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Metinvest announces 4Q and 12M 2017 operational results

31 January 2018

Metinvest B.V., the parent company of a vertically integrated group of steel and mining companies (jointly referred to as “Metinvest” or “the Group”), today announces its operational results for the fourth quarter and 12 months ended 31 December 2017.



OPERATIONAL HIGHLIGHTS

(kt)4Q 20173Q 2017∆ kt∆ %20172016∆ kt∆ %
Crude steel 1,906 1,802 104 6% 7,630 8,393 -763 -9%
Iron ore concentrate (total) 7,024 6,791 233 3% 27,464 29,640 -2,176 -7%
Coal concentrate (total) 566 577 -11 -2% 2,590 3,051 -461 -15%


METALLURGICAL SEGMENT

Hot metal production

(kt)4Q 20173Q 2017∆ kt∆ %20172016∆ kt∆ %
Hot metal 2,154 2,026 128 6% 8,188 8,821 -633 -7%
Azovstal 1,011 868 143 16% 3,777 3,177 600 19%
Ilyich Steel 1,143 1,158 -15 -1% 4,164 3,818 346 9%
Yenakiieve Steel 0 0 0 0% 247 1,826 -1,579 -86%


Crude steel production

(kt)4Q 20173Q 2017∆ kt∆ %20172016∆ kt∆ %
Crude steel 1,906 1,802 104 6% 7,630 8,393 -763 -9%
Azovstal 1,100 999 101 10% 4,265 3,705 560 15%
Ilyich Steel 806 803 3 0% 3,096 2,736 360 13%
Yenakiieve Steel 0 0 0 0% 269 1,952 -1,683 -86%


In 4Q 2017, Metinvest’s hot metal output increased by 6% q-o-q to 2,154 kt, driven mainly by a rise of 143 kt at Azovstal. This was largely a result of downtime due to scheduled work on blast furnaces reducing from 39 days in 3Q to 11 days in 4Q, following the completion of a scheduled major overhaul on blast furnace no. 2.

In 4Q 2017, the Group’s crude steel production climbed by 6% q-o-q to 1,906 kt, mainly due to an increase of 101 kt at Azovstal, driven by greater hot metal output.

In 2017, production at the Mariupol steelmakers rose y-o-y. Hot metal output at Azovstal rose by 600 kt after blast furnace no. 4 was re-launched in February 2016 following a lengthy major overhaul. In addition, downtime due to irregular supplies of raw materials and fuel fell in 2017, boosting steel output by 560 kt. Hot metal production at Ilyich Steel rose by 346 kt after the re-launch of blast furnace no. 4 in May 2016 following a lengthy major overhaul, driving an increase in steel output of 360 kt.

 

Metal product output [1]

(kt)4Q 20173Q 2017∆ kt∆ %20172016∆ kt∆ %
Semi-finished products 797 798 -1 0% 2,761 2,262 499 22%
  Pig iron 414 442 -28 -6% 1,403 1,230 173 14%
  Slabs 383 356 27 8% 1,343 734 609 83%
  Square billets 0 0 0 0% 15 298 -283 -95%
Finished products 1,472 1,347 125 9% 5,805 6,485 -680 -10%
  Flat products 1,181 1,120 61 5% 4,675 4,385 290 7%
  Long products 221 175 46 26% 912 1,918 -1,006 -52%
  Railway products 36 8 28 350% 67 73 -6 -8%
  Tubular products 34 44 -10 -23% 151 109 42 39%
    Large-diameter pipes 0 0 0 0% 1 20 -19 -95%
    Other pipes 34 44 -10 -23% 150 89 61 69%
TOTAL 2,269 2,145 124 6% 8,566 8,747 -181 -2%

 

In 4Q 2017, Metinvest’s output of merchant semi-finished products remained virtually unchanged q-o-q at 797 kt. At the same time, there were changes in hot metal utilisation: output of merchant slabs increased by 27 kt, while that of merchant pig iron decreased by 28 kt.

In 2017, the Group’s output of merchant semi-finished products climbed by 22% y-o-y to 2,761 kt. This was due to rises in production of slabs and merchant pig iron of 609 kt and 173 kt, respectively, amid a favourable market trend.

In 4Q 2017, Metinvest’s output of finished products rose by 9% q-o-q to 1,472 kt.

  • Output of flat products rose by 61 kt q-o-q to 1,181 kt. This was due to increases in production at the European re-rolling plants of 43 kt, following lower output in 3Q amid major annual overhauls, and at Ilyich Steel of 25 kt. That growth offset a decline at Azovstal of 7 kt amid a scheduled major annual overhaul of the plate mill.
  • Output of long products rose by 46 kt q-o-q to 221 kt. This was due to a rise in production at Promet Steel of 79 kt as stable supplies of square billets have been secured. That increase offset a production decline at Azovstal of 33 kt amid a lack of orders for these products.
  • Production of rails increased by 28 kt q-o-q to 36 kt, driven by new orders from Ukrzaliznytsia.
  • Output of tubular products decreased by 10 kt q-o-q due to a seasonal reduction in demand.

In 2017, the Group’s output of finished products fell by 10% y-o-y to 5,805 kt.

  • Output of flat products rose by 290 kt y-o-y to 4,675 kt amid a revival on the market. This was mainly due to increases in production of plate at Azovstal (260 kt) and Ilyich Steel (117 kt), as well as steel sheets and coils at the European re-rollers (10 kt and 51 kt, respectively). That growth offset lower coil output at Ilyich Steel (148 kt).
  • Output of long products slumped by 1,006 kt y-o-y to 912 kt: output at Promet Steel plummeted (154 kt), as the Group had to arrange new supplies of billets for re-rolling, although this was partly offset by greater output of long products at Azovstal (121 kt).
  • Production of rails decreased by 6 kt y-o-y amid fewer orders.
  • Output of tubular products rose by 42 kt y-o-y due to an increase in other pipe making at Ilyich Steel, driven by a rise in capacity.

 

Coke production [2]

(kt)4Q 20173Q 2017∆ kt∆ %20172016∆ kt∆ %
Coke (total) 1,329 1,276 53 4% 4,736 4,325 411 10%
Coke (merchant) 350 420 -70 -17% 1,209 1,050 159 15%

 

In 4Q 2017, Metinvest’s overall coke output rose by 4% q-o-q to 1,329 kt, as Avdiivka Coke boosted production by 29 kt, Zaporizhia Coke by 15 kt and Azovstal by 9 kt.

In 2017, the Group’s total coke output rose by 10% y-o-y to 4,736 kt. This was driven by production increases of 280 kt at Avdiivka Coke, 113 kt at Azovstal and 18 kt at Zaporizhia Coke. The rise at Azovstal stemmed from more stable coal deliveries, while that at Avdiivka Coke was due to eight coke oven batteries having been in operation since May 2017.

 

MINING SEGMENT

Iron ore concentrate and pellet output [3]

(kt)4Q 20173Q 2017∆ kt∆ %20172016∆ kt∆ %
Iron ore concentrate (total) 7,024 6,791 233 3% 27,464 29,640 -2,176 -7%
Iron ore products (merchant) 3,763 3,552 211 6% 15,067 17,093 -2,026 -12%
  Iron ore concentrate 2,378 1,783 595 33% 9,325 10,946 -1,621 -15%
  Pellets 1,385 1,769 -384 -22% 5,742 6,147 -405 -7%

In 4Q 2017, Metinvest’s production of iron ore concentrate rose by 3% q-o-q to 7,024 kt, due to increases in output of 167 kt at Ingulets GOK, 61 kt at Northern GOK and 5 kt at Central GOK.

In 4Q 2017, the Group’s output of merchant iron ore products rose by 6% q-o-q to 3,763 kt amid:

  • an increase in merchant concentrate production of 595 kt, resulting from higher overall concentrate output, and a decrease in pellet production;
  • a fall in merchant pellet production of 384 kt, driven by a decline in output of 248 kt at Northern GOK amid a scheduled major overhaul of the Lurgi 552-A roasting machine and of 136 kt at Central GOK due to a scheduled semi-annual refurbishment of the OK-324 roasting machine.

In 2017, Metinvest’s output of iron ore concentrate dropped by 7% y-o-y to 27,464 kt, caused by a drive to catch up with overburden removal work and amid expected retirement of iron bearing sands for concentrate production. This in turn led to a decrease in merchant concentrate production of 15% y-o-y to 9,325 kt.

In 2017, the Group’s merchant pellet output dropped by 7% y-o-y to 5,742 kt. This was due to the cessation of shipments to certain customers in the territory not controlled by the government of Ukraine and a shift in pricing in favour of concentrate, which offered higher margins in February-April 2017.

Coal concentrate production [4]

(kt)4Q 20173Q 2017∆ kt∆ %20172016∆ kt∆ %
Coal concentrate (total) 566 577 -11 -2% 2,590 3,051 -461 -15%
Coal concentrate (merchant) 37 38 -1 -3% 445 1,440 -995 -69%

In 4Q 2017, coal concentrate output at United Coal’s mines decreased by 2% q-o-q to 566 kt.

In 2017, Metinvest’s total coal concentrate production dropped by 15% y-o-y to 2,590 kt. A lower contribution by Krasnodon Coal to the total coal mined by Metinvest (613 kt) was partly compensated by an increase in production of 152 kt at United Coal to cover intragroup needs. The latter was driven by a rise of 250 kt at the Wellmore mines, while output at the Carter Roag and Affinity mines dropped by 51 kt and 47 kt, respectively, amid a change in geological conditions.



[1] Excludes intragroup sales and intragroup consumption; figures for 2016 were updated

Pig iron merchant pig iron

Flat products include hot-rolled plates, as well as hot-rolled, cold-rolled and hot-dip galvanised sheets and coils

Long products include hot rolled sections (light, medium, heavy), rebar, merchant bars and wire rod

Rail products include light and heavy rails and rail fasteners

Other pipes include other ERW (electric resistance welded) pipes and seamless pipes

[2] Merchant coke production excludes intragroup sales and consumption

[3] Figures for output of merchant iron ore products exclude intragroup sales and consumption

[4] Coal concentrate (total) production figures present coal production in equivalent of coal concentrate. Merchant coal concentrate production excludes intragroup sales and intragroup consumption.

For editors:

Andriy Bondarenko
Head of Investor Relations
Tel.: +41 22 591 03 74 (Switzerland)
Tel.: +380 44 251 83 24 (Ukraine)
andriy.bondarenko@metinvestholding.com

Yana Kalmykova
Manager of Investor Relations
Tel.: +380 44 251 83 36 (Ukraine)
yana.kalmykova@metinvestholding.com

METINVEST GROUP is a vertically integrated group of steel and mining companies that manages every link of the value chain, from mining and processing iron ore and coal to making and selling semi-finished and finished steel products. It comprises steel and mining production facilities located in Ukraine, Europe and the US, as well as a sales network covering all key global markets. It comprises two operating segments: Metallurgical and Mining. Its strategic vision is to become a leading vertically integrated steel producer in Europe, delivering sustainable growth and profitability resilient to business cycles and providing investors with returns above the industry benchmarks. For the nine months ended 30 September 2017, the Group reported revenues of US$6.2 bn and an EBITDA margin of 22%.

METINVEST HOLDING, LLC is the management company of Metinvest Group