OREANDA-NEWS. Severstal (MICEX-RTS: CHMF; LSE: SVST), one of the world’s leading vertically integrated steel and steel-related mining companies, today announces its Q1 2014 financial results.
Q1 2014 vs. Q1 2013 analysis:

Group revenue decreased 9.5% y/y to USD 3,007 million (Q1 2013: USD 3,322 million) primarily impacted by lower realized prices and sales volumes at the Russian Steel and Resources divisions;
Group EBITDA increased 24.2% y/y to USD 534 million (Q1 2013: USD 430 million) driven by continued operational improvements, reductions in G&A expenses, further progress in improving sales mix and a continued focus on customer care;
Strong free cash flow at USD 236 million (Q1 2013: negative of USD 186 million);
Capex of USD 264 million1, 14.6% lower y/y (Q1 2013: USD 309 million).
Q1 2014 vs. Q4 2013 analysis:

Efficiency initiatives continuing to drive cost improvements:
15.0% q/q decrease in cost of sales at Severstal Russian Steel
5.3% decrease in Group G&A expenses to USD 142 million (Q4 2013: USD 150 million);
23.5% decrease in Group distribution costs to USD 176 million (Q4 2013: USD 230 million);
Production cash-cost of slab at the Cherepovets Steel Mill on a non-integrated basis declined further by USD 51/t to USD 326/t (Q4 2013: USD 377/t); on an integrated basis it declined by USD 32/t to USD 247/t (Q4 2013: USD 279/t).
Columbus posted record EBITDA/t in Q1 2014 of USD 113/t.
Group revenue declined 11.1% q/q to USD 3,007 million (Q4 2013: USD 3,384 million), primarily due to weaker average pricing, seasonally softer demand and temporary production interruptions at Severstal Russian Steel and Severstal Resources. Severstal International performed well despite abnormally severe winter weather;
Group EBITDA decreased 12.6% q/q to USD 534 million (Q4 2013: USD 611 million) driven by seasonal factors;
Group EBITDA margin was broadly flat q/q at 17.8% (Q4 2013: 18.1%) supported by ongoing and relentless focus on operational enhancements as well as a weaker rouble. Both Russian Steel and Resources improved their EBITDA margin q/q, to 15.2% and 34.7% respectively;
Free cash flow remained strong at USD 236 million (Q4 2013: USD 347 million);
Loss2 for the quarter of USD 100 million (Q4 2013 loss of USD 74 million), negatively impacted by FX non-cash item of USD 321 million. Excluding that non-cash item, Severstal would have posted a net profit of USD 221 million in Q1 2014;
Capex of USD 264 million3, 21% lower q/q (Q4 2013: USD 334 million). FY2014 target CAPEX of USD 976 million might be finally lower due to weaker rouble;
Recommended dividend payment of 2.43 roubles per share (approximately USD 0.07) for the 3 months ended 31 March 2014.
Finnsial position highlights:

Deleveraging remains on track with gross debt reduced by 6.5% from the end of Q4 2013 to USD 4,444 million. This included a USD 525 million exercise of the call option on the 10.25% Severstal Columbus high-yield bond;
Q1 2014 saw important progress in the deleveraging of Severstal North America with the exercise of the call option to buy out the 10.25% Severstal Columbus high-yield bond in March 2014 for a total amount of USD 525 million.;
Net debt at the quarter end of USD 3,552 million was 4.5% lower compared to the end of Q4 2013 and was 15.1% lower compared to the end of Q1 2013;
Our Net Debt/EBITDA ratio fell q/q to 1.6x bringing Severstal very close to its stated target of 1.5x;
Solid liquidity position with USD 892 million in cash and cash equivalents, and committed unused credit lines of USD 1,336 million more than covering the short-term debt of USD 709 million4.
Full version of the press release

NOTES

Represents cash outflow on capex in the period.
Net profit/ (loss) attributable to shareholders of OAO Severstal.
Represents cash outflow on capex in the period.
Represents principal amount of debt.