Metalloinvest, a leading manufacturer and supplier of iron ore products and hot briquetted iron (HBI) in the global market, one of the regional producers of high-quality steel, announces 1Q 2019 operating results.

Management comments

Andrey Varichev, CEO of Metalloinvest Management Company, commented:

“In Q1 2019, the Company increased the supply of pellets by 8% and HBI /DRI by 10% compared to Q1 2018. Thus, in accordance with the strategy to increase the share of high value added products in the sales structure, in the reporting period, the share of pellets and HBI /DRI in the total volume of shipments of iron ore products amounted to 74% compared to 69% in 1Q 2018. At the same time, despite the ongoing implementation of a number of projects for the modernization of production facilities in the 1st quarter, including the reconstruction of an electric power station and hot tests of a flexible modular furnace at Ural Steel, the sales volumes of cast iron and steel products remained at the level of the same period last year. "

Iron ore products

Production

• In 1Q 2019 Metalloinvest produced 9.6 million tonnes of iron ore ... Decrease in production volumes by 7.2% QoQ (hereinafter Q /Q means comparison with 4Q 2018, unless otherwise indicated) and by 2.9% YoY (hereinafter, YoY means comparison with 1Q 2018 unless otherwise specified) is associated with scheduled equipment repairs at LGOK, as well as changes in the quality characteristics of mined ore at LGOK and MGOK. The decrease in production volumes qoq was also due to a reduction in the calendar working time
• The production of pellets in 1Q 2019 remained almost at the level of 4Q 2018 (-0.7% qoq) and amounted to 6.8 million tonnes. At the same time, an increase in pellet production by 2.2% YoY is associated with an increase in the productivity of OM-3 at MGOK
• The volume of HBI /DRI production remained at the level of 1Q 2018 (2.0 Mt), which is 1 , 2% higher qoq due to the overhaul of TsGBZh-1 at LGOK in 4Q 2018

Shipment

• In 1Q 2019, the volume of shipments of iron ore products to external consumers grew by 1.8% YoY to 6.2 million tonnes, which is due to a change in the product mix: shipments of pellets increased by 8.1%, shipments of HBI /DRI by 10.2%
• The share of high value added products (pellets and HBI /DRI) in the total shipments of the Company's iron ore products in 1Q 2019 amounted to 73.6% versus 66.2% in 4Q 2018 and 68 , 9% in 1Q 2018
• In 1Q 2019, the share of shipments of iron ore products to the domestic market amounted to 56.9% compared to 61.0% in 4Q 2018 and 70.5% in 1Q 2018
• The volume of export supplies for the reporting period increased - shipments of iron ore products Funds to Europe increased to 25.9% (compared to 21.3% in 4Q 2018 and 18.0% in 1Q 2018), to Asia to 11.3% (7.2% in 4Q 2018 and 4.2% in 1Q 2018)

Metallurgical products

Production

• Production pig iron in 1Q 2019 decreased by 13.9% qoq and by 5.3% yoy as a result of repairs of blast furnaces in the reporting period, as well as a decrease in domestic consumption of pig iron in accordance with needs
• Volume Steel smelting decreased in 1Q 2019 by 10.5% qoq and by 4.2% yoy to 1.2 mt, which is mainly due to the reconstruction and hot testing of the GMF (flexible modular furnace) at Uralskaya Steel, as well as a change in the range of OEMK products

Shipment

• The share of shipments of steel products is HVA (high value-added, with a high added value) in 1Q 2019 amounted to 45.6% (compared to 39.2% in 4Q 2018 and 45.9% in 1Q 2018)
• In 1Q 2019, the share of supplies of metallurgical products to the Russian market but remained at the level of 4Q 2018 (29.0% and 29.7%, respectively)
• In 1Q 2019, supplies to the Middle East more than doubled qoq and by 43.5% yoy and to North Africa (26.5% share) mainly as a result of increased shipments to consumers in Turkey

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