TIDMEVR
RNS Number : 6656O
Evraz Plc
31 January 2019
EVRAZ Q4 2018 and FY 2018 TRADING UPDATE
31 January 2018 - EVRAZ plc (LSE: EVR; "EVRAZ" or the "Group")
today released its trading update for the fourth quarter and full
year of 2018.
Q4 2018 vs Q3 2018 HIGHLIGHTS
-- In Q4 2018, EVRAZ' consolidated crude steel output was flat QoQ at 3.1 million tonnes.
-- Sales volumes of semi-finished products fell by 16.0% QoQ,
primarily due to production decrease in August-September amid
capital repairs of blast furnace no.3 at EVRAZ ZSMK which mostly
influenced the Q4 2018 sales as well as due to late shipment of
products in December 2018 (transfer of title took place in January
2019 taking into account the delivery time).
-- Sales of finished products edged down by 1.6%, which was
mostly attributable to lower sales volumes of construction and
railway products amid a seasonal reduction in market demand.
-- Production of raw coking coal climbed by 15.3% QoQ to 6.9
million tonnes due to increased longwall productivity at the
Raspadskaya mine, as well as from bringing mothballed equipment
back online and hiring third-party contractors at Raspadsky
open-pit mine and the open-pit at Raspadskaya-Koksovaya site.
-- Coking coal product sales grew by 4.7% QoQ, mainly due to
higher export sales amid favourable market conditions and higher
shipments to deliver outstanding volumes from Q3 2018. This was
partly offset by lower raw coking coal shipments during the
longwall repositioning at Yuzhkuzbassugol's mines.
-- External iron ore product sales rose by 7.7% QoQ, primarily
because EVRAZ ZSMK required less feedstock during the capital
repairs of its blast furnace no. 3 in August-December. An
additional driver was increased sales of material stockpiled while
EVRAZ KGOK's indurating machine was being repaired in Q3 2018.
-- Sales of vanadium products dropped by 17.9% QoQ, mainly due
to replenishing ferrovanadium stocks to serve 2019 requirements.
Other factors included maintenance at EVRAZ Vanady-Tula to reline
the roasting kiln refractories and replace the grinding mill during
September and October.
FY 2018 vs FY 2017 HIGHLIGHTS
-- In FY 2018, EVRAZ' consolidated crude steel production
decreased by 7.3% YoY to 13.0 million tonnes. This was mainly
attributable to the disposal of EVRAZ DMZ in March 2018, as well as
a reduction in crude steel production at EVRAZ ZSMK following the
capital repairs of its blast furnace no. 3 in August-December 2018,
a technical incident at EVRAZ ZSMK's blast furnace no. 1 in August
2018 and the launch of EVRAZ NTMK's blast furnace no. 7 in March
2018.
-- Sales volumes of semi-finished products dropped by 18.0% YoY,
primarily due to reduced steel product output at the Group's
Russian mills. Meanwhile, sales of finished products edged up by
3.5%, which was mostly attributable to higher output in North
America in response to higher rail, rod bar and seamless pipe
demand at EVRAZ Pueblo, as well as the stabilization of steelmaking
operations at EVRAZ Regina.
-- Production of raw coking coal rose by 3.8% YoY to 24.2
million tonnes after the Raspadskaya-Koksovaya site increased
open-pit mining volumes to boost output of premium low-vol coking
coal.
-- External iron ore product sales fell by 32.0% YoY, primarily
as a result of the disposal of EVRAZ Sukha Balka in June 2017.
-- Sales of vanadium products declined by 18.8% YoY amid higher
oxide availability during 2017 resulting from conversion of slag
stocks at third parties, production downtime in 2018 due to launch
of blast furnace no. 7 at EVRAZ NTMK and maintenance at EVRAZ
Vanady-Tula, as well as no Nitrovan sales in 2018 from EVRAZ
Vametco reported following its deconsolidation in May 2017.
Q4 2018/ Q3 2018, 12m 2018/ 12m 2017,
Product, '000 tonnes Q4 2018 Q3 2018 change 12m 2018 12m 2017 change
------------------------ -------- -------- ------------------------ --------- --------- ------------------------
Total crude steel
production 3,102 3,103 0.0% 13,019 14,037 -7.3%
Russia 2,599 2,642 -1.6% 10,967 11,367 -3.5%
Ukraine 0 0 0.0% 154 918 -83.2%
North America* 503 461 9.1% 1,898 1,752 8.3%
Total raw coking coal
mined 6,853 5,944 15.3% 24,188 23,306 3.8%
Total coking coal
concentrate
production 4,221 3,906 8.1% 16,188 15,144 6.9%
Iron ore products
production 3,367 3,293 2.2% 13,515 13,879 -2.6%
Total sales of steel
products 2,871 3,093 -7.2% 12,173 12,954 -6.0%
Semi-finished
products 1,003 1,194 -16.0% 4,702 5,735 -18.0%
Finished products 1,868 1,899 -1.6% 7,471 7,219 3.5%
Total sales of
third-party steel
products 228 255 -10.6% 900 802 12.2%
Sales of coking coal
products 2,770 2,645 4.7% 11,014 10,498 4.9%
Sales of iron ore
products 460 427 7.7% 1,980 2,912 -32.0%
Sales of vanadium final
products** 2,659 3,238 -17.9% 12,352 15,213 -18.8%
------------------------ -------- -------- ------------------------ --------- --------- ------------------------
Note. Numbers in this table and the tables below may not add up
to totals due to rounding.
* The Q4 2018 production and sales volumes of EVRAZ North
America are preliminary.
** in tonnes of pure vanadium; the 2017 data updated due to an
adjustment in classification
STEEL SEGMENT
Total production volumes (RUSSIA and UKRAINE)
Product, '000 tonn
es Q4 2018 Q3 Q4 2018 / Q3 2018, change 12m 2018 12m 2017 12m 2018 / 12m 2017, change
2018
-------------------- -------- ------ -------------------------- ----------- ----------- ----------------------------
Pig iron production 2,348 2,393 -1.9% 9,993 11,320 -11.7%
EVRAZ ZSMK 1,090 1,193 -8.6% 5,195 5,586 -7.0%
EVRAZ NTMK 1,258 1,200 4.8% 4,644 4,715 -1.5%
EVRAZ DMZ 0 0 0.0% 153 1,019 -85.0%
Crude steel
production 2,599 2,642 -1.6% 11,121 12,285 -9.5%
EVRAZ ZSMK 1,494 1,605 -6.9% 6,851 7,166 -4.4%
EVRAZ NTMK 1,105 1,037 6.6% 4,116 4,201 -2.0%
EVRAZ DMZ 0 0 0.0% 154 918 -83.2%
Iron ore products
production 3,367 3,293 2.2% 13,515 13,879 -2.6%
Pellets (EVRAZ
KGOK) 1,571 1,661 -5.4% 6,509 6,440 1.1%
Sinter (EVRAZ
KGOK) 908 898 1.1% 3,541 3,448 2.7%
Concentrate
saleable
(Evrazruda,
EVRAZ KGOK) 888 734 21.0% 3,465 3,991 -13.2%
Coking coal
concentrate
production 519 498 4.2% 2,057 2,083 -1.2%
From own raw
coal* 294 321 -8.4% 1,216 854 42.4%
From third-party
raw coal 225 177 27.1% 841 1,229 -31.6%
Gross vanadium slag
production** 4,377 4,261 2.7% 17,052 18,636 -8.5%
-------------------- -------- ------ -------------------------- ----------- ----------- ----------------------------
Note. Numbers in this table and the tables below may not add up
to totals due to rounding.
* from Coal segment
** in tonnes of pure vanadium
In Q4 2018, EVRAZ' pig iron output at Russian mills edged down
by 1.9% QoQ to 2.3 million tonnes. This was mainly due to capital
repairs of EVRAZ ZSMK's blast furnace no. 3 in August-December. In
FY 2018, production of pig iron dropped by 11.7% YoY, which was
primarily attributable to the disposal of EVRAZ DMZ in March 2018,
as well as the capital repairs of EVRAZ ZSMK's blast furnace no. 3
in August-December 2018 and a technical incident at EVRAZ ZSMK's
blast furnace no. 1 in August 2018.
Crude steel output went down 1.6% QoQ to 2.6 million tonnes, in
line with overall pig iron output trends. In FY 2018, crude steel
production fell by 9.5% YoY amid a fall in pig iron output.
Iron ore product output increased by 2.2% QoQ to 3.4 million
tonnes, primarily due to accumulation of raw ore stockpiles in the
previous periods. In FY 2018, the output of iron ore products went
down 2.6% YoY, primarily due to emergency shutdown of skip winding
and worse raw ore quality.
Consolidated output of vanadium slag increased by 2.7% QoQ from
the low base caused by the cold repair of EVRAZ NTMK's converter
no. 1 in Q3 2018. In FY 2018, vanadium slag production dropped by
8.5% YoY due to a reduction in vanadium content in pig iron, a
lower vanadium extraction ratio and decreased volumes of pig iron
duplex processing.
Total sales volumes (RUSSIA, UKRAINE, KAZAKHSTAN and EUROPE)
Q4 2018 / Q3 2018, 12m 2018 / 12m 2017,
Product, '000 tonnes Q4 2018 Q3 2018 change 12m 2018 12m 2017 change
------------------------ -------- -------- ----------------------- ---------- ---------- -----------------------
Coke 251 135 85.9% 569 867 -34.4%
Steel products,
external sales 2,323 2,571 -9.6% 10,080 11,077 -9.0%
Semi-finished products 1,003 1,194 -16.0% 4,703 5,735 -18.0%
Slabs 387 415 -6.7% 1,764 1,935 -8.8%
Billets 504 642 -21.5% 2,448 3,011 -18.7%
Other steel products 112 137 -18.2% 490 789 -37.9%
Finished products 1,320 1,377 -4.1% 5,377 5,342 0.7%
Construction products 771 826 -6.7% 3,138 3,237 -3.1%
Railway products 334 341 -2.1% 1,345 1,308 2.8%
Flat products 84 75 12.0% 347 245 41.6%
Other steel products 130 135 -3.7% 548 552 -0.7%
Steel products,
inter-segment sales 151 120 25.8% 573 587 -2.4%
Sales of third-party
steel products,
external sales 228 255 -10.6% 900 802 12.2%
Sales of iron ore
products, external
sales 460 427 7.7% 1,980 2,912 -32.0%
Pellets 458 425 7.8% 1,972 1,726 14.3%
Other 2 2 0.0% 8 1,186 -99.3%
Sales of vanadium final
products* 2,659 3,238 -17.9% 12,352 15,213 -18.8%
------------------------ -------- -------- ----------------------- ---------- ---------- -----------------------
Note. Numbers in this table and the tables below may not add to
totals due to rounding.
* in tonnes of pure vanadium; the 2017 data have been updated
due to an adjustment in classification
In Q4 2018, external sales of steel products fell by 9.6% QoQ.
Sales of semi-finished products declined by 16.0%, mostly due to
production decrease in August-September amid capital repairs of
blast furnace no.3 at EVRAZ ZSMK which mostly influenced the Q4
2018 sales as well as due to late shipment of products in December
2018 (transfer of title took place in January 2019 taking into
account the delivery time). In FY 2018, lower crude steel output
led to a decrease in steel product sales volumes.
Sales of finished products dropped by 4.1% QoQ, mainly driven by
lower sales of construction and railway products. In FY 2018, sales
volumes of finished products edged up by 0.7% YoY, mainly due to
higher sales volumes of flat products.
Sales of construction products fell by 6.7% QoQ, mainly due to a
seasonal decrease of market demand. In FY 2018, sales volumes of
construction products were down 3.1% YoY, mainly due to slowdown of
construction works in Russia.
Sales of railway products edged down by 2.1% QoQ due to capital
repairs at EVRAZ NTMK's rail and beam shop in October and November.
In FY 2018, sales volumes of railway products rose by 2.8% YoY,
mainly due to increased demand for wheels and profiles for wagon
building.
Sales of flat products climbed by 12.0% QoQ, mainly due to a
recovery of production at EVRAZ Palini e Bertoli from furnace
repairs in July and a maintenance stop in August. In FY 2018, sales
volumes surged by 41.6%, as EVRAZ Palini e Bertoli has been
operating two furnaces since September 2017.
Sales of iron ore products rose by 7.7% QoQ, primarily because
EVRAZ ZSMK required less feedstock during the capital repairs of
its blast furnace no. 3 in August-December. An additional driver
was increased sales of material stockpiled while EVRAZ KGOK's
indurating machine was being repaired in Q3 2018. In FY 2018, iron
ore product sales dropped by 32.0% YoY, primarily as a result of
the disposal of EVRAZ Sukha Balka in June 2017.
Sales of vanadium products declined by 17.9% QoQ, mainly due to
replenishing ferrovanadium stockpiles and shifting sales to serve
2019 requirements. Other factors included maintenance at EVRAZ
Vanady-Tula to reline the roasting kiln refractories and replace
the grinding mill in September and October, and increased demand
for spot sales during Q3 2018 due to higher capacity utilization at
US steelmakers.
Sales of vanadium products fell by 18.8% YoY amid higher oxide
availability during 2017 resulting from conversion of slag stocks
at third parties, production downtime in 2018 due to launch of
blast furnace no. 7 at EVRAZ NTMK and maintenance at EVRAZ
Vanady-Tula, as well as no Nitrovan sales in 2018 from EVRAZ
Vametco reported following its deconsolidation in May 2017.
Q4 2018 / Q3 2018, 12m 2018 / 12m 2017,
Cash cost, US$/tonne Q4 2018 Q3 2018 change 12m 2018 12m 2017 change
------------------------- -------- -------- ----------------------- ---------- ---------- ----------------------
Slab cash cost
(vertically integrated) 195 209 -6,6% 242 247 -2,3%
Iron ore products (Fe
62%) 42 34 22,1% 37 34 11,3%
Average selling prices
US$/tonne (ex works) Q4 2018 Q3 2018 12m 2018 12m 2017
------------------------------------------------------------- -------- -------- --------- ---------
Coke 202 201 217 222
Steel products 504 541 537 463
Semi-finished products* 424 466 453 370
Construction products 535 567 583 536
Railway products 662 676 685 643
Other steel products 627 645 636 548
Pellets 66 68 65 61
Metal Bulletin Ferro-Vanadium basis 78% min, free DDP,
consumer plant, 1st grade Western Europe** 108.60 85.46 81.28 32.66
Ryan's Notes N.A. FeV 80% min, US ex-warehouse, duty paid** 118.65 87.49 86.29 33.99
------------------------------------------------------------- -------- -------- --------- ---------
* includes prices for pig iron
** US$/kgV
In Q1 2019, the Group expects its pig iron production to
increase by roughly 15% QoQ due to the completion of capital
repairs at EVRAZ ZSMK's blast furnace no. 3 in December. Pellet
production volumes at EVRAZ KGOK should rise by roughly 4% during
the same period following the completion of indurating machine
repairs.
STEEL, NORTH AMERICA SEGMENT
Production and sales volumes
Q4 2018 / Q3 2018, 12m 2018 / 12m 2017,
Product, '000 tonnes Q4 * 2018 Q3 2018 change 12m 2018 12m 2017 change
------------------------ ---------- -------- ---------------------- ---------- ---------- ----------------------
Crude steel 503 461 9.1% 1,898 1,752 8.3%
EVRAZ Pueblo 233 232 0.4% 911 821 11.0%
EVRAZ Regina 270 228 18.4% 986 931 5.9%
Sales of steel products 548 523 4.8% 2,094 1,877 11.6%
Construction products 74 71 4.2% 287 241 19.1%
Railway products 111 96 15.6% 415 376 10.4%
Flat-rolled products 126 140 -10.0% 568 512 10.9%
Tubular products 237 216 9.7% 824 749 10.0%
3
* The Q4 2018 production and sales volumes data are
preliminary.
In Q4 2018, crude steel production climbed by 9.1% QoQ,
primarily driven by higher production at EVRAZ Regina following a
planned maintenance outage in Q3 2018, as well as improved
operational performance. In FY 2018, crude steel production was
8.3% higher YoY, primarily due to higher rail, rod bar and seamless
pipe demand at EVRAZ Pueblo, as well as increased demand for spiral
and line pipe products and the stabilization of steelmaking
operations at EVRAZ Regina.
In FY 2018, sales volumes of construction products grew by 19.1%
YoY as a result of improved demand.
Sales of railway products rose by 15.6% QoQ following a planned
maintenance outage in Q3 2018. In FY 2018, sales volumes of railway
products increased by 10.4% YoY amid stronger demand.
Sales of flat-rolled products fell by 10.0% QoQ, primarily due
to a planned maintenance outage in Q4 2018, as well as a rail car
shortage at the year-end. In FY 2018, sales volumes of flat-rolled
products rose by 10.9% YoY as a result of improved demand, which
was partly driven by increased wind tower business.
Tubular product sales volumes were up 9.7% QoQ, mostly as a
result of improved sales of spiral and small-diameter line pipe. In
FY 2018, sales of tubular products climbed by 10.0% as a result of
increased demand for seamless and spiral pipe, as well as
small-diameter line pipe.
Prices for construction and flat-rolled products were up during
Q4 2018, reflecting higher prevailing prices for scrap and other
inputs, reduced pressure from imports and improving demand
fundamentals. Prices for flat products and other steel products
decreased in the same period due to changes in customer preference
and the product mix.
Average selling prices
US$/tonne (ex works) Q4 2018 Q3 2018 12m 2018 12m 2017
----------------------- -------- -------- --------- ---------
Construction products 889 871 820 629
Flat-rolled products 1,074 1,129 991 790
Tubular products 1,267 1,242 1,241 1,106
----------------------- -------- -------- --------- ---------
In Q1 2019, the Group expects crude steel output to increase
slightly QoQ and tubular product volumes to edge down QoQ due to
pressure from imports, while flat-rolled products should be up
slightly QoQ following a planned maintenance outage in Q4 2018.
EVRAZ expects construction product volumes to be flat QoQ amid a
stable market and rail volumes to grow by 4-5% due to improving
customer demand.
COAL SEGMENT
Production volumes
Q4 2018 / Q3 2018, 12m 2018 / 12m 2017,
Product, '000 tonnes Q4 2018 Q3 2018 change 12m 2018 12m 2017 change
------------------------ -------- -------- ------------------------ --------- --------- ------------------------
Raw coking coal (mined) 6,853 5,944 15.3% 24,188 23,306 3.8%
Yuzhkuzbassugol 2,188 2,697 -18.9% 10,360 10,967 -5.5%
Raspadskaya 4,376 2,926 49.6% 12,740 11,435 11.4%
Mezhegeyugol 289 321 -10.0% 1,088 904 20.3%
Coking coal concentrate
(production) 3,702 3,408 8.6% 14,130 13,061 8.2%
Produced at
Yuzhkuzbassugol coal
washing plants 1,428 1,496 -4.5% 6,419 6,419 0.0%
Produced at
Raspadskaya coal
washing plant 2,274 1,912 18.9% 7,711 6,641 16.1%
------------------------ -------- -------- ------------------------ --------- --------- ------------------------
In Q4 2018, production of raw coking coal rose by 15.3% QoQ,
primarily due to increased longwall productivity at the Raspadskaya
mine, as well as from bringing mothballed equipment back online and
hiring third-party contractors at Raspadsky open-pit mine and the
open-pit at Raspadskaya-Koksovaya site. This was partly offset by
longwall repositioning at Yuzhkuzbassugol's mines. In FY 2018,
production of raw coking coal grew by 3.8% YoY after the
Raspadskaya-Koksovaya site increased open-pit mining volumes to
boost output of premium low-vol coking coal.
Coking coal concentrate output climbed by 8.6% QoQ, primarily
due to the Raspadskaya coal washing plant increasing production in
line with higher raw coking coal mining volumes in Q4 2018, as well
as lower concentrate output in Q3 2018 amid higher ash content in
the coal produced at the Raspadskaya mine. This was partly offset
by a decrease in volumes at the Yuzhkuzbassugol coal washing
plants. In FY 2018, coking coal concentrate output went up 8.2%
YoY, mainly due to the improvement of extraction processes and
decreased ash content in run-of-mine coal.
Sales volumes
Q4 2018 / Q3 2018, 12m 2018 / 12m 2017,
Product, '000 tonnes Q4 2018 Q3 2018 change 12m 2018 12m 2017 change
------------------------ -------- -------- ----------------------- ---------- ---------- -----------------------
External sales 2,770 2,645 4.7% 11,014 10,498 4.9%
Raw coking coal 313 570 -45.1% 1,690 2,302 -26.6%
Coking coal
concentrate 2,457 2,075 18.4% 9,323 8,197 13.7%
Intersegment sales 1,472 1,613 -8.7% 6,017 5,778 4.1%
Raw coking coal 409 545 -25.0% 1,863 1,160 60.6%
Coking coal
concentrate 1,063 1,068 -0.5% 4,153 4,618 -10.1%
------------------------ -------- -------- ----------------------- ---------- ---------- -----------------------
In Q4 2018, external sales volumes of coking coal went up 4.7%
QoQ, mainly due to increased export sales amid favourable market
conditions and higher shipments to deliver outstanding volumes from
Q3 2018. This was partly offset by lower raw coking coal shipments
during the longwall repositioning at Yuzhkuzbassugol's Uskovskaya
mine. In FY 2018, coking coal sales volumes climbed by 4.9% YoY,
mainly because of increased shipments to the Southeast Asia and
higher sales to European countries.
Q4 2018 / Q3 2018, 12m 2018 / 12m 2017,
Cash cost, US$/tonne Q4 2018 Q3 2018 change 12m 2018 12m 2017 change
------------------------ -------- -------- ----------------------- ---------- ---------- -----------------------
Coking coal concentrate 46 49 -6,3% 47 42 12,6%
Average selling prices
US$/tonne (ex works) Q4 2018 Q3 2018 12m 2018 12m 2017
------------------------- -------- -------- --------- ---------
Raw coking coal 67 57 65 64
Coking coal concentrate 113 113 120 117
------------------------- -------- -------- --------- ---------
In Q4 2018, coking coal sales prices moved in line with global
benchmarks.
In Q1 2019, the Group expects raw coal production to decrease
QoQ, mainly driven by longwall repositioning at Yuzhkuzbassugol's
Alardinskaya mine, as well as increased work to remove the
overburden at Raspadsky open-pit mine and the open-pit at
Raspadskaya-Koksovaya site to prepare reserves for mining.
Notes:
Semi-finished products include slabs, billets, pipe blanks and
other semi-finished products.
Construction products include beams, channels, angles, rebars,
wire rods, wire and other construction products.
Railway products include rails, wheels, tyres and other railway
products.
Flat-rolled products include commodity plate, specialty plate
and other flat products.
Tubular products include large-diameter line pipes, ERW pipes
and casings, seamless pipes and other tubular products.
Other steel products include rounds, grinding balls, mine
uprights, strips, etc. They also include railway products for
Ukraine.
For further information:
Media Relations:
London: +44 207 832 8998 Moscow: +7 495 937 6871
media@evraz.com
Investor Relations:
London: +44 207 832 8990 Moscow: +7 495 232 1370
ir@evraz.com
EVRAZ is a vertically integrated steel, mining and vanadium
business with operations in the Russian Federation, Kazakhstan, US,
Canada, Czech Republic and Italy. EVRAZ is among the top steel
producers in the world based on crude steel production of 14
million tonnes in 2017. A significant portion of the Group's
internal consumption of iron ore and coking coal is covered by its
mining operations. The Group's consolidated revenues for the year
ended 31 December 2017 were US$10,827 million, and consolidated
EBITDA amounted to US$2,624 million.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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