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PAO Severstal (MICEX-RTS: CHMF; LSE: SVST), one of the world’s leading steel and steel-related mining companies, today announces its Q2 & H1 2020 financial results for the period ended 30 June 2020.
CONSOLIDATED FINANCIAL RESULTS FOR Q2 AND H1 2020
Q2 2020 vs. Q1 2020 ANALYSIS:
H1 2019 ANALYSIS:
FINANCIAL POSITION HIGHLIGHTS:
Alexander Shevelev, CEO of Severstal Management, commented:
“The health and safety of all Severstal employees remains our first priority. For this reason, in response to the COVID-19 pandemic we have implemented strict protective measures across all our sites and organised remote working for our office staff since the middle of March. Fortunately, in almost all of the regions where we operate, we have avoided any large-scale outbreak of COVID-19 and our operations have continued without interruption. As long as necessary, Severstal will continue to maintain strict sanitary requirements and to closely monitor adherence in this area.
Moving on to our financial results for Q2 2020, I am pleased to note that all our businesses demonstrated a strong performance despite the market disruptions made by the COVID-19 outbreak. We have maintained almost 100% utilisation rate at our steelmaking facilities. At our mining operations we have increased sales volumes of coking coal by 34% q/q, maintained strong sales volumes of iron ore products and achieved significant end-to-end optimisation effects. The flexibility of our distribution network allowed us to maintain a high share of exports, keeping sales volumes relatively steady during the period. The weighted average selling prices declined only by 4% q/q as we continue developing our downstream operations. Despite the 11% decline in revenues in Q2 2020, our high levels of operational efficiency enabled us to maintain an EBITDA margin of 31.5%, which is the highest in the global steel industry globally. Free Cash Flow also increased from $54 million to $190 million q/q, even though our capital investment level remained high.
Despite the COVID-19 pandemic our transformation programme continues and remains a very high priority for us.
Severstal’s financial position remains strong with Net Debt/EBITDA ratio of 0.8 times, the Board remains confident in its outlook and is recommending a dividend of 15.44 roubles per share for Q2 2020.”
The Board of Directors is recommending a dividend of 15.44 roubles per share for Q2 2020. Approval of the dividend is expected to take place at the Company’s EGM on 28 August 2020. The record date for participation in the EGM is 3 August 2020. The recommended record date for the dividend payment is 8 September 2020. The approval of the record date for the dividend payment is also expected to take place at the Company’s EGM on 28 August 2020.
In Q2 2020 global steel demand was impacted by the spread of COVID-19 as a result of lockdown restrictions throughout the EU and Russia. According to industry experts, global steel demand is expected to decline by 6% y/y in 2020. Iron ore prices demonstrated strong upward dynamics due to high production rates in China, whereas production contraction elsewhere resulted in lower demand for coking coal.
Russian domestic steel demand reduced significantly in Q2 2020; however, this is expected to partially recover in H2 2020.
Despite a number of potential headwinds on both export and domestic markets, Severstal’s low cost position allows us to remain competitive and the Board remains confident in the resilience of the Company’s business model relative to its local and global peers.
Full financial statements are available at http://www.severstal.com/eng/ir/results_and_reports/financial_results/index.phtml
The Annual Report 2019 is available at http://www.severstal.com/eng/ir/results_and_reports/annual_reports/index.phtml