Severstal 2Q & 1H 2019 operating results

12 July 2019, 12:00

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PJSC Severstal (MICEX-RTS: CHMF; LSE: SVST), one of the world's largest vertically integrated metals and mining companies, today reports its operating results for the second quarter and first half of 2019.

HIGHLIGHTS (GROUP), Q2 2019

Pig iron production declined in Q2. 2019 to 2.30 mln tonnes (Q1 2019: 2.36 mln tonnes) due to short-term repairs at DP # 1, DP # 4 and DP # 5. Steel production remained largely unchanged at 3.06 Mt (Q1 2019: 3.04 Mt), reflecting an increase in steelmaking production.
Consolidated sales of steel products remained in Q2. 2019 at 2.84 Mt (Q1 2019: 2.83 Mt). The share of sales in the domestic market increased to 70% amid a more favorable environment on the Russian market (Q1 2019: 65%).
The share of high value-added products increased by 2 pp. up to 46% (Q1 2019: 44%), driven by a decrease in sales of semi-finished products and hot rolled coils and an increase in sales of galvanized sheet, pre-painted sheet and large diameter pipes.
Sales of coking coal concentrate at Vorkutaugol »Decreased by 7% due to the planned short-term work on the modernization of the concentrating plant in 2 sq. 2019. At the same time, Vorkutaugol increased rock mass production by 13% qoq.
Sales of iron ore pellets increased by 2% qoq and amounted to 2.90 mln. Tonnes (Q1 2019: 2.83 mln. tonnes), which was driven by seasonal factors, despite a decrease in production volumes compared to the previous quarter.
Iron ore concentrate sales increased by 10% to 1.43 million tonnes (Q1 2019: 1.30 million tonnes), which was due to the seasonal growth of production.

HIGHLIGHTS (GROUP), 6 months. 2019

The volume of pig iron production increased in the first half of 2019 by 1% versus 6 months. 2018 and amounted to 4.67 million tonnes (6M 2018: 4.61 million tonnes) as a result of improved productivity, more efficient repairs and an increase in the quality of raw materials. Steel production increased to 6.10 Mt (6M 2018: 6.03 Mt) driven by an increase in electric steel production and improved equipment productivity.
Sales of coking coal concentrate at Vorkutaugol increased by 44% year-on-year due to increased coal production. Iron ore concentrate sales volumes increased 3% y-o-y to 2.73 mt (6M 2018: 2.66 mt), mainly reflecting an increase in volumes from the Yakovlevsky mine.
Share of high value-added products remained in the first half of 2019 at a high level of 45%, which was largely due to an increase in sales of galvanized and polymer-coated steel, as well as the launch of new capacities, which reached full capacity in the first half of 2019, as well as an increase in sales of heavy-plate steel .

MAIN INDICATORS FOR PRODUCTION AND SALES

CONSOLIDATED SALES (EXCLUDING DOMESTIC SALES)

ESG RESULTS (ECOLOGY, SOCIAL SPHERE, CORPORATE GOVERNANCE), HIGHLIGHTS OF THE SECOND QUARTER AND THE FIRST HORN OF 2019

The safety of our employees and contractors is important all stages of the Company's activity. Severstal is committed to completely eliminating fatal injuries at work. In the 2nd quarter. 2019 LTIFR * decreased by 44% qoq. 2019 and amounted to 0.51 (1Q 2019: 0.91). In the first half of 2019, LTIFR decreased by 37% compared to the first half of 2018 and amounted to 0.71 (6 months 2018: 1.12).

Not allowed in the first half of 2019 fatal accidents with own personnel. Unfortunately, however, there have been two fatal accidents among contractors. We are investigating the circumstances of each of these cases to prevent similar occurrences in the future.
In the first half of 2019, Severstal actively embarked on a strategy for the development of an industrial safety management system until 2025, the goal of which is to sustainably reduce injuries (reduce LTIFR by 50% of the 2017 level and the elimination of fatal injuries), including through the introduction of innovative technologies (machine vision, control systems, etc.). The work is carried out in three directions:

prevention of violations by employees of direct prohibitions;
search for hazards and risk assessment with maximum involvement of workers in this process;
control of the state of workers and prevention of dangers associated with its deterioration.