Severstal posts 9% rise in IFRS net profit for Q3 to $1.24 bln

TASS Russian News Agency | Oct 18, 2021 at 11:26 AM

MOSCOW, October 18. /TASS/. Net profit of Severstal under International Financial Reporting Standards (IFRS) rose by 9% in Q3 2021 quarter-on-quarter to $1.24 bln, Russia's steel and mining company reported on Monday.

Revenue also gained 9% in the reporting period compared to the previous quarter to $3.2 bln due to "higher sales volumes and increase in weighted average steel prices," the report said.

"Sales growth was primarily driven by export markets with an increase of revenue from the North America region (4x growth quarter-on-quarter) as well as from the Middle East region (2x growth quarter-on-quarter)," Severstal explained.

Meanwhile, "higher revenue was partially impacted by additional export duties imposed by the Russian government," according to the report.

EBITDA went up by 5% quarter-on-quarter to $1.72 bln, EBITDA margin slipped to 54% from 56% in the previous three months.

Net debt stood at $1.53 bln as of the end of Q3, flat quarter-on-quarter. The net debt/EBITDA ratio improved to 0.29 from 0.37 as at June 30, 2021.

"In Q3 2021, we saw first signs of a normalization in the steel market. Iron ore prices fell by almost $100/t from all-time maximums due to a decrease in the Chinese demand, as China limits steel output. In line with our expectations, spot steel prices also declined from the record level of Q2. The semi-conductor shortage pushed automotive output down in Europe which led to lower steel demand and declining lead times from steel mills, resulting in supply and demand being in balance. The introduction of export duties in Russia caused domestic HRC price to fall to a level below export parity, net of duty," Chief Executive Officer of Severstal Alexander Shevelev was quoted as saying.

"However, the growth in sales coupled with higher average selling prices (due to the lag between spot prices and actual prices) pushed the company's financial results to new records," he noted.

Duties on exports of ferrous and nonferrous metals, as well as metal products, outside the Eurasian Economic Union have been introduced in Russia from August 1 until December 31, 2021. The duty comprises a base rate (15%) and a specific component calculated in dollars per tonne.

Severstal is a vertically integrated steel and mining company, one of Russia's largest steel producers. Chairman of the board of directors Alexey Mordashov who holds 77.03% of shares, is the main shareholder of Severstal.