OREANDA-NEWS. PAO Severstal (MICEX-RTS: CHMF; LSE: SVST), one of the world’s leading steel and steel-related mining companies, today announces its Q1 2015 financial results for the period ended 31 March 2015.

CONSOLIDATED FINANCIAL RESULTS FOR THE QUARTER ENDED 31 MARCH 2015

\$ million, unless otherwise stated

Q1 2015

Q4 2014

Change, %

Q1 2015

Q1 20141

Change, %

Revenue

1,531  

1,878  

(18.5%)

1,531  

1,991  

(23.1%)

EBITDA2

590  

602  

(2.0%)

590  

459  

28.5%

EBITDA margin, %

38.5%

32.1%

6.4 ppts

38.5%

23.1%

15.4 ppts

Profit from operations

502  

453  

10.8%

502  

310  

61.9%

Operating margin, %

32.8%

24.1%

8.7 ppts

32.8%

15.6%

17.2 ppts

Free cash flow3

209  

425  

(50.8%)

209  

256  

(18.4%)

Net  profit/(loss)4

343

 (795)

n.a.

343

 (100)

n.a.

Basic EPS5, \$

0.42 

 (0.98)

n.a.

0.42

 (0.12)

n.a.

Notes:

1)     These amounts reflect adjustments made in connection with the presentation of the discontinued operation.

2)     EBITDA represents profit/(loss) from operations plus depreciation and amortization of productive assets (including the Group’s share in depreciation and amortization of associates and joint ventures) adjusted for gain/(loss) on disposals of PPE and intangible assets and for share in associates’ and joint ventures’ non-operating income/(expenses).

3)     Free cash flow excludes discontinued operation.

4)     Net profit/(loss) attributable to shareholders of PAO Severstal after FX losses.

5)     Basic EPS includes both continuing and discontinued operations. Basic EPS is calculated based on the following basis: weighted average number of shares outstanding during the period: 810.6 million shares for Q1 2015, Q4 2014 and Q1 2014.

Q1 2015 vs. Q4 2014 ANALYSIS:

  • EBITDA margin increased by 6.4 ppts q/q to a record 38.5% (Q4 2014: 32.1%), representing the highest level in Severstal’s history as a public company and primarily reflecting ongoing efficiency improvements as well as lower input costs with RUB devaluation mitigating the impact of lower selling prices. Group EBITDA decreased a negligible 2.0% q/q to \$590 million (Q4 2014: \$602 million);
  • Group revenue decreased 18.5% q/q to \$1,531 million (Q4 2014: \$1,878 million) despite solid demand across both domestic and export markets reflecting a decline in global steel prices and steelmaking raw materials prices more than offsetting increases in RUB-denominated selling prices;
  • Net profit1 of \$343 million (Q4 2014: net loss1 of \$795 million) was marginally impacted by FX translation losses of continuing operations of \$31 million. Adjusting for those non-cash items, Severstal would have posted a net profit of \$374 million (Q4 2014: net profit of \$534 million excluding impairments);
  • Free cash flow of \$209 million (Q4 2014: \$425 million) generated in line with our key strategic focus. Q/q decline of 50.8% primarily reflects an increase in stock to normalized level after divesting inventories during Q4 2014 against strong demand;
  • Capex2 of \$103 million, 34.4% lower q/q (Q4 2014: \$157 million) reflecting our prudent approach to investments as well as the completion of most large-scale development projects;

Recommended dividend payment of 12.81 RUB per share for the three months ended 31 March 2015.

Q1 2015 vs. Q1 2014 ANALYSIS:

  • Group revenue decreased 23.1% y/y to \$1,531 million (Q1 2014: \$1,991 million) primarily impacted by lower realized prices, which has been partially mitigated by significant increases in sales volumes at Russian Steel;
  • Group EBITDA increased 28.5% y/y to \$590 million (Q1 2014: \$459 million), driven by Russian Steel’s operational enhancements, lower input costs and RUB devaluation, more than offsetting lower deliveries at Resources;
  • Continued strong free cash flow at \$209 million (Q1 2014: \$256 million);
  • Capex of \$103 million2, 59.0% lower y/y (Q1 2014: \$251 million).