OREANDA-NEWS. Severstal Resources reports its Q4 and FY 2015 financial results for the period ended 31 December 2015.

Coking coal concentrate sales volumes increased 1% q/q to 1.48 mln tonnes (Q3 2015: 1.46 mln tonnes) reflecting a substantial increase in ROM-coal output volumes in Q4 2015 at Vorkutaugol. Average coking coal concentrate selling prices increased 11% q/q despite a 4% q/q decline in hard coking coal benchmark contract prices in Q4 and an 8% q/q decline in global coking coal spot prices. This is primarily a function of an upward revision of coking coal contract prices in the domestic market fully offsetting the RUB devaluation of 5% during the quarter.

Iron ore pellet sales decreased 1% q/q to 2.70 mln tonnes (Q3 2015: 2.73 mln tonnes), while iron ore concentrate sales volumes decreased 15% q/q to 0.96 mln tonnes (Q3 2015: 1.13 mln tonnes) both reflecting lower internal procurement and seasonally weaker demand. Pricing-wise, average USD-denominated selling prices of iron ore concentrate at Olkon increased 3% q/q against a 15% q/q decline of the global iron ore benchmark (China, CFR).

This was largely driven by a marginal increase in RUB-denominated prices offsetting RUB devaluation during the period. Prices for iron ore pellets at Karelsky Okatysh were less resilient (declining 4% q/q) due to the geographical structure of sales.

All of the abovementioned factors resulted in largely unchanged revenue q/q at USD 299 million (Q3 2015: USD 296 million). Marginal RUB devaluation q/q led to further production cost reduction, while a substantial increase in ROM-coal output volumes in Q4 at Vorkutaugol with completion of the scheduled long-wall repositionings had an additional positive impact on production costs given the fixed-cost nature of the mining operations.

That said, EBITDA increased 26.0% to USD 97 million (Q3 2015: USD 77 million). The EBITDA margin expanded 6.4 ppts to 32.4% (Q3 2015:26.0%).