MMK Group Announces Financial Results for Q4 and FY 2019
Russian steel giant Magnitogorsk Iron & Steel Works announced its financial results for Q4 and 2019. MMK Group’s revenue in Q4 declined by 14.3% QoQ and amounted to USD 1,722 million amid seasonal weakening of business activity and decline in prices on the global steel markets. EBITDA amounted to USD 335 million, down 36.2% QoQ. Net profit for Q4 2019 amounted to USD 88 million, down 67.5% QoQ. The decline was due to seasonal weakening of business activity and other negative market factors. MMK Group’s revenue in 2019 declined by 7.9% YoY and amounted to USD 7,566 million, which was partly due to lower sales as a result of the reconstruction of hot-rolling Mill 2500 during 2019. EBITDA amounted to USD 1,797 million, down 25.7% YoY. This decline was due to lower revenue, as well as negative trends on the global steel market. Net profit amounted to USD 856 million, down 35.0% YoY.
Steel segment (Russia) - Revenue for Q4 2019 amounted to USD 1,660 million, down 13.4% QoQ amid a decrease in sales volumes as a result of seasonally weak business activity and the significant correction in global steel prices. Revenue for FY 2019 declined by 7.7% YoY to USD 7,226 million due to lower metal products prices. The segment’s EBITDA for Q4 2019 amounted to USD 327 million, down 36.9% QoQ due to lower revenue. In FY 2019, EBITDA amounted to USD 1,744 million, down 23.6% YoY, which reflected negative factors on the global steel markets. The cost of sales for a tonne of slab in Q4 2019 amounted to USD 283, down 9.6% QoQ. Key factors for this decline were higher pig iron production amid lower volumes of steel production at the electric-furnace melting shop and lower shares of pellets and scrap in the blast furnace charge. It was also positively influenced by the correction in prices for iron ore and coal concentrate. In FY 2019, the cost of sales for a tonne of slab increased by 4.8% YoY to USD 305, reflecting growth in global indices for iron ore during the year.
Steel segment (Turkey) - The segment’s revenue for Q4 2019 amounted to USD 110 million, down 19.1% QoQ. This decline was due to a decrease in the volume of domestic and exports sales of galvanized steel. In FY 2019, the segment’s revenue amounted to USD 520 million, down 16.1% YoY amid the challenging economic situation on the Turkish market. The Company managed to partly offset the decline in domestic demand by relocating sales towards Europe and the Middle East, which resulted in a growth in export sales by one-third compared to 2018.
OUTLOOK - The Company expects its metal production to decline in Q1 2020 due to the maintenance of blast furnace and converter facilities, as well as suspension of operations at hot-rolling Mill 2500 due to its planned reconstruction in March. The Company’s performance should be supported by the favourable price environment on the domestic market and price stabilisation for key raw materials. The Company’s performance should be further supported by measures aimed at operational efficiency increase and high capacity utilisation of high-margin production units.
Source : Strategic Research Institute