Metalloinvest
Annual Report 2019

Operating Results

The Metalloinvest business model, which places a high emphasis on high value-added products, has proved its resilience. Metalloinvest demonstrated solid operating and financial results, despite the external challenges.

72 %

share of high value-added products (pellets and HBI/DRI).

This year the Company faced unusual market conditions, driven by spreads between global iron-ore and steel prices. The Metalloinvest business model, which places a high emphasis on high valueadded products, has proved its resilience. Metalloinvest demonstrated solid operating and financial results, despite the external challenges.

In 2019 the Company saw growth in the production and shipment of high valueadded products (pellets and HBI/DRI). Their share in the total amount of iron-ore product shipments was 72% (vs. 71% in 2018 and 61% in 2017).

The output of pig iron declined by 10% y-o-y, to 2.7 million tonnes, due to maintenance works being carried out at blast furnaces. Crude steel production fell by 3.9% y-o-y, to 4.9 million tonnes in 2019, chiefly as a result of the renovation of arc steel-making furnaces #1 and #2 at Ural Steel, using a flexible modular furnace (FMF).

In 2019 the Company’s EBITDA stood at USD2.5 billion, while the EBITDA margin remained high, at 36.1%. A large-scale credit portfolio optimisation programme, which was implemented last year, allowed us to significantly reduce debt-servicing costs. The Company’s leverage is kept at a comfortable level, with a Net Debt / EBITDA ratio of 1.49x at the end of the reporting period, and the share of short-term debt as a percentage of total liabilities standing at less than 2%.

PRODUCTION AND SHIPMENTS

In 2019 iron-ore production amounted to 40.2 million tonnes (-0.5% y-o-y ). This was due to a change in both the product mix and the specifications of mined iron ore. Another factor was the production of concentrate with a higher Fe content, after the four sections of fine screening technology began operating at full capacity at MGOK, which in turn led to a decrease in the physical volume of production. In 2019 pellet production rose by 1.4% y-o-y, to 28.1 million tonnes, as a result of the completion of major maintenance works at Pellet Plant #2 at LGOK, renovating Pellet Plant #3 at MGOK, reducing time spent on maintenance works, and introducing changes in the pellet production mix. In 2019 the Company produced 7.9 million tonnes of HBI/DRI, which represents 1.3% growth y-o-y, due to increased output at the HBI-3 Plant, the most productive facility.

Output of iron-ore products, 2015–2019
mln tonnes
 
Output of iron-ore products at LGOK, 2015–2019
mln tonnes
Output of iron-ore products at MGOK, 2015–2019
mln tonnes

Due to maintenance works at blast furnaces pig iron production fell by 10% y-o-y in 2019, and amounted to 2.7 million tonnes.

In the reporting period the Company saw a decrease in crude steel production, by 3.9% y-o-y, to 4.9 million tonnes, chiefly due to the renovation of arc steel-making furnaces #1 and #2 at Ural Steel

Output of steel products, 2015–2019
mln tonnes
Output of steel products at OEMK, 2015–2019 mln tonnes
Output of steel products at Ural Steel, 2015–2019 mln tonnes

In 2019 iron-ore product shipments to customers outside Russia rose by 3.5% y-o-y, to 26.7 million tonnes.
High value-added iron-ore products (pellets and HBI/DRI) prevailed in the total volume of iron-ore product shipments, accounting for 72.3% in 2019.
Shipments of iron-ore products, 2015–2019
mln tonnes
 
Shipments of iron-ore products from LGOK, 2015–2019
mln tonnes
Shipments of iron-ore products from MGOK, 2015–2019
mln tonnes

In 2019 iron and steel product shipments to the Russian market increased by 0.6%, and amounted to 31% of the total volume (vs. 28% in 2018). The share of high value-added steel product shipments stood at 41%.

The volume of pig iron shipments to customers outside Russia declined from 2.2 million tonnes (12M 2018) to 1.7 million tonnes (12M 2019) mainly due to the increased domestic consumption.


Shipments of pig iron and steel products, 2015–2019
mln tonnes
Shipments of metal products from OEMK, 2015–2019
mln tonnes
Shipments of metal products from Ural Steel, 2015–2019
mln tonnes
Output and shipments, 2019