TIDMEVR
RNS Number : 8792R
Evraz Plc
01 November 2019
EVRAZ Q3 2019 TRADING UPDATE
1 November 2019 - EVRAZ plc (LSE: EVR; "EVRAZ" or the "Group")
today released its trading update for the third quarter of
2019.
Q3 2019 vs Q2 2019 HIGHLIGHTS
-- In Q3 2019, EVRAZ' consolidated crude steel output decreased
by 3.4% QoQ, mainly due to lower production volumes at EVRAZ ZSMK
amid scheduled capital repairs. Production was also impacted by
reduced output at EVRAZ' US and Canadian mills following scheduled
downtimes and by weaker demand.
-- Total steel product sales remained flat QoQ. Sales of
semi-finished products increased by 5.6% QoQ due to better market
conditions. This was partly offset by a 3.1% QoQ drop in finished
products due to lower sales of flat-rolled products (decreased
production at EVRAZ Palini e Bertoli as well as weaker demand from
service centres at North America) and railway products (capital
repairs at EVRAZ ZSMK and EVRAZ NTMK).
-- Production of raw coking coal decreased by 9.7% QoQ mainly
following the decision to reduce production at the Razrez Raspadsky
open-pit as a response to substantial accumulated stockpiles of raw
coal.
-- External sales volumes of coking coal products remained flat QoQ.
-- External sales of iron ore products descended by 73 kt
(31.1%) QoQ as production volumes of pellets were down amid capital
repairs at EVRAZ KGOK's roasting machine no. 2.
-- Sales of final vanadium products rose by 9.8% QoQ, mainly due
to increased demand in China. This was a result of robust
infrastructure sector development, as well as ferrovanadium
re-stocking in the rest of the world due to lower prices.
Q3 2019/ Q2 2019,
Product, kt Q3 2019 Q2 2019 change 9m 2019 9m 2018 9m 2019/ 9m 2018, change
------------------------- -------- -------- ------------------------ -------- -------- -------------------------
Total crude steel
production 3,380 3,498 -3.4% 10,366 9,917 4.5%
Russia 2,953 3,006 -1.8% 8,945 8,368 6.9%
Ukraine 0 0 n/a 0 154 -100.0%
North America 427 492 -13.2% 1,421 1,395 1.9%
Total raw coking coal
mined 6,319 6,996 -9.7% 20,159 17,335 16.3%
Total coking coal
concentrate
production 4,244 4,458 -4.8% 12,386 11,967 3.5%
Iron ore products
production 3,319 3,533 -6.1% 10,488 10,148 3.4%
Total sales of steel
products(1) 3,385 3,371 0.4% 9,893 9,328 6.1%
Semi-finished
products(2,3) 1,443 1,367 5.6% 4,146 3,726 11.3%
Finished products(3) 1,942 2,004 -3.1% 5,747 5,602 2.6%
Total sales of
third-party steel
products(3) 225 196 14.8% 601 672 -10.6%
Sales of coking coal
products 2,953 2,929 0.8% 8,539 8,244 3.6%
Sales of iron ore
products(2) 162 235 -31.1% 861 1,514 -43.1%
Sales of vanadium in
slag(2) 1,693 1,660 2.0% 4,528 4,760 -4.9%
Sales of vanadium final
products(4) 3,585 3,266 9.8% 9,369 9,693 -3.3%
------------------------- -------- -------- ------------------------ -------- -------- -------------------------
Note. Numbers in this table and the tables below may not add up
to totals due to rounding
(1) Q3 2019 production and sales volumes of EVRAZ North America
are preliminary
(2) 9m 2018 data has been adjusted
(3) Q2 2019 data has been adjusted
(4) in tonnes of pure vanadium
CONFERENCE CALL DETAILS
A conference call to discuss the trading update will be held on
Friday, 1 November 2019, at:
-- 1 pm (London time)
-- 4 pm (Moscow time)
-- 9 am (New York time)
Key speakers:
-- Ilya Shirokobrod, Vice President, Sales and Logistics
-- 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 9125 UK
+7 495 213 1767 Russia
+1 646-828-8193 US
Conference ID: 7150635
To avoid any technical inconvenience, it is recommended that
participants dial in 10 minutes before the start of the call.
The Q3 2019 Trading update presentation will be available on the
Group's website, www.evraz.com, on Friday, 1 November 2019, at the
following link:
https://www.evraz.com/en/investors/reports-and-results/presentations/#2019
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
Q3 2019/ Q2 2019,
Product, kt Q3 2019 Q2 2019 change 9m 2019 9m 2018 9m 2019/ 9m 2018, change
------------------------- -------- -------- ------------------------ -------- -------- -------------------------
Pig iron production 2,795 2,745 1.8% 8,252 7,645 7.9%
EVRAZ ZSMK 1,516 1,530 -0.9% 4,517 4,105 10.0%
EVRAZ NTMK 1,279 1,215 5.3% 3,735 3,386 10.3%
EVRAZ DMZ 0 0 n/a 0 153 -100.0%
Crude steel production 2,953 3,006 -1.8% 8,945 8,522 5.0%
EVRAZ ZSMK 1,866 1,942 -3.9% 5,703 5,357 6.5%
EVRAZ NTMK 1,087 1,064 2.2% 3,242 3,011 7.7%
EVRAZ DMZ 0 0 n/a 0 154 -100.0%
Total steel products
production, net of
re-rolled
volume 2,766 2,759 0.3% 8,147 7,580 7.5%
EVRAZ ZSMK 1,624 1,737 -6.5% 5,047 4,839 4.3%
EVRAZ NTMK 969 844 14.8% 2,607 2,213 17.8%
EVRAZ DMZ 0 0 n/a 0 132 -100.0%
EVRAZ Palini e Bertoli 88 101 -12.9% 286 266 7.5%
EVRAZ Caspian Steel 86 77 11.7% 207 130 59.2%
Iron ore products
production 3,319 3,533 -6.1% 10,488 10,148 3.4%
Pellets (EVRAZ KGOK) 1,456 1,573 -7.4% 4,672 4,938 -5.4%
Sinter (EVRAZ KGOK) 883 928 -4.8% 2,709 2,633 2.9%
Concentrate (EVRAZ
KGOK, Evrazruda) 980 1,032 -5.0% 3,107 2,577 20.6%
Coking coal concentrate
production 511 489 4.5% 1,454 1,538 -5.5%
From own raw coal(1) 407 341 19.4% 1,004 922 8.9%
From third-party raw
coal 104 148 -29.7% 450 616 -26.9%
Gross vanadium slag
production(2) 4,734 4,533 4.4% 13,713 12,675 8.2%
------------------------- -------- -------- ------------------------ -------- -------- -------------------------
Note. Numbers in this table and the tables below may not add up
to totals due to rounding.
(1) from Coal segment
(2) in tonnes of pure vanadium
In Q3 2019, EVRAZ` pig iron output rose by 1.8% QoQ, mainly
following the completion of capital repairs in April at EVRAZ
NTMK's blast furnace no. 5.
Crude steel production volumes fell by 1.8% QoQ, primarily due
to scheduled capital repairs in July-August 2019 at EVRAZ ZSMK.
Total output of steel products remained almost flat QoQ, with a
14.8% QoQ increase in production volumes at EVRAZ NTMK due to lower
re-rolled volumes of slabs at the Steel, North America segment.
EVRAZ Caspian Steel boosted production by 11.7% following higher
demand from customers. This was partly offset by production at
EVRAZ Palini e Bertoli going down by 12.9% due to unscheduled
downtime in August 2019.
Iron ore products output fell by 6.1% QoQ, mainly due to capital
repairs in August-September 2019 at EVRAZ KGOK's roasting machine
no. 2.
Total sales volumes
Product, kt Q3 Q2 2019 Q3 2019/ Q2 2019, change 9m 2019 9m 2018 9m 2019/ 9m 2018, change
2019
------------------------- ------- -------- ------------------------- -------- -------- -------------------------
Coke 93 113 -17.7% 271 318 -14.8%
Steel products, external
sales(2) 2,847 2,770 2.8% 8,200 7,757 5.7%
Semi-finished products 1,398 1,293 8.1% 3,971 3,700 7.3%
Slabs 669 572 17.0% 1,724 1,377 25.2%
Billets 562 545 3.1% 1,752 1,943 -9.8%
Other steel
products(1) 167 176 -5.1% 495 379 30.6%
Finished products(2) 1,448 1,477 -2.0% 4,229 4,057 4.2%
Construction
products(2) 883 864 2.2% 2,476 2,367 4.6%
Railway products 314 367 -14.4% 1,025 1,010 1.5%
Flat products 79 98 -19.4% 269 263 2.3%
Other steel
products(2) 172 148 16.2% 461 417 10.6%
Steel products,
inter-segment sales 27 115 -76.5% 328 423 -22.5%
Third-party steel
products, external
sales(2) 225 196 14.8% 601 672 -10.6%
Iron ore products,
external sales 162 235 -31.1% 861 1,514 -43.1%
Pellets 162 235 -31.1% 861 1,514 -43.1%
Sales of vanadium in
slag(3) 1,693 1,660 2.0% 4,528 4,760 -4.9%
Sales of vanadium final
products(4) 3,585 3,266 9.8% 9,369 9,693 -3.3%
------------------------- ------- -------- ------------------------- -------- -------- -------------------------
Note. Numbers in this table and the tables below may not add to
totals due to rounding.
(1) includes tonnes of pig iron
(2) Q2 2019 data has been adjusted
(3) 9m 2018 data has been adjusted
(4) in tonnes of pure vanadium
In Q3 2019, external sales of steel products were up 2.8% QoQ.
Sales of semi-finished products rose by 8.1% QoQ, primarily due to
better market conditions.
Sales of finished products fell by 2% QoQ. Sales of railway
products were down 14.4% QoQ amid capital repairs at EVRAZ NTMK's
rail and beam mill and EVRAZ ZSMK's electric-arc furnace shop. In
addition, sales of flat-rolled products dropped by 19.4% QoQ,
primarily due to a decline in production volumes at EVRAZ Palini e
Bertoli.
Inter-segment sales declined by 76.5% QoQ due to lower sales of
slabs to the Steel, North America segment following a decline in
demand from customers.
Sales of iron ore products fell by 31.1% QoQ after a reduction
in pellet production volumes due to capital repairs in
August-September at EVRAZ KGOK's roasting machine no. 2.
Sales of final vanadium products rose by 9.8% QoQ, mainly due to
increased demand in China. This was the result of robust
infrastructure sector development, as well as ferrovanadium
re-stocking in the rest of the world due to lower prices.
Cash cost, US$/t Q3 Q2 2019 Q3 2019/ Q2 2019, change 9m 9m 9m 2019/ 9m 2018, change
2019 2019 2018
----------------------------- ------- -------- ------------------------- ------ ------ -------------------------
Slab cash cost vertically
integrated 241 238 1.3% 234 235 -0.4%
Iron ore products (Fe 62%)* 41 40 2.5% 39 36 8.3%
----------------------------- ------- -------- ------------------------- ------ ------ -------------------------
* Q2 2019 data has been adjusted
Average selling prices
9m 9m
US$/t (ex works) Q3 2019 Q2 2019 2019 2018
-------------------------------------------------------------- -------- -------- ------ ------
Coke 214 240 225 229
Steel products** 480 507 489 548
Semi-finished products* 341 392 371 464
Construction products** 557 563 548 598
Railway products 842 763 780 693
Other steel products 579 598 590 638
Pellets 76 81 77 64
Metal Bulletin Ferro-Vanadium basis 78% min, free DDP,
consumer plant, 1st grade Western Europe*** 30.72 39.36 47.80 72.17
Ryan's Notes N.A. FeV 80% min, US ex-warehouse, duty paid*** 34.93 47.81 56.89 75.50
-------------------------------------------------------------- -------- -------- ------ ------
* includes prices for pig iron
** Q2 2019 data has been adjusted
*** US$/kgV
In Q4 2019, pig iron production volumes are expected to edge
down QoQ due to capital repairs in October at EVRAZ NTMK's blast
furnace no. 5. This will be partly offset by a QoQ uptick in pig
iron production volumes following completion of capital repairs in
July-August 2019 at EVRAZ ZSMK.
STEEL, NORTH AMERICA SEGMENT
Production and sales volumes*
Q3 2019/ Q2 2019,
Product, kt Q3 2019 Q2 2019 change 9m 2019 9m 2018 9m 2019/ 9m 2018, change
------------------------- -------- -------- ------------------------ -------- -------- -------------------------
Crude steel 427 492 -13.2% 1,421 1,395 1.9%
EVRAZ US mills 223 251 -11.2% 709 678 4.6%
EVRAZ Canadian mills 204 241 -15.4% 712 716 -0.6%
Total steel products
production, net of
re-rolled volume 535 605 -11.6% 1,698 1,616 5.1%
EVRAZ US mills 352 384 -8.3% 1,087 1,007 7.9%
EVRAZ Canadian mills 183 220 -16.8% 611 609 0.3%
Sales of steel products 539 601 -10.3% 1,693 1,571 7.8%
Semi-finished products 45 74 -39.2% 175 26 n/a
Construction products 66 69 -4.3% 202 213 -5.2%
Railway products 106 122 -13.1% 329 304 8.2%
Flat-rolled products 128 141 -9.2% 409 442 -7.5%
Tubular products 194 195 -0.5% 578 586 -1.4%
------------------------- -------- -------- ------------------------ -------- -------- -------------------------
*Q3 2019 production and sales volumes data is preliminary
In Q3 2019, crude steel production dropped by 13.2% QoQ. The
reduction was made at EVRAZ Regina facility in anticipation of
weaker demand for both OCTG and line pipe in the upcoming months,
as well as by lower production at EVRAZ Pueblo, which came as a
result of scheduled downtimes and unplanned repairs.
Sales of semi-finished products (slabs) fell by 39.2% QoQ driven
primarily by the timing of customer orders, which fluctuate
throughout the year.
Sales of construction products decreased by 4.3% QoQ with
continued sluggish demand caused by substantial customer
inventories and imports of wire rod and rebar.
Sales of railway products were down 13.1% QoQ in the period due
to planned major maintenance outage in September.
Flat-rolled product sales descended by 9.2% QoQ as a result of
weakening demand from service centres. End user demand did not
decrease in Q3 2019.
Tubular product sales volumes were almost flat (down 0.5%) QoQ
as Canadian OCTG market remains soft.
Average selling prices
US$/t (ex works) Q3 Q2 9m 9m
2019 2019 2019 2018
----------------------- ------ ------ ------ ------
Construction products 695 768 771 796
Flat-rolled products 875 953 961 967
Tubular products 1,340 1,347 1,353 1,230
----------------------- ------ ------ ------ ------
Prices for construction products decreased in the period, driven
primarily by falling scrap pricing and sluggish market demand.
Prices for flat-rolled products dropped further as service centres
continue to curtail purchases amid rapidly falling scrap prices and
market uncertainty driven by soft demand. Prices for tubular
products were almost flat in Q3 2019 (up 0.5% QoQ) thanks to higher
priced large-diameter pipe (LDP) orders, although this was offset
by a continued softening on the OCTG markets and lower line pipe
prices.
In Q4 2019, crude steel output is expected to climb by as much
as 5% compared with the average level for Q2 and Q3 2019. Tubular
sales volumes are expected to rise QoQ, driven by increased
recognition of current LDP orders and higher line pipe sales
volumes. Sales of flat-rolled products are forecast to remain flat
or marginally decline QoQ, driven by continued softness in the
market along with the usual seasonal decline in demand at the end
of the year.
COAL SEGMENT
Production volumes
Product, kt Q3 Q2 Q3 2019/ Q2 2019, Change 9m 2019 9m 2018 9m 2019/ 9m 2018, change
2019 2019
---------------------------- ------ ------ ------------------------- -------- -------- -------------------------
Raw coking coal (mined) 6,319 6,996 -9.7% 20,159 17,335 16.3%
Yuzhkuzbassugol 3,043 3,466 -12.2% 9,115 8,172 11.5%
Raspadskaya 2,965 3,231 -8.2% 10,112 8,364 20.9%
Mezhegeyugol 311 299 4.0% 932 799 16.6%
Coking coal concentrate
(production) 3,733 3,969 -5.9% 10,931 10,428 4.8%
Produced at
Yuzhkuzbassugol coal
washing plants 1,570 1,837 -14.5% 4,840 4,991 -3.0%
Produced at the
Raspadskaya coal
washing plant 2,163 2,132 1.5% 6,091 5,437 12.0%
---------------------------- ------ ------ ------------------------- -------- -------- -------------------------
In Q3 2019, overall raw coking coal output fell by 9.7% QoQ
mainly following the decision to reduce production at the
Razrez-Raspadsky open-pit as a response to substantial accumulated
stockpiles of raw coal. In addition, production volumes were lower
QoQ due to the longwall move at the Uskovskaya mine in the
period.
Output of coking coal concentrate dropped by 5.9% QoQ, primarily
due to higher sales of raw coal from the Uskovskaya mine.
Sales volumes
Product, kt Q3 Q2 Q3 2019/ Q2 2019, change 9m 2019 9m 2018 9m 2019/ 9m 2018, change
2019 2019
-------------------------- ------- ------- ------------------------- -------- -------- -------------------------
External sales 2,953 2,929 0.8% 8,539 8,244 3.6%
Raw coking coal 741 447* 65.8% 1,685* 1,377 22.4%
Coking coal concentrate 2,212 2,482 -10.9% 6,854 6,867 -0.2%
Intersegment sales 1,712 1,650 3.8% 4,882 4,545 7.4%
Raw coking coal 629 556 13.1% 1,580 1,455 8.6%
Coking coal concentrate 1,084 1,094 -0.9% 3,301 3,090 6.8%
-------------------------- ------- ------- ------------------------- -------- -------- -------------------------
* The data include sales volumes of 1 kt of coal recognised as
steam-grade coal based on its quality characteristics.
In Q3 2019, external sales volumes of coking coal products
remained flat QoQ. Raw coking coal sales volumes surged by 65.8%
QoQ due to higher sales at the Uskovskaya mine to match customer
needs. This was partly offset by lower coking coal concentrate
sales volumes due to logistical limitations of shipments to
Russia's Far East as a result of maintenance works at
railroads.
Cash cost, US$/t Q3 Q2 Q3 2019/ Q2 2019, change 9m 2019 9m 2018 9m 2019/ 9m 2018, change
2019 2019
------------------------- ------ ------ ------------------------- -------- -------- -------------------------
Coking coal concentrate 35 33 6.1% 35 47 -25.5%
------------------------- ------ ------ ------------------------- -------- -------- -------------------------
Average selling prices
Q3 Q2 9m 9m
US$/t (ex works) 2019 2019 2019 2018
------------------------- ------ ------ ------- -------
Raw coking coal 45 62 53 65
Coking coal concentrate 88 104 103 123
------------------------- ------ ------ ------- -------
In Q3 2019, coking coal selling prices moved in line with global
benchmarks.
In Q4 2019, raw coal production is expected to remain flat QoQ
as the effect from the completion of the longwall move at the
Uskovskaya mine will be partly offset by the longwall move at the
Erunakovskaya mine.
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:
Moscow: +7 495 937 6871
media@evraz.com
Investor Relations:
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, US,
Canada, Czech Republic and Italy. EVRAZ is among the top steel
producers in the world based on crude steel production of 13mt 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$12,836m and consolidated EBITDA amounted to
US$3,777m.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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