Severstal reports Q2 and H1 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 Q2 and H1 2016 financial results for the period ended 30 June 2016.

Continuing progress

Q2 2016 vs. Q1 2016 ANALYSIS:

  • Group revenue increased 44.0% q/q to $1,580 million (Q1 2016: $1,097 million). This reflects a sharp rise in average selling prices for both steel and raw materials, as well as higher sales volumes primarily in the Russian Steel Division due to seasonally higher demand in the domestic market;
  • Group EBITDA increased 92.7% to $526 million (Q1 2016: $273 million) as the increased sales were only partially mitigated by an increase in the cost base following RUB appreciation and higher raw material costs. The Group EBITDA margin increased 8.4 ppts q/q to 33.3% (Q1 2016: 24.9%) and remains one of the highest in the industry;
  • Net profit of $608 million (Q1 2016: net profit of $270 million) includes a FX gain of $181 million. Adjusting for this non-cash item, Severstal would have posted an underlying net profit of $427 million (Q1 2016: net profit of $99 million excluding FX gain and impairment of non-current assets);
  • The positive adjustment of global steel prices resulting in higher earnings alongside with a decrease in net working capital on the back of seasonal sell-off of inventories, meant that free cash flow turned positive at $342 million (Q1 2016: negative $32 million). Free cash flow remains one of the key strategic priorities of the Company;
  • Cash capex of $117 million decreased 1.7% q/q (Q1 2016: $119 million). Severstal’s FY 2016 capex target is RUB 43 billion, subject to FX fluctuations;
  • Recommended dividend payment of 19.66 RUB per share for the three months ended 30 June 2016.

The full version of the release