Severstal reports Q1 2016 financial results

PAO Severstal (MICEX-RTS: CHMF; LSE: SVST), one of the world’s leading steel and steel-related mining companies, today announces its Q1 2016 financial results for the period ended 31 March 2016.

Q1 2016 vs. Q4 2015 ANALYSIS:

  • Group revenue decreased 21.4% q/q to $1,097 million (Q4 2015: $1,396 million). This reflects both a further decline in average selling prices, which started to bottom out in March 2016, and weaker sales volumes at both Russian Steel and Resources;
  • Despite lower raw materials costs in USD-terms and RUB devaluation having a positive impact on the cost base during the period, group EBITDA declined 31.9% q/q to $273 million (Q4 2015: $401 million) reflecting a sharp decline in average selling prices. The Group EBITDA margin compressed 3.8 ppts q/q to 24.9% (Q4 2015: 28.7%). However, it remains one of the highest in the industry;
  • Net profit of $270 million (Q4 2015: net loss of $114 million) reflects an FX gain of $175 million and a $4 million impairment of non-current assets. Adjusting for these non-cash items, Severstal would have posted an underlying net profit of $99 million (Q4 2015: $267 million excluding FX losses and non-current assets impairment);
  • Reflecting unprecedented difficulties in the global steel market with global steel prices reaching their lowest level in the last ten years the Company’s free cash flow turned negative at $32 million (Q4 2015: positive $305 million).
  • Cash outflow on capex of $119 million was 2.5% lower q/q (Q4 2015: $122 million). Severstal’s FY 2016 capex target is RUB 43 billion, subject to FX fluctuations;
  • Recommended dividend payment of 8.25 RUB per share for the three months ended 31 March 2016.

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