REG - Evraz Plc - EVRAZ Q1 2019 TRADING UPDATE

EvrazAnnouncement

29/04/2019 07:05

RNS Number : 3638X
Evraz Plc
29 April 2019
 


EVRAZ Q1 2019 TRADING UPDATE
29 April 2019 - EVRAZ plc (LSE: EVR; "EVRAZ" or the "Group") today released its trading update for the first quarter of 2019.
 
 
Q1 2019 vs Q4 2018 HIGHLIGHTS
 
·      In Q1 2019, EVRAZ' consolidated crude steel output climbed by 12.4% QoQ to 3.5 million tonnes, primarily as a result of higher pig iron production following the completion of capital repairs at EVRAZ ZSMK's blast furnace no. 3 at the end of Q4 2018.
·      Total steel product sales rose by 8.4% QoQ, driven by higher crude steel production. Sales of semi-finished products surged by 29.0%, primarily due to increased pig iron and crude steel output. This was partly offset by a 2.7% reduction in sales of finished products, which was mostly attributable to lower sales of construction products in Russia and tubular and railway products in North America.
·      Production of raw coking coal remained flat QoQ. In Q1 2019, external sales volumes of coking coal products declined by 4.1% as coking coal concentrate sales subsided from the elevated levels during the longwall repositioning at Yuzhkuzbassugol's Uskovskaya mine in Q4 2018.
·      Sales of vanadium products fell by 5.3% QoQ, mainly due to a sharp decline of demand from the automotive industry and high stock levels at steel makers, accumulated during a period of sharp FeV price increase.
 




Product, '000 tonnes


Q1
2019


Q4
2018


Q1 2019/ Q4 2018, change


Q1
 2018


Q1 2019/ Q1 2018, change




Total crude steel production


3,488


3,102


12.4%


3,351


4.1%




Russia


2,986


2,599


14.9%


2,730


9.4%




Ukraine


0


0


n/a


154


n/a




North America


502


503


-0.2%


467


7.5%




Total raw coking coal mined


6,844


6,853


-0.1%


5,969


14.7%




Total coking coal concentrate

production


3,684


4,221


-12.7%


4,154


-11.3%




Iron ore products production


3,636


3,367


8.0%


3,431


6.0%




Total sales of steel products *


3,187


2,939


8.4%


3,068


3.9%




   Semi-finished products


1,335


1,035


29.0%


1,303


2.5%




   Finished products


1,852


1,904


-2.7%


1,765


4.9%




Total sales of third-party steel products


180


228


-21.0%


170


5.9%




Sales of coking coal products


2,656


2,770


-4.1%


2,713


-2.1%




Sales of iron ore products


464


460


0.9%


585


-20.7%




Sales of vanadium final products **


2,518


2,659


-5.3%


3,108


-19.0%




Note. Numbers in this table and the tables below may not add up to totals due to rounding.
* Q1 2019 production and sales volumes of EVRAZ North America are preliminary
** in tonnes of pure vanadium
 
CONFERENCE CALL DETAILS
 
A conference call to discuss the trading update will be held on Monday, 29 April 2019, at:
·      2 pm (London time)
·      4 pm (Moscow time)
·      9 am (New York time)
Key speakers:
·      Alexey Ivanov, Senior Vice President, Commerce and Business development,
·      Alexander Erenburg, Vice President, Head of the Vanadium Division
·      Sergey Stepanov, Vice President, Head of the Coal Division
·      Alexander Vasiliev, Chief Financial Officer, EVRAZ North America
To join the call, please dial:
 




+ 44 (0)330 336 9411


UK




+7 495 646 9190


Russia




+1 929 477 0448


US






Conference ID: 3551607
 
To avoid any technical inconvenience, it is recommended that participants dial in 10 minutes before the start of the call.
 
The Q1 2019 Trading update presentation will be available on the Group's website, www.evraz.com, on Monday, 29 April 2019, at the following link:
http://www.evraz.com/investors/presentations/
 
FORWARD-LOOKING STATEMENTS
This document contains "forward-looking statements", which include all statements other than statements of historical facts, including, without limitation, any statements preceded by, followed by or that include the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would", "could" or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Group's control that could cause the actual results, performance or achievements of the Group to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements, including, among others, the achievement of anticipated levels of profitability, growth, cost and synergy of recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock markets or in the price of the Group's shares or GDRs, financial risk management and the impact of general business and global economic conditions. Such forward-looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the environment in which the Group will operate in the future. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These forward-looking statements speak only as at the date as of which they are made, and each of EVRAZ and the Group expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in EVRAZ' or the Group's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. Neither the Group, nor any of its agents, employees or advisors intends or has any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this document.

 
STEEL SEGMENT
 
Total production volumes (RUSSIA, UKRAINE, KAZAKHSTAN and EUROPE)




Product, '000 tonnes


Q1 2019


Q4 2018


Q1 2019/ Q4 2018, change


Q1 2018


Q1 2019/ Q1 2018, change




Pig iron production


2,712


2,348


15.5%


2,571


5.5%




EVRAZ ZSMK


1,471


1,090


35.0%


1,397


5.3%




EVRAZ NTMK


1,241


1,258


-1.4%


1,020


21.7%




EVRAZ DMZ


0


0


n/a


153


- n/a




Crude steel production


2,986


2,599


14.9%


2,884


3.5%




EVRAZ ZSMK


1,895


1,494


26.8%


1,790


5.9%




EVRAZ NTMK


1,091


1,105


-1.3%


940


16.1%




EVRAZ DMZ


0


0


n/a


154


n/a




Total steel products production, net of re-rolled

volume


2,622


2,354


11.4%


2,549


2.9%




EVRAZ ZSMK


1,686


1,376


22.5%


1,608


4.9%




EVRAZ NTMK


794


845


-6.0%


679


16.9%




EVRAZ DMZ


0


0


n/a


132


-100%




EVRAZ Palini e Bertoli


97


82


18.3%


91


6.6%




EVRAZ Caspian Steel


45


51


-11.8%


39


15.4%




Iron ore products production


3,636


3,367


8.0%


3,431


6.0%




Pellets (EVRAZ KGOK)


1,643


1,571


4.6%


1,651


-0.5%




Sinter (EVRAZ KGOK)


898


908


-1.1%


831


8.1%




Concentrate saleable (EVRAZ KGOK, Evrazruda)


1,095


888


23.3%


949


15.4%




Coking coal concentrate production


454


519


-12.5%


522


-13.0%




From own raw coal*


256


294


-12.9%


282


-9.2%




From third-party raw coal


198


225


-12.0%


240


-17.5%




Gross vanadium slag production**


4,446


4,377


1.6%


4,020


10.6%




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 Q1 2019, pig iron output at EVRAZ' Russian mills grew by 15.5% QoQ to 2.7 million tonnes following the completion of capital repairs at EVRAZ ZSMK's blast furnace no. 3.
Crude steel output climbed by 14.9% QoQ to 3.0 million tonnes following an increase in pig iron output.
Iron ore products' output rose by 8% QoQ to 3.6 million tonnes mainly due to improved performance of Evrazruda and increased demand for own-produced iron ore at EVRAZ ZSMK after the completion of capital repairs at blast furnace no. 3
 
 
Total sales volumes (RUSSIA, UKRAINE, KAZAKHSTAN and EUROPE)




Product, '000 tonnes


Q1 2019


Q4 2018


Q1 2019/
Q4 2018, change


Q1 2018


Q1 2019/ Q1 2018, change




Coke


65


251


-74.1%


110


-40.9%




Steel products, external sales


2,583


2,323


11.2%


2,586


-0.1%




Semi-finished products


1,279


1,003


27.5%


1,303


-1.8%




   Slabs


482


387


24.5%


422


14.2%




   Billets


646


504


28.2%


763


-15.3%




   Other steel products *


151


112


34.8%


119


26.9%




Finished products


1,304


1,320


-1.2%


1,283


1.6%




   Construction products


729


771


-5.4%


735


-0.8%




   Railway products


343


334


2.7%


308


11.4%




   Flat products


91


84


8.3%


94


-3.2%




   Other steel products


141


130


8.5%


146


-3.4%




Steel products, inter-segment sales


186


151


23.2%


129


44.2%




Third-party steel products, external sales


180


228


-21.1%


170


5.9%




Iron ore products, external sales


464


460


0.9%


585


-20.7%




Pellets


464


458


1.3%


585


-20.7%




Other


0


2


-100.0%


0


n/a




Sales of vanadium final products**


2,518


2,659


-5.3%


3,108


-19.0%




 Note. Numbers in this table and the tables below may not add to totals due to rounding.
* includes tonnes of pig iron
** in tonnes of pure vanadium
 
In Q1 2019, external sales of steel products rose by 11.2% QoQ, mostly due to higher crude steel production volumes. Sales of semi-finished products jumped by 27.5%, mostly due to the completion of capital repairs at EVRAZ ZSMK's blast furnace no. 3, which affected sales in Q4 2018.
 
Sales of finished products dropped by 1.2% QoQ, mainly driven by lower sales of construction products, which were down 5.4% QoQ due to a decrease of market demand in retail in Q1 2019 amid seasonal slowdown of construction works in Russia.
 
Sales of vanadium products fell by 5.3% QoQ, mainly due to a sharp decline of demand from the automotive industry and high stock levels at steel makers, accumulated during a period of sharp FeV price increase.

 
 




Cash cost, US$/t


Q1
2019


Q4
2018


Q1 2019 / Q4 2018, change


 Q1
2018


Q1 2019 / Q1 2018, change




Slab cash cost vertically integrated


223


195


14.4 %


256


-12.9 %




Iron ore products (Fe 62%)


37


42


-11.9 %


38


-2.6 %




 
Average selling prices




US$/tonne (ex works)


Q1
2019


Q4
2018


Q1
2018






Coke


223


202


264




Steel products


481


504


544




Semi-finished products*


381


424


439




Construction products


522


535


618




Railway products


743


662


720




Other steel products


593


627


628




Pellets


75


66


61




Metal Bulletin Ferro-Vanadium basis 78% min, free DDP,

consumer plant, 1st grade Western Europe**


73.33


108.60


61.90




Ryan's Notes N.A. FeV 80% min, US ex-warehouse, duty paid**


87.93


118.65


63.32




* includes prices for pig iron
** US$/kgV
 
In Q2 2019, pig iron production volumes are expected to remain flat.
 
 
 
 
STEEL, NORTH AMERICA SEGMENT
 
Production and sales volumes




Product, '000 tonnes


Q1
2019


Q4 2018


Q1 2019/
Q4 2018, change


Q1 2018


Q1 2019/ Q1 2018, change




Crude steel


502


503


-0.2%


467


7.5%




EVRAZ U.S. mills


234


233


0.4%


228


2.6%




EVRAZ Canadian mills


268


270


-0.7%


239


12.1%




Total steel products production, net of re-rolled volume


524


575


-8.9%


515


1.7%




EVRAZ U.S. mills


350


368


-4.9%


342


2.3%




EVRAZ Canadian mills


175


206


-15.0%


173


1.2%




Sales of steel products


548


585


-6.3%


482


13.7%




Semi-finished products


56


32


75.0%


0


n/a




Construction products


70


74


-5.4%


69


1.4%




Railway products


99


117


-15.4%


96


3.1%




Flat-rolled products


132


126


4.8%


142


-7.0%




Tubular products


191


236


-19.1%


175


9.1%




* Q1 2019 production and sales volumes are preliminary
 
In Q1 2019, total output of steel products dropped by 8.9% QoQ due to a reduction of 15.0% QoQ at EVRAZ Regina. The latter was caused by lower line pipe production volumes, which was due to lower US sales driven by US tariffs and duties, as well as lower LDP production due to increased changeover time as mills switched through multiple orders.
 
Total output of steel products at EVRAZ Pueblo fell by 11.0% QoQ as output of construction products declined amid lower demand for concrete reinforcing bar, which was driven by late start of construction season and reduced railway product output due to unplanned rail mill downtime in March 2019.
 
Sales of construction products decreased by 5.4% QoQ due to lower demand for concrete reinforcing bar, as inclement weather caused a slowdown of construction activity.
 
Railway product sales slid by 15.4% QoQ, driven by unplanned rail mill downtime in March 2019 at EVRAZ Pueblo, while market fundamentals remain strong.
 
Sales of flat-rolled products jumped by 4.8% QoQ as demand recovered in Q1 2019, after customers reduced inventory in Q4 2018. The sales growth was also impacted by a planned maintenance outage in Q4 2018 and a rail car shortage at the year-end that limited shipments.
 
Sales of tubular products dropped by 19.1% QoQ due to the temporary shutdown of the coating operation, which impacted line pipe shipments, as well as to lower sales of oil country tubular goods (OCTG) due to declining drilling activity in Western Canada.
 
Prices for tubular products were up during Q1 2019, reflecting higher prices for prevailing scrap and other inputs, as well as improved demand. Prices for construction products went down in Q1 2019 due to a seasonal reduction in market demand and surplus domestic capacity in the US. Prices for flat-rolled products were little changed compared with Q4 2018.
 
Average selling prices




US$/tonne (ex works)


Q1
2019


Q4
2018


Q1
2018




Construction products


840


889


705




Flat-rolled products


1,055


1,074


781




Tubular  products


1,400


1,267


1,243




 
In Q2 2019, crude steel output is expected to drop by 2-5% QoQ amid a reduction in tubular volumes due to the seasonal decline on Canada's OCTG market. Flat-rolled products are expected to climb by 5-7%, driven by customer production schedules. Construction products are expected to grow by 3-5% and railway products are expected to recover by 5-10% following the unplanned downtime in March 2019.
 
 
 
 
 
COAL SEGMENT
 
Production volumes




Product, '000 tonnes


Q1
2019


Q4
2018


Q1 2019/ Q4 2018, change


Q1 2018


Q1 2019/ Q1 2018, change




Raw coking coal (mined)


6,844


6,853


-0.1%


5,969


14.7%




Yuzhkuzbassugol


2,606


2,188


19.1%


2,720


-4.2%




Raspadskaya


3,916


4,376


-10.5%


3,008


30.2%




Mezhegeyugol


322


289


11.4%


241


33.6%




Coking coal concentrate (production)


3,229


3,702


-12.8%


3,631


-11.1%




Produced at Yuzhkuzbassugol coal

washing plants


1,433


1,428


0.4%


1,770


-19.0%




Produced at the Raspadskaya coal

washing plant


1,796


2,274


-21.0%


1,861


-3.5%




 
In Q1 2019, overall raw coking coal output was flat QoQ, primarily due to higher production at Yuzhkuzbassugol's mines following the longwall move at the Uskovskaya mine in Q4 2018.
 
This was partly offset by lower production volumes at Raspadskaya' mines after the decision was taken to optimise production and reduce spending on contractor services at Razrez Raspadsky given the high inventories of raw coal that built up in Q4 2018 amid record mining volumes of GZh-grade coal.
 
Output of coking coal concentrate fell by 12.8%, primarily due to high level of accumulated inventories at the end of Q4 2018 and in Q1 2019.


.
 
 
Sales volumes




Product, '000 tonnes


Q1
2019


Q4
2018


Q1 2019/ Q4 2018, change


Q1
2018


Q1 2019/ Q1 2018, change




External sales


2,656


2,770


-4.1%


2,713


-2.1%




Raw coking coal


497


313


58.5%


323


53.9%




Coking coal concentrate


2,160


2,457


-12.1%


2,391


-9.7%




Intersegment sales


1,519


1,472


3.2%


1,443


5.3%




    Raw coking coal


396


409


-3.1%


396


0.0%




Coking coal concentrate


1,123


1,063


5.7%


1,047


7.3%




 
In Q1 2019, external sales volumes of coking coal products dropped by 4.1% as coking coal concentrate sales subsided from the elevated levels during the longwall repositioning at Yuzhkuzbassugol's Uskovskaya mine in Q4 2018. A deficit of K-grade coal caused by the switch to longwall operations at the Raspadskaya-Koksovaya mine also contributed to the QoQ fall in coal concentrate sales.
 




Cash cost, US$/t


Q1
2019


Q4
2018


Q1 2019 / Q4 2018, change


 Q1
2018


Q1 2019 / Q1 2018, change




Coking coal concentrate


48


46


4.3%


45


6.7%




 
Average selling prices




 
US$/tonne (ex works)
 


Q1
2019


Q4
2018


Q1
2018




Raw coking coal


57


67


75




Coking coal concentrate


117


113


135




 
In Q1 2019, coking coal selling prices rose in line with global benchmarks.
 
In Q2 2019, raw coal production is expected to increase QoQ after the completion of the Alardinskaya mine's transfer and the Raspadskaya-Koksovaya mine's switch to longwall 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, USA, 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 2018. A significant portion of the company's internal consumption of iron ore and coking coal is covered by its mining operations. The company's consolidated revenues for the year ended 31 December 2018 were US$12,836 million, and consolidated EBITDA amounted to US$3,777 million.




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