Severstal reports Q1 2014 financial results

OAO Severstal (MICEX-RTS: CHMF; LSE: SVST), one of the world’s leading vertically integrated steel and steel-related mining companies, today announces its Q1 2014 financial results.

Q1 2014 vs. Q4 2013 ANALYSIS:

-  Efficiency initiatives continuing to drive cost improvements:

-  15.0% q/q decrease in cost of sales at Severstal Russian Steel;

-  5.3% decrease in Group G&A expenses to $142 million (Q4 2013: $150 million);

-  23.5% decrease in Group distribution costs to $176 million (Q4 2013: $230 million);

-  Production cash-cost of slab at the Cherepovets Steel Mill on a non-integrated basis declined further by $51/t to $326/t (Q4 2013: $377/t); on an integrated basis it declined by $32/t to $247/t (Q4 2013: $279/t);

-  Columbus posted record EBITDA/t in Q1 2014 of $113/t.;

-  Group revenue declined 11.1% q/q to $3,007 million (Q4 2013: $3,384 million), primarily due to weaker average pricing, seasonally softer demand and temporary production interruptions at Severstal Russian Steel and Severstal Resources. Severstal International performed well despite abnormally severe winter weather;

-  Group EBITDA decreased 12.6% q/q to $534 million (Q4 2013: $611 million) driven by seasonal factors;

-  Group EBITDA margin was broadly flat q/q at 17.8% (Q4 2013: 18.1%) supported by ongoing and relentless focus on operational enhancements as well as a weaker rouble. Both Russian Steel and Resources improved their EBITDA margin q/q, to 15.2% and 34.7% respectively;

-  Free cash flow remained strong at $236 million (Q4 2013: $347 million);

-  Loss for the quarter of $100 million (Q4 2013 loss of $74 million), negatively impacted by FX non-cash item of $321 million. Excluding that non-cash item, Severstal would have posted a net profit of $221 million in Q1 2014;

-  Capex of $264 million, 21% lower q/q (Q4 2013: $334 million). FY2014 target CAPEX of $976 million might be finally lower due to weaker rouble;

-  Recommended dividend payment of 2.43 roubles per share (approximately $0.07) for the 3 months ended 31 March 2014.

The full version of the release and link to the statements