PAO Severstal, one of the world's leading vertically integrated steel and mining companies, today announces financial results for the third quarter and nine months of 2020.
CONSOLIDATED FINANCIAL RESULTS FOR THE QUARTER ENDED 30 YEARS AND NINE MONTHS OF 2020
- EBITDA is the sum of operating profit and expenses depreciation of production assets (taking into account the Group's share in depreciation 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 converting EBITDA to operating profit is provided 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 operating cash flows is provided in Severstal's quarterly financial statements.
- Basic earnings per share from continuing operations are calculated as follows: net income from continuing operations divided by weighted average number of shares during the period (825 million shares for Q3 2020 and Q2 2020, 9M 2020 and 824 million shares for 9M 2019).
- Ratio Net debt /EBITDA represents the ratio of net debt to EBITDA for the last 12 months and is included in Severstal's quarterly financial statements. Net debt is the company's total debt less cash and cash equivalents at the end of the reporting period.
2020 THIRD QUARTER RESULTS VERSUS 2020 SECOND QUARTER RESULTS:
- The Group's revenues increased 17.9% qoq to $ 1,875m (Q2 2020: $ 1,590m) driven by a rebound in sales prices for steel products qoq and higher sales volumes.
- Group EBITDA increased by 30.9% to $ 656m (Q2 2020: $ 501m) on the back of revenue growth. The Group's vertically integrated model allowed the EBITDA margin of 35.0%, which remains one of the highest in the industry.
- Free cash flow increased significantly in Q3. 2020 up 101.1% to $ 382 million (Q2 2020: $ 190 million), mainly reflecting EBITDA growth and positive changes in working capital compared to the previous quarter.
- Net income was $ 167 million (2 2020: $ 391 mn), which includes a foreign exchange loss of $ 262 mn, mainly consisting of a loss from the restatement of the balance of debt on debt obligations denominated in dollars as a result of the weakening of the ruble in Q3. 2020.
- CAPEX cash flows were $ 341 million (Q2 2020: $ 331 million).
- Net debt declined to $ 1.782 million at Q32020. 2020 (Q2 2020: $ 2.006 million).
- Severstal seeks to increase the shareholder value of the Company, including by ensuring a comfortable level of debt. Severstal's financial position remains strong with a net debt /EBITDA ratio of 0.77x finally Q3. 2020 year. As a consequence, the dividend recommended by the Board for the three months ended September 30, 2020 is RUB 37.34 per share.
RESULTS FOR NINE MONTHS OF 2020 VERSUS RESULTS FOR NINE MONTHS OF 2019:
- The Group's revenue decreased over 9 months. 2020, up 17.0% from the previous year to $ 5.242 million (9M 2019: $ 6.319 million). The decrease in revenues was due to a decrease in sales prices and a decrease in sales of steel products compared to the same period last year.
- EBITDA for the Group decreased by 22.3% year-on-year to $ 1.712 million (9M 2019: $ 2.203 million .), which mainly reflects a decrease in revenue, partially offset by a decrease in cost of sales. EBITDA margin remained high at 32.7% (9M 2019: 34.9%).
- The company generated $ 626 mn in free cash flow in 9M2019. 2020 (9M 2019: $ 998 million), which mainly reflects a decrease in EBITDA and an increase in capital expenditures compared to the same period of the previous year.
COMPANY FINANCIAL POSITION, KEY POINTS:
- Cash and cash equivalents at the end of Q3. 2020 increased to $ 781 million (Q2 2020: $ 584 million).
- The Group's total debt remained virtually unchanged at $ 2.563 million (Q2 2020: $ 2.590 million).