MMK Announces Its Consolidated IFRS Financial Statements for 1Q 2012
OREANDA-NEWS. June 22, 2012. HIGHLIGHTS
> MMK Group sales for Q1 2012 were USD 2,425 million, up 8% q-o-q.
> Cost of sales in Q1 2012 was USD 2,099 million, up 6% q-o-q.
> EBITDA for Q1 2012 was USD 293 million, up 44% q-o-q. This was due mainly to an 18% increase in the EBITDA of the Russian steel segment and a smaller EBITDA loss from the Turkish steel segment.
> Net profit for Q1 2012 was USD 14 million, compared to a USD 67 million loss in 4Q 2011. This was due mainly to a recovery in prices for finished products during the first quarter and lower costs for major raw material inputs.
MMK GROUP CONSOLIDATED INCOME STATEMENT HIGHLIGHTS (USD MLN)
|
|
Q1 2012 |
Q4 2011 |
% |
Q1 2012 |
Q1 2011 |
% |
|
Revenue |
2,425 |
2,243 |
8% |
2,425 |
2,216 |
9% |
|
Cost of sales |
2,099 |
1,987 |
6% |
2,099 |
1,775 |
18% |
|
Operating profit |
33 |
-47 |
- |
33 |
155 |
-79% |
|
EBITDA*, of which |
293 |
203 |
44% |
293 |
403 |
-27% |
|
Steel segment ( |
267 |
227 |
18% |
267 |
337 |
-21% |
|
Steel segment ( |
-18 |
-67 |
- |
-18 |
-4 |
- |
|
Coal segment |
42 |
46 |
-9% |
42 |
70 |
-40% |
|
Consolidation effect |
2 |
-3 |
- |
2 |
0 |
- |
|
EBITDA margin |
12.1% |
9.1% |
3pp |
12.1% |
18.2% |
-6pp |
|
Profit for the period |
14 |
-67 |
- |
14 |
134 |
-90% |
* EBITDA calculation is presented in the Notes to MMK's Condensed Consolidated Financial Statements
> Revenue growth of 8% in Q1 2012 q-o-q was driven mainly by higher sales volumes in the quarter at the
> The average price of finished products in Q1 2012 increased insignificantly from Q4 2011, to USD 705. This was due mainly to a recovery in demand and prices for steel on the domestic and export markets during the quarter, and also by a higher proportion of shipments of finished products going to the domestic market, which has a price premium to export markets.
> Cost of sales in Q1 2012 rose 6% q-o-q to USD 2,099 million, due to an increase in sales volumes in the quarter. However, the cost of sales rose more slowly than growth in revenue over the period.
> Lower prices for the main raw material inputs during Q4 2011 and Q1 2012 contributed to a reduction in the cash-cost of slabs by more than 11% to around USD 442 (compared with a
> Operating profit for Q1 2012 was USD 33 million, compared to an operating loss of USD 47 million in 4Q 2011.
> EBITDA for Q1 2012 was USD 293 million; the EBITDA margin was 12.1%. EBITDA grew by more than 44% in Q1 2012 q-o-q, due to higher sales volumes and recovering prices for steel, and a reduction in raw materials costs. Improvements to the output mix (a 4pp increase in the share of high value added products to 40%) supported the Company's profitability.
> A further positive effect came from the significant reduction in the EBITDA loss at MMK Metalurji.
> Net profit for Q1 2012 was USD 14 million, compared to a USD 67 million loss in 4Q 2011. The loss at MMK Metalurji continued to have a negative effect on net profit for the period. One-off factors affecting net profit for the period included a foreign exchange loss (USD 89 million).
BALANCE SHEET AND CASH-FLOW HIGHLIGHTS
> Total assets as of 31 March 2012 were USD 17,453 million, up 7% from 31 December 2011.
> PP&E rose by 8% in Q1 2012 from the end of the previous financial year, and stood at USD 12,680 million at the end of the period.
> Despite higher output of finished products in Q1 2012 q-o-q, MMK reduced inventory during Q1 2012 q-o-q by 7%, to USD 1,660 million. This was due to reduced inventories of raw materials in the Company's warehouses, as well as sales of reserves of finished products built up at shipment points at the end of 2011.
> Total debt at the end of Q1 2012 stood at USD 4,246 million, down USD 170 million from the end of FY 2011.
> Cash and cash equivalents stood at USD 197 million as of 31 March 2011, which together with highly liquid assets amounting to USD 990 million fully covers the Company's short-term debt (USD 1,171 million).
> Total capital expenditure (capex) during Q1 2012 was USD 230 million. The Company's major investment projects for 2012 are completion of the 2,000 Cold Mill Complex and upgrades and repairs to the 2,500 Hot Mill.
MMK GROUP OPERATIONAL HIGHLIGHTS
> MMK's crude steel output in Q1 2012 was 3.4 million tons (+10% q-o-q).
> MMK's finished steel products output in Q1 2012 was more than 3 million tons (+10% q-o-q).
> MMK Group's total output of high value-added (HVA) products increased by 17% q-o-q in Q1 2012 to 1,199 thousand tons.
|
Q1 2012 |
Q4 2011 |
% |
Q1 2012 |
Q1 2011 |
% | |
|
MMK Group crude steel |
3,417 |
3,109 |
10% |
3,417 |
3,092 |
11% |
|
MMK steel |
3,117 |
2,826 |
10% |
3,117 |
3,092 |
1% |
|
MMK Metalurji steel |
300 |
283 |
6% |
300 |
- |
|
|
MMK Group finished steel products |
3,021 |
2,859 |
6% |
3,021 |
2,737 |
10% |
|
MMK finished steel products |
2,766 |
2,623 |
5% |
2,766 |
2,707 |
2% |
|
MMK-Metiz finished steel products* |
110 |
103 |
7% |
110 |
123 |
-11% |
|
MMK Metalurji finished steel products |
253 |
233 |
9% |
253 |
28 |
x9 |
|
HVA products, MMK Group (volume) |
1,199 |
1,028 |
17% |
1,199 |
1,080 |
11% |
|
HVA products, MMK Group (% of total production) |
40% |
36% |
4pp |
40% |
39% |
1pp |
|
Belon coal concentrate |
776 |
882 |
-12% |
776 |
766 |
1% |
|
Iron ore |
1,047 |
1,145 |
-9% |
1,047 |
1,277 |
-18% |
' Including processing of MMK products
MMK steel operations in
Finished steel products output in Q1 2012 was 2,766 thousand tons (+5% q-o-q). This was due mainly to a recovery in demand for finished products in the company's priority sales markets, and also the introduction of new products.
MMK's HVA steel products output in Q1 2012 amounted to 939 thousand tonnes, up 16% q-o-q.
> MMK shipped 2,033 thousand tons of finished products to the domestic market in Q1 2012, up 22% q- o-q. The domestic market accounted for 73% of MMK's shipments during the period.
> HVA products accounted for 43% of MMK's domestic sales in Q1 2012.
> MMK's main end-consumers on the domestic market are pipemakers, machine builders and carmakers, which together accounted for about 50% of shipments in Q1 2012 (excluding shipments to CIS countries).
> MMK's domestic sales are focused in the Urals and
> In monetary terms, shipments to
> MMK export shipments totaled 732 thousand tons in Q1 2012. The largest export markets for MMK in the period were the Middle East, Asia and the Far East, and
MMK steel operations in
> MMK Metalurji's finished steel products output in Q1 2012 was 253 thousand tons (+9% q-o-q).
> MMK Metalurji's revenue in Q1 2012 was USD 215 million, up 31% q-o-q.
> MMK Metalurji recorded an EBITDA loss of USD 18 million in Q1 2012, compared with a loss of USD 67 million in Q4 2011. This improvement was due to a recovery in prices for finished products on the Turkish market during Q1 2012 and processing of expensive inventory of scrap that accumulated during late Q3 and early Q4 2011.
BELON OPERATIONAL HIGHLIGHTS - MMK GROUP COAL SEGMENT
> Production of coking coal concentrate in Q1 2012 was 776 thousand tons. Production in Q4 2011 was 882 thousand tons.
> Revenue in the coal segment for Q1 2012 was USD 130 million, down 18% q-o-q. This was due to lower market prices for coal in Q1 2012 and reduced output caused by work on the reinstallation of walls.
> EBITDA for Q1 2012 fell slightly q-o-q to USD 42 million providing the EBITDA margin of 32%.
MARKET OUTLOOK
Production of finished steel products in Q2
Average prices since the beginning of 2012 rose by 6-7%. At present prices are experiencing a correction, which is expected to continue into the middle of Q3 2012.
An expected increase in demand for steel in
MMK Group to increase output of finished steel products compared with 2011.
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