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EVRAZ announces unaudited interim financial results for H1 2020

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EVRAZ announces unaudited interim financial results for H1 2020



EVRAZ announces unaudited interim financial results for H1 2020

6 August 2020 — EVRAZ plc (“EVRAZ” or “the Group”; LSE: EVR) today announces its unaudited interim results for the six months ended 30 June 2020 (“the Period”).

H1 2020 HIGHLIGHTS

  • Positive free cash flow of US$315 million (H1 2019: US$692 million).
  • Consolidated EBITDA totalled US$1,073 million, down 27.6% YoY from US$1,482 million in H1 2019, driving the EBITDA margin down to 21.5% from 24.1% due to lower vanadium, coal and steel product prices. This was partly offset by a US$251 million effect from cost-cutting and customer focus initiatives.
  • Total debt increased by US$229 million to US$5,097 million, net debt increased by US$288 million to US$3,733 million.
  • Net profit was US$513 million, compared with US$344 million in H1 2019.
  • The cash cost of steel and raw materials in Russia was lower or flat:
    • The cash cost of slabs decreased to US$210/tonne from US$230/tonne in H1 2019
    • The cash cost of washed coking coal was flat at US$34/tonne in H1 2020 over H1 2019
    • The cash cost of iron ore products was flat at US$38/tonne in H1 2020 over H1 2019
  • An interim dividend for 2020 of US$291.37 million (US$0.20 per share) has been declared, reflecting the Board’s confidence in the Group’s financial position and outlook.
Financial Highlights
(US$ million) H1 2020 H1 2019 Change, %
Consolidated revenues 4,983 6,140 (18.8)
Profit from operations 891 913 (2.4)
Consolidated EBITDA1 1,073 1,482 (27.6)
Net profit 513 344 49.1
Earnings per share, basic (US$) 0.35 0.22 59.1
Net cash flows from operating activities 781 1,175 (33.5)
CAPEX1 337 309 9.1
  30 June 2020 31 December 2019  
Net debt1 3,733 3,445 8.4
Total assets 9,003 9,847 (8.6)

1 For the definition, see «Definitions of selected alternative performance measures».

Commenting on the results, EVRAZ’ Chief Executive Officer, Alexander Frolov, said:

The first half of 2020 was dominated by the global fight against the COVID-19 pandemic. The restrictive measures imposed by the governments of various countries have had a significant impact on the level of consumption of steel products around the world. Prices have reflected this situation, dropping sharply in comparison with the first half of 2019.

Despite market turbulence, EVRAZ was able to achieve EBITDA of almost US$1.1 billion, a 28% decline in year-on-year terms. This result was achieved despite lower steel, vanadium and coking coal prices as well as weakening market demand in North America that led to lower sales of tubular and flat-rolled steel products. To provide additional financial flexibility amid the COVID-19 pandemic, the Group bolstered its cash position through additional borrowing. This resulted in a slight increase in net debt to US$3,733 million, as at 30 June 2020 (US$3,445 million as of 31 December 2019), which together with the lower EBITDA, led to a moderate increase in the last twelve months EBITDA to net debt ratio to 1.7 times, compared with 1.3 times as at 31 December 2019.

Cost-cutting and productivity improvement initiatives combined with customer focus efforts generated a total EBITDA effect of US$251 million.

Our total CAPEX in the period was US$337 million. Amid deteriorating Russian steel market conditions, the management reprioritised the Group’s key initiatives and development projects. Despite this revision, the new long rail mill project at EVRAZ continued on schedule. Overall, the Group invested US$106 million in development CAPEX in the first half of 2020.

Given the positive results in challenging market conditions, the Board of Directors are recommending an interim dividend for 2020 of US$0.20 per share, totalling roughly US$291.37 million, which is in line with the previously announced dividend policy.

In H2, EVRAZ will aim to sustain production at full capacity and maximise sales volumes in Russia. We will focus on additional efficiency improvements and maintain balanced and selective approach to our investment projects.

Alexander Frolov EVRAZ’ Chief Executive Officer