Severstal (CHMF) Q4 2021 earnings summary

Executive summary

• Revenue for 2021 reached $11,638 million, up 69% year-over-year; Q4 2021 revenue was $3,267 million, up 2% quarter-over-quarter.

• EBITDA for 2021 was $5,978 million, a 147% increase from 2020; Q4 2021 EBITDA was $1,446 million, down 16% qoq.

• Net profit for 2021 was $4,075 million, up from $1,016 million in 2020; Q4 2021 net profit was $978 million.

• Free cash flow in 2021 was $3,539 million, up 322% yoy; Q4 2021 FCF increased 12% qoq to $1,114 million.

• Net debt/EBITDA ratio improved to 0.23 at year-end 2021, down from 0.29 in Q3 2021 and 0.8 in 2020.

Financial highlights

• EBITDA margin for 2021 was 51%, up 16 p.p. yoy; Q4 2021 EBITDA margin was 44%, down 10 p.p. qoq.

• Operating margin for 2021 was 46%; Q4 2021 operating margin was 39%.

• Cash and cash equivalents at year-end were $418 million, up 49% qoq; total debt stood at $1,816 million, flat qoq.

• Gross profit for 2021 was $6,718 million, up from $2,918 million in 2020.

• Basic earnings per share for 2021 were $4.88, compared to $1.23 in 2020.

Outlook and guidance

• Steel price environment stabilized after a downward trend in 2H 2021, rebounding in early 2022 due to seasonal demand.

• Raw material prices showed mixed trends; supply shortages reversed the downside by end-Q4.

• CAPEX guidance for 2022 increased, mainly for new development projects and reallocation from 2021.

• Management monitors economic and geopolitical risks, including sanctions and regulatory changes.

• No significant COVID-19 impact identified for 2021; ongoing monitoring continues.