PJSC Magnitogorsk Iron and Steel Works (MMK) PJSC Magnitogorsk Iron and Steel Works: MMK Group Trading Update for Q3 and 9M 2019 15-Oct-2019 / 10:06 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 and 9M 2019 ММК Group: Consolidated results (thousand tonnes) | | Q3 2019 | Q2 2019 | % | 9M 2019 | 9M 2018 | % | | Finished products sales, including: | 2,897 | 2,856 | 1.4% | 8,535 | 8,728 | -2.2% | | Long products | 340 | 366 | -7.1% | 1,039 | 1,034 | 0.6% | | Flat hot-rolled products | 1,139 | 1,064 | 7.0% | 3,314 | 3,617 | -8.4% | | Thick plate (mill 5000) | 251 | 281 | -10.8% | 824 | 595 | 38.5% | | Flat cold-rolled products | 247 | 241 | 2.5% | 746 | 917 | -18.7% | | Downstream products, including: | 920 | 904 | 1.8% | 2,611 | 2,565 | 1.8% | | Tin plate | 36 | 43 | -17.0% | 111 | 100 | 10.8% | | Galvanised steel | 489 | 484 | 1.0% | 1,387 | 1,294 | 7.2% | | Polymer-coated steel | 184 | 176 | 4.4% | 516 | 532 | -2.9% | | Band | 27 | 29 | -6.9% | 87 | 109 | -20.9% | | Formed section | 49 | 38 | 27.4% | 128 | 125 | 2.4% | | Pipes | 18 | 11 | 69.6% | 41 | 48 | -14.7% | | Metalware | 100 | 106 | -5.7% | 299 | 301 | -0.7% | | Other metal products | 17 | 16 | 5.1% | 43 | 57 | -24.2% | | HVA products | 1,418 | 1,426 | -0,6% | 4,181 | 4,077 | 2.6% | | Share of HVA products | 48.9% | 49.9% | | 49.0% | 46.7% | | | Coal concentrate production | 629 | 487 | 29.2% | 1,893 | 2,220 | -14.8% | | Iron ore production | 646 | 729 | -11.4% | 2,091 | 2,370 | -11.8% |
Q3 2019 highlights vs. Q2 2019 MMK Group's total sales of finished products in Q3 2019 totalled 2,897 thousand tonnes, up 1.4% quarter-on-quarter (q-o-q). MMK Group's sales of HVA products in Q3 2019 totalled 1,418 thousand tonnes, slightly down 0.6% q-o-q. The share of HVA products in total sales amounted to 48.9%. MMK Coal's coal concentrate production in Q3 2019 totalled 629 thousand tonnes, up 29.2% q-o-q. 9M 2019 highlights vs. 9M 2018 MMK Group's total sales of finished products in 9M 2019 totalled 8,535 thousand tonnes, down 2.2% year-on-year (y-o-y). MMK Group's sales of HVA products in 9M 2019 totalled 4,181 thousand tonnes, up 2.6% y-o-y. The share of HVA products in total sales increased to 49.0%. MMK Coal's coal concentrate production in 9M 2019 totalled 1,893 thousand tonnes, down 14.8% y-o-y. MMK Group highlights by key segments PSJC MMK (thousand tonnes) | | Q3 2019 | Q2 2019 | % | 9M 2019 | 9M 2018 | % | | Pig iron | 2,560 | 2,452 | 4.4% | 7,409 | 7,301 | 1.5% | | Crude steel | 3,194 | 3,091 | 3.3% | 9,392 | 9,552 | -1.7% | | Finished products, including: | 2,787 | 2,730 | 2.1% | 8,248 | 8,599 | -4.1% | | Long products | 470 | 452 | 4.1% | 1,379 | 1,372 | 0.5% | | Flat hot-rolled products | 1,207 | 1,166 | 3.5% | 3,554 | 3,920 | -9.3% | | HVA products, including: | 1,109 | 1,112 | -0.2% | 3,316 | 3,306 | 0.3% | | Thick plate (mill 5000) | 256 | 287 | -10.9% | 810 | 616 | 31.6% | | Flat cold-rolled products | 322 | 294 | 9.5% | 936 | 1,079 | -13.3% | | Downstream products, including: | 531 | 530 | 0.1% | 1,569 | 1,611 | -2.6% | | Tin plate | 35 | 42 | -16.5% | 111 | 99 | 11.3% | | Galvanised steel | 327 | 338 | -3.2% | 976 | 954 | 2.4% | | Polymer-coated steel | 77 | 70 | 10.2% | 228 | 266 | -14.3% | | Band | 26 | 28 | -7.3% | 82 | 111 | -26.5% | | Formed section | 40 | 42 | -5.8% | 122 | 126 | -3.4% | | Pipes | 26 | 11 | 149% | 51 | 55 | -7.4% | | Shipments by market: | | | | | | | | Russia + CIS | 2,541 | 2,444 | 4.0% | 7,427 | 6,842 | 8.6% | | Export | 246 | 286 | -13.9% | 821 | 1,756 | -53.2% |
(USD / tonne) | | Q3 2019 | Q2 2019 | % | 9M 2019 | 9M 2018 | % | | Average price per tonne: | 616 | 625 | -1.5% | 607 | 637 | -4.7% | | Long products | 493 | 510 | -3.2% | 494 | 553 | -10.7% | | Flat hot-rolled products | 551 | 551 | 0% | 536 | 573 | -6.5% | | HVA products, including: | 740 | 750 | -1.3% | 729 | 747 | -2.4% | | Thick plate (mill 5000) | 752 | 747 | 0.6% | 737 | 779 | -5.4% | | Flat cold-rolled products | 631 | 629 | 0.3% | 613 | 626 | -2.1% | | Downstream products, including: | 800 | 818 | -2.3% | 794 | 815 | -2.6% | | Tin plate | 840 | 817 | 2.8% | 811 | 812 | -0.1% | | Galvanised steel | 777 | 802 | -3.1% | 774 | 793 | -2.4% | | Polymer-coated steel | 961 | 981 | -2.1% | 951 | 991 | -4.0% | | Band | 703 | 689 | 2.0% | 681 | 671 | 1.5% | | Formed section | 841 | 827 | 1.7% | 816 | 817 | -0.1% | | Pipes | 583 | 594 | -1.8% | 573 | 639 | -10.3% |
Pig iron output in Q3 2019 increased by 4.4% q-o-q. This was due to the completion of the scheduled overhaul of the blast furnace No.7 and higher productivity. At the same time, the volume of steel output in Q3 2019 grew at a slower pace, which allowed the company to decrease the share of metal scrap in burden. The volume of shipments in Q3 2019 grew 2.1% q-o-q and amounted to 2,787 thousand tonnes. This growth was mainly due to the continued high demand in the company's key sales markets and a decrease in the finished product stock in the warehouses. Strong demand on the domestic market allowed the company to increase its domestic shipments by 4.0% q-o-q to 2,541 thousand tonnes. As a result, the share of shipments to the domestic market increased to 91%. The volume of shipments of long products in Q3 2019 grew by 4.1% q-o-q and amounted to 470 thousand tonnes. This growth was due to seasonally strong demand for construction products on the domestic market, which allowed the company to maintain the capacity utilisation rate of long products equipment at close to 100% level. The volume of shipments of hot-rolled products for Q3 2019 grew by 3.5% q-o-q and amounted to 1,207 thousand tonnes, which was due to the completion of the reconstruction of Mill 2500 in Q2 2019 under the current investment programme. The decline in output in 9M 2019 compared to 9M 2018 was due to the reconstruction of Mill 2500. The volume of shipments of HVA products for Q3 2019 were flat q-o-q and amounted to 1,109 thousand tonnes. Sustainable shipment volumes were due to high capacity utilisation rates of equipment, producing downstream products. The increase in the volume of shipments of cold-rolled products for Q3 2019 by 9.5% q-o-q was mainly due to the completion of equipment maintenance in Q2 2019 and continued high demand on the domestic market. In Q3 2019, the shipment volume of Mill 5000 products decreased by 10.9% q-o-q and amounted to 256 thousand tonnes amid 100% capacity utilisation rate. This decrease was due to the equipment overhaul in Q3 2019. In 9M 2019, the volume of shipments of Mill 5000 thick plate increased by 31.6% y-o-y and amounted to 810 thousand tonnes due to strong demand for large diameter pipes from the oil and gas industry. In Q3 2019, shipments of galvanised steel decreased by 3.2% q-o-q and amounted to 327 thousand tonnes. This decrease was due to a more complex sales mix and the increase in sales of polymer-coated steel by 10.2% q-o-q. In 9M 2019, shipments of galvanised steel grew by 22 thousand tonnes, or 2.4% y-o-y, due to high demand from the automotive and construction industries on the domestic market, as well as a decrease in semi-finished rolled products for polymer coated steel, since galvanised steel delivered higher margins. In 9M 2019, shipments of polymer-coated steel declined by 14.3% y-o-y to 228 thousand tonnes mainly due to higher volumes of galvanised steel. The average selling price, expressed in US dollars, for Q3 2019 decreased by 1.5% q-o-q and amounted to USD 616 per tonne. This decrease was due to a significant correction in global steel prices. MMK - Lysvensky Metallurgical Plant (thousand tonnes) | | Q3 2019 | Q2 2019 | % | 9M 2019 | 9M 2018 | % | | Finished products, including: | 66 | 74 | -11.0% | 201 | 194 | 3.5% | | Galvanised steel | 21 | 3 | 534.5% | 26 | 4 | 516.9% | | Galvanised steel with polymer coating | 39 | 68 | -42.4% | 163 | 178 | -8.6% | | Galvanised steel with decorative coating (SteelArt) | 6 | 3 | 113.5% | 12 | 11 | 5.9% |
Finished products output decreased q-o-q in Q3 2019 as a result of the increase in sales (up 12% q-o-q), including of the stocks of finished products from the warehouses. Output growth in 9M 2019 compared to 9M 2018 was due to the implementation of a programme to promote construction products, including SteelArt. Steel segment (Turkey) (thousand tonnes) | | Q3 2019 | Q2 2019 | % | 9M 2019 | 9M 2018 | % | | ММК Metalurji finished products, including: | 188 | 197 | -4.3% | 561 | 565 | -0.7% | | Flat hot-rolled products | 2 | 8 | -68.3% | 18 | 40 | -56.0% | | HVA products, including: | 186 | 189 | -1.6% | 543 | 525 | 3.5% | | Galvanised steel | 146 | 160 | -8.8% | 435 | 410 | 6.2% | | Polymer-coated steel | 40 | 29 | 38.1% | 108 | 116 | -6.1% | | ММК Metalurji finished products from ММК steel | 82 | 58 | 41.1% | 298 | 430 | -30.7% |
Sales of finished products for Q3 2019 amounted to 188 thousand tonnes, down 4.3% q-o-q, mainly due to lower sales of hot-rolled steel. Despite the challenging economic situation in Turkey, the volume of sales of commercial products for 9M 2019 was flat y-o-y. The company was able to maintain the sales volume due to higher sales of HVA products and the reorientation of sales towards export. The continued challenging economic situation and external headwinds, along with a sharp acceleration of price drops at the end of the quarter, continue to negatively affect the demand for finished products and prices on both local and foreign markets. MMK Coal (thousand tonnes) | | Q3 2019 | Q2 2019 | % | 9M 2019 | 9M 2018 | % | | Coking coal mining | 1,092 | 978 | 11.6% | 3,533 | 3,699 | -4.5% | | Coking coal processing | 1,091 | 916 | 19.1% | 3,429 | 4,188 | -18.1% | | Mined | 983 | 786 | 25.0% | 3,171 | 3,600 | -11.9% | | Purchased | 109 | 116 | -6.2% | 244 | 571 | -57.3% | | Toll | | 14 | -100.0% | 14 | 17 | -17.6% | | Coking coal concentrate | 629 | 487 | 29.2% | 1,893 | 2,220 | -14.8% |
The volume of coking coal production in Q3 2019 increased by 11.6% q-o-q and amounted to 1,092 thousand tonnes, as there were no maintenance works during the quarter. The increase in coal concentrate production by 29.2% q-o-q in Q3 2019 was due to measures aimed at productivity growth and the process of ramping up the beneficiation plant to its design capacity following the reconstruction. The volume of coking coal production in 9M 2019 decreased by 4.5% y-o-y to 3,533 thousand tonnes due to mine face operations in the area of mining and geological breaches and the beneficiation plant reconstruction. The decrease in coal concentrate production by 14.8% q-o-q in 9M 2019 was due to maintenance works and equipment adjustment at the beneficiation plant. It is expected that the plant will reach its full design capacity in Q4 2019. Outlook The Company's management expects that the seasonally weak business activity coupled with a significant correction in global prices will affect MMK Group's performance in Q4 2019. The impact of these negative factors should be partly offset by higher operational efficiency and high capacity utilisation of high-margin production units. MMK is one of the world's largest steel producers and a leading Russian metals company. The company's operations in Russia span the entire value chain from iron ore processing to downstream production of rolled steel. MMK produces an extensive range of steel products with a predominant share of high-value-added products. In 2018, the company produced 12.7 million tonnes of crude steel and 11.7 million tonnes of commercial steel products. MMK Group had sales in 2018 of USD 8,214 million and EBITDA of USD 2,418 million. Contacts Investor Relations Department: +7 3519 25-24-48 ir@mmk.ru Communications Department: Dmitry Kuchumov Dmitry Bulin +7 499 238-26-13 +7 499 238-26-13 [email protected] [email protected]
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