Industrial Metallurgical Holding
IMH ANNOUNCES IFRS CONSOLIDATED FINANCIAL RESULTS FOR 2019
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/ Key word(s): Annual Results
IMH announces IFRS consolidated financial results for 2019
24 March 2020
Industrial Metallurgical Holding (IMH), one the largest global suppliers of merchant pig iron and the biggest Russian merchant coke producer, announces IFRS financial results for 2019.
IMH key financial indicators:
Financial results
Key segments operational and financial results
Coke segment
Ore & Pig Iron segment
Debt portfolio management The Group’s debt portfolio did not see any substantial changes over the reporting period. As part of its deleveraging programme, the Group fully repaid some of its most expensive bank loans. As at 31 December 2019, the Group had RUB 39.6 bln in outstanding credit facilities, including RUB 37.8 bln in long-term facilities.
Events in the reporting period
Events after the 2019 reporting period
Sergey Frolov, Vice President for Strategy and Communications of IMH Management Company, commented on the 2019 financial and operating performance:
“In 2019, the landmark event for IMH was the launch of Tula Steel, a partner project that is expected to consume over 1.5 million tonnes of pig iron from Tulachermet. We noticed in late 2019 and early 2020 that reduction in supply of our merchant pig iron drove up the price. We believe that a large reliable consumer located in proximity to our pig iron production facilities will provide support to the Group and further secure its stability in turbulent times. Commenting on our financial performance in 2019, I would like to note that we have witnessed the benefits of vertical integration once again. In early 2019, we found ourselves in a situation where weak support from export markets of merchant products was coupled with high prices for iron ore. And while the price of merchant pig iron in 2019 fell by the average of 12% y-o-y, our revenue decreased insignificantly by as little as 3%. This was achieved through the record high output and sales of pig iron and an increase in the output and sales of coke, Complex subsurface conditions at the Butovskaya and Tikhova mines were material negative factors that affected our performance in 2019. An incident at the Tikhova mine, also caused by the complex subsurface conditions, lead to the suspension of operations early in the year. We managed to improve the situation in 2H 2019 and increase the output by over 40% h-o-h. We also improved efficiency of our operations at Uchastok Koksovy, having upgraded its machinery and equipment. Coal prices were low in 2019, so we could procure cheap coal from third-party suppliers to make up for the shortage we experienced. This had a positive effect on the Coke segment. We took a series of measures to cut costs. We also overhauled our investment portfolio and postponed most of the projects that are not critical for day-to-day operations of the Company to a later date in order to maintain high free cash flow. In 2019, free cash flow went up 7% y-o-y to continue several years of running growth and demonstrate the Company’s broad stability margin. While carrying out our financial and operational stability enhancement programme, we plan to deliver three large investment projects in the years to come. We are going to complete the construction of the new horizon at KMAruda, construct the second phase of the Tikhova mine, and commission blast furnace No. 1 at Tulachermet. Expansion of the mining capacity will enable us to almost entirely meet our demand for feedstock and protect ourselves against losses at the time of market volatility. The commissioning of blast furnace No. 1 will make us more flexible and help us retain the Group’s share in the merchant pig iron market. The three projects will complete the process of building a vertically integrated business structure fully supplied with our own feedstock and having a reliable sales market represented by our partner Tula Steel. We made an important decision after the reporting period, and I want to mention it separately. We are currently looking for the ways of integrating the UN Sustainable Development Goals (SDG) into the Group’s business strategy. We are going to hire a leading audit firm as our external consultant for sustainable development best practices and propose a package of strategic initiatives to support responsible consumption and production and to ensure long-term efficiency improvements throughout our value chain and across all business processes of the Group. Many of our companies have long opted to take a responsible attitude towards resources, and this is proved, among other things, by the high ratings assigned by Interfax-ERA. We have taken part in the energy efficiency ranking of Russian and Kazakhstan companies for many years. The key steps in this area will be a sustainable development committee to be established with the Board of Directors, and a roadmap that will set out strategic initiatives, specific measures and implementation procedures. Sustainable development assessment by an international agency will be an intermediate step in this extensive work.”
Sergey Cherkaev, Vice President and CFO, commented on the Company’s financial performance: “In 2019, IMH Group continued its debt optimisation efforts. While aiming mostly at debt extension and currency restructuring in 2018, our primary goal in 2019 was to reduce the cost of bank loans for our companies. Achieving this goal was supported by the Bank of Russia’s monetary policy that brought the key rate from 7.75% in early 2019 down to 6.25% in the year end. The ratio of RUB and USD denominated loans is an important stability factor for the Group. Until the mid-2018, rouble loans made 40%, and foreign currency loans 60% of the total bank loans. The situation has now reversed, with rouble and foreign currency loans making 61% and 39% respectively, This ratio is beneficial to us both now, at the time of exchange rate volatility, and in the future as we expect our rouble revenue to increase on the back of growing supplies to Tula Steel. An increase in domestic sales is seen already in the 2019 financial statement – their share in the total revenue went up 12%. The share of pig iron sales in the domestic market increased more than 200%. We also plan to repay or refinance our most expensive loan facilities as another step towards maintaining our financial stability. Our task for the current year is to decrease Net Debt / EBITDA ratio.”
*** Industrial Metallurgical Holding (IMH) is a Russian vertically integrated company specialising in production of pig iron, extraction and processing of coking coal and iron ore, foundry castling and powder metallurgy. IMH is one of the world’s largest suppliers of merchant pig iron and Russia’s biggest producer of merchant coke. The Group’s key production facilities are located in the Kemerovo, Belgorod, Tula and Kaluga regions of the Russian Federation. *** Ekaterina Popova Head of Strategic Communications Phone: +7 495 725 56 82, ext. 654
[1] EBITDA calculated in accordance with the Eurobond loan agreement (LPN, Reg S / 144A)
26.03.2020 CET/CEST Dissemination of a Corporate News, transmitted by EquityStory.RS, LLC – a company of EQS Group AG. |
Language: | English |
Company: | Industrial Metallurgical Holding |
2nd Verkhniy Mikhailovskiy proezd, 9 | |
115419 Moscow | |
Russia | |
Phone: | +7 495 725 56 80 |
Fax: | +7 495 633 13 12 |
E-mail: | popova@metholding.com |
Internet: | www.metholding.ru |
ISIN: | XS1255387976 |
EQS News ID: | 1007935 |
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