Severstal (CHMF) Q1 2021 earnings summary

Executive summary

• Q1 2021 saw strong operational and financial performance, with hot metal output up 12% and crude steel production up 7% sequentially, driven by the launch of BF #3.

• Group revenue rose 28.8% quarter-over-quarter to $2,219 million, and EBITDA increased 63.7% to $1,162 million, with a record EBITDA margin of 52.4%.

• Net profit surged to $721 million in Q1 2021 from $72 million in Q1 2020, driven by higher operating income and lower FX losses.

• Free Cash Flow more than doubled to $497 million, and net debt declined to $1,589 million.

• The Board recommended a dividend of 46.77 roubles per share for Q1 2021.

Financial highlights

• Revenue increased 27.5% year-over-year to $2,219 million, driven by stronger pricing and market demand.

• EBITDA was up 109.4% year-over-year to $1,162 million; EBITDA margin reached 52.4% (up from 31.9%).

• Net profit rose to $721 million, up 901.4% year-over-year.

• Basic EPS was $0.87, up from $0.09 in Q1 2020.

• Net debt/EBITDA improved to 0.52x from 0.84x sequentially and 0.5x year-over-year.

Outlook and guidance

• The Board remains confident in the resilience of the business model relative to peers.

• Management expects temporary negative drivers in Q1 to turn positive for the remainder of the year.

• Capital commitments as of March 31, 2021, stood at $407 million, up from $349 million at year-end 2020, indicating ongoing investment.