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Metinvest trading update for the first quarter of 2019

Steel News - Published on Mon, 27 May 2019

Image Source: PR Newswire
Metinvest BV has published a trading update for the first quarter ended 31 March 2019. In 1Q 2019, Metinvest’s consolidated revenues decreased by 5% YoY to USD 2,863 million, primarily due to the drop in realised steel prices in line with global benchmarks, as well as lower resales volumes. This was partly compensated by greater sales volumes of in-house steel products following the change in the product mix, mainly due to the launch of continuous casting machine no 4 at Ilyich Steel, which allowed the plant to use greater volumes of hot metal for steelmaking and downstream production instead of pig iron. In addition, the Group boosted its iron ore sales due to higher volumes and increased selling prices amid global supply reductions.

In the period, revenues in Ukraine declined by 7% YoY to USD 776 million amid lower prices of steel products and reduced sales volumes of flat products, coke and pellets. As a result, the share of Ukraine in consolidated revenues fell by 1 pp YoY to 27%.

In 1Q 2019, international sales decreased by 4% YoY to USD 2,086 million, accounting for 73% of consolidated revenues.

Sales to Europe edged down by 1% YoY, primarily amid lower realised steel prices, as well as a fall in pig iron sales volumes (-92 kt). At the same time, the region’s share in overall revenues amounted to 37%, up 2 pp YoY.

Sales to the Middle East and North Africa decreased by 10% YoY, mainly due to lower selling prices of steel goods, causing MENA’s share in consolidated revenues to decline by 1 pp YoY to 18%.

Sales to the CIS dropped by 18% YoY following a fall in finished product prices and long product volumes (-25 kt), driving the region’s share in consolidated revenues down by 1 pp YoY to 6%.

Sales to Southeast Asia jumped by 43% YoY, primarily due to higher sales volumes of pellets and slabs, boosting the region’s share in consolidated revenues by 2 pp y-o-y to 5%.

Sales to North America declined by 32% YoY, mainly due to lower pig iron sales volumes (-192 kt), causing the region’s share in overall revenues to decrease by 2 pp YoY to 4%.

Sales to other regions rose by 39% YoY, due to greater sales volumes of flat products and iron ore concentrate, helping to increase their share in consolidated revenues by 1 pp YoY to 3%.

The Metallurgical segment generates revenues from sales of pig iron, steel, coke and other products and services. In 1Q 2019, its top line fell by 10% YoY to USD 2,333 million, driven by lower selling prices, as well as lower resales volumes of semi-finished products and coke. This was partly compensated by greater volumes of steel products (slabs, flat and tubular products) manufactured at Metinvest’s facilities. In 1Q 2019, the segment accounted for 81% of external sales, down 5 pp YoY.

Pig iron - In 1Q 2019, sales of pig iron dropped by 46% YoY to USD 166 million, primarily driven by a 44% decrease in sales volumes. Volumes fell by 356 kt YoY to 459 kt amid lower in-house production (-254 kt) and resales (-102 kt). Consequently, the share of resales in total volumes increased by 8 pp YoY to 46% in 1Q 2019, while sales to all markets fell. Moreover, a drop in the average selling price also affected sales.

Slabs - In 1Q 2019, sales of slabs increased by 41% YoY to USD 221 million. This was driven by a 65% rise in sales volumes, which grew by 189 kt YoY to 480 kt amid greater YoY output and destocking in 1Q 2019. Incremental volumes were primarily sold to Europe and Southeast Asia, where they rose by 122 kt and 62 kt, respectively. At the same time, the average selling price followed the benchmark for slabs (FOB Black Sea), which dropped by 18% YoY.

Square billets - In 1Q 2019, sales of square billets declined by 20% YoY to USD 156 million, equally due to lower selling prices and volumes. Sales volumes dropped by 38 kt YoY to 344 kt amid lower resales. MENA accounted for 95% of billet sales volumes (85% in 1Q 2018). The average selling price tracked a 16% YoY decline in the square billet benchmark (FOB Black Sea).

Flat products - In 1Q 2019, sales of flat products fell by 6% YoY to USD 1,225 million, as the average selling price decreased in line with a 17% YoY drop in the benchmark for hot-rolled coils (HRC, FOB Black Sea). This was partly compensated by a 3% YoY (or 62 kt) increase in overall sales volumes to 2,096 kt. Resales of Zaporizhstal’s goods climbed by 26 kt YoY to 833 kt, leaving the share of total sales volumes flat YoY at 40%. Sales volumes to Europe climbed by 3% due to stronger demand in Central, Eastern and Southern Europe. Volumes to MENA rose by 4% amid higher sales volumes of hot-rolled plate. While sales volumes to other regions grew by 31 kt as a result of greater resales, shipments to Ukraine declined by 9% amid weaker demand from the pipe manufacturing industry

Long products - In 1Q 2019, sales of long products fell by 11% YoY to USD 215 million due to lower selling prices, as the billet benchmark (FOB Black Sea) declined by 16% YoY. Meanwhile, sales volumes remained unchanged YoY at 363 kt, as greater resales were offset by lower sales of in-house products. The key markets for long products remained Ukraine and Europe, accounting for 37% and 35% of sales volumes, respectively.

Tubular products - In 1Q 2019, sales of tubular products rose by 12% YoY to USD 18 million. A 26% YoY increase in sales volumes was partly offset by a lower average selling price.

(US$ mn)1Q 20191Q 2018YoY
Revenues28633019-5.00%
Adjusted EBITDA435649-33.00%
margin15.00%21.00%-6 pp
CAPEX198216-8.00%
 

Source :

Posted By : Rabi Wangkhem on Mon, 27 May 2019
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