Mmk · RUS:MAGN
Mmk — H1 2017 Earnings Presentation
13 slides from Mmk's earnings presentation, Aug 7, 2017
Slide 1: IFRS financial statements for Q2 and H1 2017
IFRS financial statements for Q2 and H1 2017 7 August 2017
Slide 2: Key highlights for MMK Group
KEY HIGHLIGHTS FOR MMK GROUP 2 Q2 2017 financial results Revenue USD 1,926 mln up 16.0% on Q1 2017 Cost of sales USD 1,389 mln up 18.6% on Q1 2017 EBITDA USD 455 mln up 0.7% on Q1 2017 EBITDA margin 23.6% down 3.6 p.p. on Q1 2017 Net profit USD 297 mln up 23.2% on Q1 2017 Cash-cost of slab USD 290 p
Slide 3: High capacity utilisation
HIGH CAPACITY UTILISATION 3 Key production indicators, ths tonnes Q2’17 Q1’17 % H1’17 H1’16 % • MMK Group’s finished steel products output in Q2 2017 grew 5.9% on Q1 2017. Pig iron 2,578 2,372 8.7% 4,950 4,859 1.9% Crude steel 3,182 3,066 3.8% 6,248 6,208 0.6% • In Q2 2017, sales volumes of HVA prod
Slide 4: MMK Group sales structure on key markets
MMK GROUP SALES STRUCTURE ON KEY MARKETS 4 Russian and CIS market sales, ths tonnes Russia and CIS market sales by sector, ths tonnes 1 911 2 079 1 911 2 079 CIS sales 18% 14% 24% HVA 22% Downstream products 2% Other HVA 40% 1% 9% 8% Construction sector 47% 9% Flat cold-rolled products 5% 4% 12% 5%
Slide 5: MMK Group key financial highlights
MMK GROUP KEY FINANCIAL HIGHLIGHTS 5 • Revenue for Q2 2017 amounted to USD 1,926 mln, up 16.0% on Q1 2017. This was primarily due to the growth in finished products sales, stronger rouble to US dollar, and changes in finished products stocks in traders’ warehouses. Steel segment revenue (Russia), ml
Slide 6: MMK Group key financial highlights: EBITDA
MMK GROUP KEY FINANCIAL HIGHLIGHTS 6 • Average sales price in Q2 2017 decreased q-o-q due to correction in global steel prices and the domestic market prices. Quarterly EBITDA dynamics, mln USD 423 416 • EBITDA for the Russian steel segment in H1 2017 grew 30.1% y-o-y. This was mainly due to an incr
Slide 7: Analysis of key financial highlights
ANALYSIS OF KEY FINANCIAL HIGHLIGHTS 7 Analysis of revenue, Q2 2017 vs Q1 2017, mln USD • The main factors that impacted revenue in Q2 2017 were lower prices for steel, higher sales volumes and decrease of stocks held 2 000 38 by traders which are a part of MMK Group. 157 -94 16 87 1 500 61 • In Q2
Slide 8: Depreciation and CAPEX
DEPRECIATION AND CAPEX 8 Depreciation, mln USD • In Q2 2017, MMK Group CAPEX amounted to USD 163 mln. The growth on the previous quarter is in line with the investment projects schedule 150 and is in part connected to the stronger rouble rate. 130 • In 2017, CAPEX is expected to amount to RUB 38-39
Slide 9: Sustainable generation of positive free cash flow (FCF)
SUSTAINABLE GENERATION OF POSITIVE FREE CASH FLOW (FCF) 9 Net working capital, mln USD Free Cash Flow (FCF), mln USD 1 400 1 000 As of Q2 2017, the working capital/revenue ratio was 15.6% 1 200 -216 750 1 000 -189 800 500 1 239 907 600 1 203 1206 1 031 977 -284 902 400 812 815 748 767 250 502 200 21
Slide 10: MMK Group's debt profile
MMK GROUP’s DEBT PROFILE 10 • Net debt of MMK Group in Q2 2017 was USD 239 mln, with Net debt / Debt and cash funds structure by currency, mln USD EBITDA ratio of 0.12x. 600 Debt C&CE and Deposits • The share of debt which is denominated in foreign currencies (USD, EUR) as 500 506 400 of 30.06.2017
Slide 11: Structure of operating costs and cash costs
STRUCTURE OF OPERATING COSTS AND CASH COSTS 11 MMK Group operating costs, mln USD • In Q2 2017, the share of scrap in MMK’s material costs decreased due to the decreased utilization level for the electric arc furnaces. Q2 ‘17 Q1 ‘17 +/- % • At the same time, the share of iron ore increased due to th
Slide 12: Comment on market situation
COMMENT ON MARKET SITUATION 12 • Currently, the Company’s management sees a seasonal uptick on the domestic market, which means an increase in sales of finished products in Q3 2017 can be expected. • It is anticipated that the increase in steel price seen since July 2017 in the Company’s main export
Slide 13: Disclaimer
DISCLAIMER 13 • •THIS PRESENTATION IS FOR DISTRIBUTION IN UK ONLY AMONG THE PEOPLE HAVING PROFESSIONAL SKILL IN THE ISSUES RELATED TO INVESTMENTS WITHIN THE MEANING OF ARTICLE 19(5) OF DIRECTIVE ON FINANCIAL ADVERTISEMENT APPROVED IN 2005 ON THE BASIS OF LAW ON FINANCIAL SERVICES AND MARKETS 2000, O