Severstal Reports Q3 & 9M 2014 Financial Results
OREANDA-NEWS. OAO Severstal (MICEX-RTS: CHMF; LSE: SVST), one of the world's leading steel and steel-related mining companies, today announces its Q3 and 9M 2014 financial results for the period ended 30 September 2014.
These amounts reflect adjustments made in connection with the presentation of the discontinued operation.
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).
Free cash flow excludes discontinued operation.
Net (loss)/ profit attributable to shareholders of OAO Severstal.
Basic EPS includes both continuing and discontinued operations. Basic EPS is calculated based on the following basic weighted average number of shares outstanding during the period: 810.6 million shares for Q3 2014, Q2 2014, 9M 2014 and 9M 2013.
Q3 2014 vs. Q2 2014 ANALYSIS:
-Group revenue increased 2.4% q/q to USD 2,240 million (Q2 2014: USD 2,187 million) driven by further improvements at Russian Steel on the back of higher share of HVA products sales coupled with marginal price increase;
-Group EBITDA increased 25.7% q/q to USD 636 million (Q2 2014: USD 506 million) and Group EBITDA margin grew 5.3 ppts q/q to 28.4% (Q2 2014: 23.1%), representing the highest level since Q3 2008 and primarily reflecting a combination of ongoing operational enhancements at both Russian Steel and Resources division, a decline in raw materials input costs at our steel operations and further RUB depreciation;
-Net loss1 of USD 45m (Q2 2014: net loss1 of USD 661m), has been primarily affected by FX losses of continuing operations of USD 453 million and a gain on disposal of USD 85 million of the discontinued operation. Adjusting for those non-cash items, Severstal would have posted a net profit of USD 323m (Q2 2014: net profit of USD 206m excluding FX gain in Q2 2014 of USD 199m and impairment of USD 1,066m for continuing and discontinued operations);
-Continuous robust free cash flow generation of USD 218 million is in line with our key strategic focus (Q2 2014: USD 333 million);
-Capex2 of USD 181 million, 4.7% lower q/q (Q2 2014: USD 190 million) reflecting our disciplined approach to investments as well as the completion of the vast share of large-scale development projects. The FY2014 capex target has been reduced to USD 868m, reflecting the disposal of Severstal North America (SNA) and weaker RUB (the currency in which the majority of our capex is nominated);
-Recommended record high dividend payment of 54.46 RUB (approximately USD 1.37) per share (including special dividend ) for the nine months ended 30 September 2014, reflecting the previously announced intention to return to shareholders a portion of the SNA sale proceeds via dividends.
9M 2014 vs. 9M 2013 ANALYSIS:
-9M 2014 revenue decreased 9.0% y/y to USD 6,418 million (9M 2013: USD 7,052 million) as Russian Steel and Resources experienced lower realized prices and sales volumes y/y;
-EBITDA increased 23.2% y/y to USD 1,601 million (9M 2013: USD 1,300 million) driven by strong results from Russian Steel on the back of operational enhancements and lower input costs;
-9M 2014 net loss1 was USD 807 million (9M 2013: net profit1 of USD 157m) has been impacted by FX losses of continuing operations of USD 593 million, impairments for continuing and discontinued operations of USD 1,091 million and a gain on disposal of USD 85 million of the discontinued operation. Excluding these non-cash items, Severstal would have posted a net profit of USD 792 million (9M 2013: net profit of USD 431 million, excluding FX losses and impairment for both continuing and discontinued operations);
-Strong improvement in free cash flow to USD 807 million for 9 months 2014 (9M 2013: USD 115 million), in line with strategic focus;
-Capex2 of USD 622 million for the first nine months of 2014 was 20.7% lower y/y (9M 2013: USD 784 million), representing 71.7% of the updated FY2014 capex target of USD 868 million.
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