Severstal reported 1Q16 revenue decreased 28.3% y/y to $1,097 million, EBITDA decreased 53.2% to $273 million

21 April 2016
Severstal Group reported Q1 2016 revenue decreased 28.3% y/y to $1,097 million (Q1 2015: $1,531 million) primarily impacted by a substantial decline in average selling prices as well as a marginal reduction in sales volumes at both Russian Steel and Resources segments. Group EBITDA decreased 53.2% y/y to $273 million (Q1 2015: $583 million) as operational enhancements only partially mitigated lower selling prices. Capex of $119 million was 15.5% higher y/y (Q1 2015: $103 million).

Vadim Larin, CEO of JSC Severstal Management, commented: “Before moving on to review our results in the quarter I would like first to reflect on the tragic events of February 2016 and pay tribute to the 31 Severstal employees and five rescue workers who tragically died in the accident at the Severnaya mine. We are providing full support to the families of those affected. At the time of writing, we are working with the authorities to identify the cause of the accident, which has initially been assessed as being caused by geological reasons. One of the company’s key objectives is to eliminate all fatalities across the business, and health and safety remains a key priority and focus of investment as we strive to ensure tragedies such as this are not repeated.

The company is still considering different options for the mine’s recovery. Meanwhile, the decision on handling the underground fire in the mine by flooding with water was taken. The operation is estimated to last until June 2016. The timeframe for reopening the mine is currently unclear and the Company will provide further updates as soon as information becomes available.

As we review the quarter, concerns regarding China’s economic outlook and the lack of growth in global steel demand continue to put pressure on the steel market. While the start of the year appeared to mark the low point in steel prices globally, the subdued picture changed significantly in March 2016 with global hot rolled coil prices rallying more than 40% compared with the previous month.

The company remains consistent in the execution of its stated strategy focusing on customer care and product quality improvement, cost efficiency, and investment optimisation. This, combined with a strong financial position, enables the company to constantly deliver long-term shareholder value. Although visibility remains limited, we are seeing resilience in domestic steel demand supported by our flexibility to shift sales between regions, which enables us to target full utilisation.”



Tags: Severstal


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