PJSC Severstal (MICEX-RTS: CHMF; LSE: SVST), one of the world's leading vertically integrated steel and mining companies, today announces its financial results for the first quarter of 2020.
CONSOLIDATED FINANCIAL RESULTS FOR THE QUARTER ENDED MARCH 31, 2020
- EBITDA is the sum of operating profit and depreciation expenses of production assets (taking into account the Group's share in depreciation and amortization of associates and joint ventures), adjusted by the amount of profit /(loss) from the sale of property, plant and equipment and intangible assets, as well as the share in non-operating income /(expenses) of associates and joint ventures ... The formula for recalculating EBITDA to operating profit is shown in Severstal's quarterly financial statements.
- Free cash flow is calculated as the sum of the following components: net cash flows from operating activities, cash flows from capital investments, proceeds from disposal of fixed assets and intangible assets, interest and dividends received. The formula for converting free cash flow to net cash flows from operating activities is provided in Severstal's quarterly financial statements.
- Basic EPS from continuing operations is calculated as follows: net income from continuing operations divided by weighted average number of shares during the period (825 million shares in Q1 2020 and Q4 2019 and 823 million shares in Q1 2019).
FIRST RESULTS Q2 2020 COMPARED TO FOURTH QUARTER 2019 RESULTS:
- The Group's revenue decreased slightly by 3.3% qoq and amounted to $ 1,777 million (Q4 2019: $ 1,838 million) from for lower selling prices of steel products, which was partially offset by higher sales volumes.
- Group EBITDA decreased by 7.8% to $ 555m (Q4 2019: $ 602m) due to lower revenues partially offset by lower costs sales. The Group's vertically integrated model allowed for an EBITDA margin of 31.2%, which remains one of the highest in the industry.
- Free cash flow of $ 54 million (Q4 2019: $ 101 million), which mainly reflects a decline in profits and an increased need for working capital. Capital expenditures, however, declined qoq.
- Net income was $ 72 million (Q4 2019: $ 374 million), which includes a foreign exchange loss of $ 378 million, mainly consisting of translation losses the balance sheet of debt denominated in dollars as a result of the devaluation of the ruble.
- Cash flows for capital investments were $ 344 million (Q4 2019: $ 431 million).
- Net debt decreased to $ 1,528 million at the end of the 1st quarter 2020 (Q4 2019: $ 1,570mn).
- Severstal is committed to increasing its shareholder value, including by maintaining low debt levels. Severstal's financial position remains robust with a net debt /EBITDA ratio of 0.6x at the end of Q1 2020. As a result, the dividends recommended by the Board of Directors for the three months ended March 31, 2020 are RUB 27.35 per share.
RESULTS FOR THE FIRST QUARTER OF 2020 COMPARED WITH THE RESULTS FOR THE FIRST QUARTER OF 2019:
- The Group's revenues decreased by 12.5% y-o-y to $ 1,777 million (Q1 2019: 2,031 million). The decrease in revenue was driven by lower selling prices and lower sales of steel products compared to the same period last year.
- Group EBITDA decreased by 16.3% yoy to $ 555 million (Q1 2019: $ 663 mln.), which mainly reflects a decrease in revenue, partially offset by a decrease in cost of sales. EBITDA margin remained strong at 31.2% (Q1 2019: 32.6%).
- The company generated $ 54 million in free cash flow (Q1 2019: $ 389 million), mainly reflecting the decline EBITDA, growth in capital expenditures and increased demand for working capital relative to the same period last year.
FINANCIAL POSITION OF THE COMPANY, KEY POINTS:
- Cash and cash equivalents remained largely unchanged at the end of Q1 2020 at $ 1,042 million (Q4 2019: $ 1.081mn).
- The Group's total debt decreased to $ 2.570 million (Q4 2019 : $ 2.651 million), which is mainly due to the effect of exchange rate differences for debt denominated in rubles.
- Net debt remained virtually unchanged and amounted to $ 1.528 million at the end of 1Q. 2020 (Q4 2019: $ 1,570 million). Net debt /EBITDA remained at 0.6x at the end of Q1. 2020 (Q4 2019: 0.6x) and remains