil        242        275   (12%)  517  710  (27%) 
Galvanised and          254        237    7%    491  416   18% 
metallic coated 
coil 
Colour coated           141        102    38%   243  172   41% 
coil 
Long products           411        362    14%   773  731   6% 
Downstream              455        400    14%   855  882  (3%) 
products: 
Metalware               140        126    11%   266  274  (3%) 
products 
Large diameter          106         97    9%    203  205  (1%) 
pipes 
Other tubes,            209        177    18%   386  403  (4%) 
pipes, formed 
shapes 
 
      SEVERSTAL RESOURCES 
 
· Coking coal concentrate sales volumes from Vorkutaugol declined 7% due 
to planned short-term modernisation works at coal beneficiation facilities 
in Q2 2019. Meanwhile run-of-mine (ROM) coal production at Vorkutaugol in 
Q2 2019 increased 13% q/q. 
 
· Steam coal sales at Vorkutaugol decreased 25% q/q, reflecting a seasonal 
slowdown in consumption at the end of the heating season. 
 
· Iron ore pellet sales increased 2% to 2.90 mln tonnes (Q1 2019: 2.83 mln 
tonnes) due to seasonal factors despite a q/q decline in production. 
 
· Iron ore concentrate sales volumes increased 10% to 1.43 mln tonnes (Q1 
2019: 1.30 mln tonnes) following seasonal output growth. 
 
Sales        Q2 2019 Q1 2019 Change, % H1 2019 H1 2018 Change, % 
volumes, 
thousands of 
tonnes 
Coal:         1,238   1,406    (12%)    2,644   2,043     29% 
Coking coal    958    1,031    (7%)     1,989   1,378     44% 
concentrate 
Steam coal     280     375     (25%)     655     665     (2%) 
Iron ore:     4,327   4,133     5%      8,460   8,156     4% 
Iron ore      2,899   2,832     2%      5,731   5,500     4% 
pellets 
Iron ore      1,428   1,301     10%     2,729   2,656     3% 
concentrate 
 
      SEVERSTAL RUSSIAN STEEL ('RSD') 
 
· RSD steel product sales remained almost unchanged at 2.85 mln tonnes in 
Q2 2019 compared with the previous quarter (Q1 2019: 2.84 mln tonnes). 
 
· The share of domestic sales rose to 70% due to the increased 
attractiveness of domestic sales (Q1 2019: 65%). 
 
· The share of high value-added (HVA) products within the sales portfolio 
increased 2 ppts to 46% (Q1 2019: 44%), driven by a decline in sales of 
semi-finished, hot rolled coil products and higher sales of galvanised, 
colour-coated and LDPs. 
 
· LDP sales volumes grew 9% q/q which reflects the realisation of 
accumulated stock of large diameter pipes for the Poland-Slovakia Gas 
Interconnection project (Eustream) produced in 2018 and shipped in the 
previous quarter. In February 2019 Izhora Pipe Mill (IPM) won several 
tenders to supply PAO Gazprom with over 200,000 tonnes of large diameter 
pipes. The products will be used in the development of gas transmission 
capacities for the Unified Gas Supply System in the North-West Region 
(NEGP), as well as the construction of the Kovykta-Chayanda section of the 
Power of Siberia gas pipeline. 
 
· Average selling prices for the majority of steel products increased in 
Q2 2019 in line with benchmarks. 
 
Sales volumes,  Q2 2019   Q1   Change, % H1 2019  H1   Change, 
thousands of             2019                    2018     % 
tonnes 
Total steel      2,848  2,843     0%      5,691  5,731   (1%) 
products 
Semi-finished     69     121     (43%)     190    441   (57%) 
products 
Rolled           2,322  2,322     0%      4,644  4,408    5% 
products: 
Hot-rolled coil  1,040  1,102    (6%)     2,142  1,932   11% 
Hot-rolled        225    233     (3%)      458    424     8% 
plate 
Cold-rolled       242    275     (12%)     517    710   (27%) 
coil 
Galvanised and    254    237      7%       491    416    18% 
metallic coated 
coil 
Colour coated     141    102      38%      243    172    41% 
coil 
Long products     420    373      13%      793    754     5% 
Downstream        457    400      14%      857    882    (3%) 
products: 
Metalware         142    126      13%      268    274    (2%) 
products 
Large diameter    106     97      9%       203    205    (1%) 
pipes 
Other tubes,      209    177      18%      386    403    (4%) 
pipes, formed 
shapes 
 
Sales price,    Q2 2019   Q1   Change, % H1 2019  H1   Change, 
$/tonne                  2019                    2018     % 
Semi-finished     450    423      6%       433    462    (6%) 
products 
Hot-rolled coil   514    494      4%       504    571   (12%) 
Hot-rolled        659    635      4%       647    734   (12%) 
plate 
Cold-rolled       629    592      6%       609    632    (4%) 
coil 
Galvanised and    729    709      3%       720    759    (5%) 
metallic coated 
coil 
Colour coated     918    849      8%       889    929    (4%) 
coil 
Long products     484    449      8%       468    499    (6%) 
Metalware         981    948      3%       965    995    (3%) 
products 

Large diameter   1,033  1,008     2%      1,021  1,185  (14%) 
pipes 
Other tubes,      585    568      3%       577    616    (6%) 
pipes, formed 
shapes 
 
      Q2 & H1 2019 ESG (ENVIRONMENTAL, SOCIAL, GOVERNANCE) HIGHLIGHTS 
 
· The health and safety of our employees and contractors is the Group's 
foremost priority. Severstal constantly scrutinises health and safety 
performance across its operations, and targets zero fatalities. In Q2 
2019, the Group's LTIFR* decreased 44% q/q to 0.51 (Q1 2019: 0.91). In H1 
2019 LTIFR reduced 37% compared with the comparative period to 0.71 (H1 
2018 - 1.12). 
 
· In H1 2019 there were no fatalities of our staff, however, there were 
unfortunately two contractor fatalities. We are investigating each of 
these cases to prevent similar incidents from taking place in the future. 
 
· In H1 2019 Severstal started implementing its Health and Safety 2025 
strategy, which aims at a sustainable reduction of occupational accidents 
(to reduce LTIFR by 50% compared with 2017 and to eliminate all 
work-related fatalities) including through introducing innovative 
technologies (computer vision, controlling systems). The development and 
implementation of effective tools is focused on three areas: 
 
· Preventing health and safety rule violation; 
 
· Identifying hazards which are not currently being managed and assessing 
their risk level with the maximum involvement of workers; 
 
· Managing workers' conditions and preventing hazards emerging due to any 
deterioration. 
 
Health and      Q2 2018 Q1 2018 Change,    H1   H1 2018 Change, 
Safety                             %      2019             % 
LTIFR            0.51    0.91    (44%)    0.71   1.12    (37%) 
 
· At Severstal Russian Steel's atmospheric emissions of pollutants 
decreased 8% in H1 2019, to 142,500 tonnes compared with the previous 
period (H1 2018: 154,400 tonnes). Atmospheric emission of pollutants per 
tonne of steel products fell by 9% to 23.3 kg per tonne of steel in H1 
2019. Atmospheric emissions of pollutants were reduced through the 
reduction of carbon monoxide emissions at the coke battery due to lower 
consumption of solid fuel and limestone in sinter plant-3, increased iron 
ore concentration and a reduction of silicon oxides in the concentrate. 
 
· At Severstal Resources atmospheric emissions of pollutants decreased 7% 
in H1 2019 compared with the previous period and totalled 100,200 tonnes 
(H1 2018: 107,800 tonnes). This was achieved through the utilisation of a 
larger volume of degassing methane at Vorkutaugol compared with H1 2018. 
 
Environment**  Q2 2019 Q1 2019 Change,  H1 2019   H1   Change, 
                                  %             2018**    % 
                                                  * 
Atmospheric     67.7    74.8    (10%)    142.5  154.4    (8%) 
emission of 
pollutants, 
thousand 
tonnes 
(Russian 
Steel) 
Atmospheric     50.2    50.0      0%     100.2  107.8    (7%) 
emission of 
pollutants, 
thousand 
tonnes 
(Severstal 
Resources) 
Specific        22.1    24.6    (10%)    23.3    25.6    (9%) 
atmospheric 
emission of 
pollutants, kg 
per tonne of 
steel**** 
 
Notes to this section: 
 
* LTIFR refers to Lost Time Injury Frequency Rate of Severstal staff, the 
number of lost time injuries occurring in a workplace per one million hours 
worked. 
 
** Emissions data is calculated in accordance with Russian regulations and 
is reported to the relevant Russian authorities on an annual basis and 
reviewed by them. 
 
***Minor changes in data for H1 2018 took place due to changes in scope: 
starting in 2019, the scope included the following Severstal Group 
subsidiaries: Severstal Steel Solutions, Severstal Distribution, Severstal 
Vtorchermet, Severstal Airlines, Severstal-SMC-Vsevolozhsk, Severstal TPZ 
Sheksna and Yakovlevsky Mine 
 
**** Steel production at Cherepovets Steel Mill and Severstal Long Product 
Mill Balakovo. 
 
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 Leach / Emily Dillon 
 
T: [phone] 
 
*** 
 
 P?? 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 RTS and MICEX and the company's GDRs are traded on 
  the LSE. Severstal reported revenue of $8,580 million and EBITDA of $3,142 
    million in 2018. Severstal's crude steel production in 2018 reached 12.0 
            million tonnes. www.severstal.com [1] 
 
ISIN:          US8181503025 
Category Code: TST 
TIDM:          SVST 
LEI Code:      213800OKDPTV6K4ONO53 
Sequence No.:  13221 
EQS News ID:   840393 
 
End of Announcement EQS News Service 
 
 
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July 12, 2019 02:03 ET (06:03 GMT)