EquityStory.RS, LLC-News: OAO Holding Company METALLOINVEST / Key
word(s): Final Results
METALLOINVEST ANNOUNCES FINANCIAL RESULTS FOR THE FULL YEAR 2011
02.05.2012 / 08:45
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METALLOINVEST ANNOUNCES FINANCIAL RESULTS
FOR THE FULL YEAR 2011
Moscow, Russia – May 2, 2012 – METALLOINVEST (–the Company–), a leading
global iron ore and HBI producer based in Russia, today announces its
audited IFRS financial results for the full year ended December 31, 2011.
Financial Highlights
– Consolidated revenues US$ 9,919 million (+38.7% y-o-y)
– EBITDA US$ 3,873 million (+49.7%)
– EBITDA margin 39.0% vs. 36.2% in 2010
– Net Income US$ 1,432 million (+19.4%)
– Net Debt US$ 4,432 million (+11.0%)
– Net Debt / EBITDA 1.1x vs. 1.5x in 2010
– Capital expenditures US$ 512 million (+30.6%)
– Total assets US$ 10,465 million (+27.3%)
Production Highlights
– Iron ore 40.1 million tonnes (+9.0% y-o-y)
– Pellets 22.4 million tonnes (+2.0%)
– HBI/DRI 5.2 million tonnes (+9.5%)
– Hot metal 2.5 million tonnes (-6.1%)
– Crude steel 5.8 million tonnes (-4.4%)
Corporate Highlights
– Entered into the new long-term agreements with NLMK, MMK and other
Russian and oversees customers to supply iron ore and pellets for 3-5
years
– Increased sales of iron ore and pellets to the Chinese market by 137%
to 10.2 million tonnes in 2011 from 4.3 million tonnes in 2010
– Secured a 5-year PXF loan for the amount of US$ 3.1 billion
– Issued 5-year US$ 750 million Eurobonds with a coupon rate of 6.50%
– Obtained ratings of –Ba3–/–Positive– by Moody–s and –BB—/–Stable– by
Fitch respectively
– Purchased a 4% stake in Norilsk Nickel for a total consideration of US$
2.2 billion
– Appointed three independent non-executive directors to the Board of
Directors
– Introduced disclosure of operational results on a quarterly basis and
IFRS financial results on a half year basis
Eduard Potapov, Chief Executive Officer of METALLOINVEST, commented:
–We are pleased to announce that the Company has demonstrated impressive
growth of its key operational and financial metrics and significantly
strengthened its position in the global market during the course of 2011.
The management delivered on a number of initiatives that supported a
significant increase in the Company–s production volumes and allowed to
achieve impressive financial results. The strong performance enabled the
Company to successfully tap international capital markets. Our ability to
raise the largest syndicated loan in [Russia–s metals and mining] industry
and successfully issue a debut Eurobond underlines a high level of investor
confidence in Metalloinvest.
Throughout 2011, Metalloinvest has undertaken a number of targeted measures
to create a basis for the Company–s sustainable development, including the
improvement of corporate governance, introducing the principles of
corporate social responsibility and best practice information disclosure.
We intend to continue implementing our strategy aimed at increasing the
Company–s efficiency levels and improving transparency–.
INCOME STATEMENT
US$ million FY 2011 FY 2010 Change, y-o-y
Total Revenues 9,919 7,153 38.7%
EBITDA 3,873 2,588 49.7%
EBITDA margin 39.0% 36.2% 2.8 ppt
Net Income 1,432 1,199 19.4%
Revenue
In 2011, METALLOINVEST–s consolidated revenues amounted to US$ 9,919
million, an increase of 38.7% compared to US$ 7,153 million in 2010.
METALLOINVEST–s Mining segment was the primary contributor to the Company–s
financial performance, with a total 49% share in the consolidated revenues
(compared with 48% in 2010), whilst the Steel segment accounted for 46%
(compared with 51% in 2010). Revenues from mining operations increased by
40.5% y-o-y to US$ 4,883 million in 2011, whilst revenues from the Steel
segment grew by 25.0% y-o-y to US$ 4,594 million.
METALLOINVEST continued to strengthen its presence in major high-growth
economies over the course of the year, with Russia&CIS being the primary
markets for the Company with a share of 44% in consolidated revenues.
Europe represented 19% of the Company–s total consolidated revenues,
followed by China and the MENA region with 18% and 14% shares respectively.
Cost of Sales and Distribution expenses
In 2011, cost of sales amounted to US$ 4,485 million, an increase of 24.9%
compared to US$ 3,590 million in 2010, due to higher production volumes and
industry-wide cost inflation. As a share of consolidated revenues, cost of
sales declined to 45.2% in 2011 from 50.2% in 2010.
Cost of materials and components increased by 25.9% y-o-y to US$ 2,342
million, energy costs increased by 26.1% y-o-y to US$ 845 million, and the
Company–s labour costs increased by 24.0% to US$ 689 million in 2011.
METALLOINVEST–s distribution expenses increased by 4.9% to US$ 1,642
million in 2011 from US$ 1,165 million in 2010, primarily due to
significantly higher shipment volumes to China and other export markets.
Profitability
METALLOINVEST–s consolidated EBITDA amounted to US$ 3,873 million in 2011,
an increase of 49.7% compared to US$ 2,588 million in 2010, with the EBITDA
margin increasing to 39.0% over 2011 from 36.2% in 2010.
METALLOINVEST–s Mining segment contributed 81.1% to the Company–s
consolidated EBITDA, with the Steel segment contributing 14.7%. EBITDA from
the Mining segment increased by 58.0% y-o-y to US$ 3,140 million, while the
Steel segment–s EBITDA grew by 21.9% y-o-y to US$ 570 million.
As at 31 December 2011, the equity price of Norilsk Nickel, classified as
available-for-sale, was lower than the price of purchase, which resulted in
a loss of US$ 969 million for the full year 2011. However, Net Income
increased by 19.4% to US$ 1,432 million in 2011 compared to US$ 1,199
million in 2010.
FINANCIAL POSITION
As at 31 December 2011, METALLOINVEST–s total assets amounted to US$ 10,465
million, an increase of 27.3% y-o-y, compared to US$ 8,199 million in 2010,
while total equity accounted for US$ 3,337 million compared to US$ 2,533
million, an increase of 31.7% y-o-y. The increase in the Company–s assets
and equity was primarily driven by the Company–s cash generation from
operating activities.
As at 31 December 2011, METALLOINVEST–s total borrowings amounted to US$
5,598 million.
The long-term portion represented 80.0% of total debt at the end of the
reporting period, with the weighted average maturity of METALLOINVEST–s
borrowings amounting to 31 months. As at 31 December 2011, Net debt stood
at US$ 4,432 million compared to US$ 3,995 million as at 31 December 2010,
with a Net Debt/EBITDA ratio of 1.1x as of compared to 1.5x in 2010
The Company–s cash and cash equivalents amounted to US$ 1,166 million as at
31 December 2011, against US$ 152 million as at 31 December 2010.
LIQUIDITY AND CAPITAL RESOURCES
The Company–s operations generated an 84% increase in net cash from
operating activities to US$ 2,876 million in 2011, compared to US$ 1,563
million in 2010, primarily as a result of the increase in consolidated
revenues and operating profitability.
Net cash used in investing activities rose to US$ 3,033 million against US$
325 million in 2010, mainly due to the acquisition of 76.3 million of ADRs
(approx. 4% interest in Norilsk Nickel) for a total consideration of US$
2.2 billion. Over the course of the year, METALLOINVEST received dividends
of US$ 44 million as a shareholder of Norilsk Nickel. Separately, in
November 2011, the Company disposed of 8.3 million ADRs for a consideration
of US$ 255 million within the framework of the buy-back program, executed
by Norilsk Nickel.
METALLOINVEST generated US$ 1,306 million of cash from financing activities
in 2011. In April, the Company raised a total of US$ 3.1 billion via a
five-year syndicated PXF loan, maturing in 2016.
In addition, in July, the Company successfully issued its debut 5-year US$
750 million Eurobonds with a coupon rate of 6.50%. In 2011 the Company–s
debt repayments amounted to US$ 2,697 million.
In April 2011, the Company paid dividends in the amount of US$ 267 million
for the year ended at 31 December 2010.
METALLOINVEST is rated –Ba3– with a –Positive– outlook (upgraded from
–Stable– in June 2011) by Moody–s and –BB—with –Stable– outlook by Fitch
Ratings. In July 2011, Moody–s and Fitch Ratings assigned Metalloinvest
Finance Limited–s 5-year US$ 750 million bonds a senior unsecured rating of
–Ba3– and –BB— respectively.
CORPORATE GOVERNANCE AND TRANSPARENCY
In the second half of 2011, the Company introduced the disclosure of its
IFRS financial results and organized its first conference call with
investors, following which the Company commenced the disclosure of its
operational results on a quarterly basis.
In September 2011, METALLOINVEST established an Investor Relations
department.
In November 2011, METALLOINVEST approved a new Board of Directors
consisting of 12 members, with three independent non-executive directors –
Ken Costa, Nikolai Krylov and Vadim Levin – appointed to the Board. Their
extensive experience will make a significant contribution to the Board, and
enhance the standards of the Company–s corporate governance.
DEVELOPMENT PROGRAM
METALLOINVEST–s capital expenditure increased by 30.6% y-o-y to US$ 512
million, compared to US$ 392 million in 2010. The Company has maintained
its focus on high value-added iron ore products, developing the iron ore
reserve base and improving the cost efficiency of its operations, whilst
striving to satisfy customer needs and expanding the product mix.
Major on-going and high-priority investment projects include:
Project Locati Total Capex,US$ Capacity
on million
Focus on high value-added
products
HBI-3 plant construction LGOK 850 1.8 mta of HBI
HBI-2 plant modernization LGOK 57 0.24 mta of HBI
Pellet Plant #3 construction MGOK 450 5.0 mta of pellets
DRI-3 reconstruction OEMK 11 0.1 mta of DRI
Iron ore reserve base
development
Increase in iron ore LGOK 264 1.0 mta of iron
production up to 23.0 mta ore
Increase in iron ore MGOK 61 0.4 mta of iron
production up to 17.9 mta ore
Expanding the product mix
Iron ore drying facilities LGOK 34 0.9 mta of dried
construction concentrate
Vacuum degasser construction Ural 27 1.2 mta of treated
Steel steel
Production optimization OEMK 267 0.5 mta of crude
(brownfield) steel
Cost efficiency improvements
Increase of merchant pig iron Ural 5 0.8 mta of pig
output Steel iron
Coke-oven battery #6 Ural 126 0.7 mta of coke
construction Steel
Air separation unit OEMK 83 -
construction
Baikal Mining Company (Udokan copper deposit development)
In 2009-2010, the Baikal Mining Company carried out the prefeasibility
study as well as geological exploratory works on site and test work.
In 2011, SRK Consulting has estimated Udokan–s mineral reserves and
resources based on the JORC code requirements. Probable reserves of Udokan
amounted to 9.88 million tonnes of contained copper. Measured, indicated
and inferred resources amounted to 25.7 million tonnes of contained copper.
In the first half of 2011, the first LME grade –A– copper cathode was
produced from Udokan ore in SGS Lakefield, Perth, Australia as part of
semi-industrial testing of the selected flowsheet.
In the middle of 2011, Baikal Mining Company has initiated the selection of
a General contractor for the preparation of bankable feasibility study and
Russian standards based technical project, which are expected to be
completed by December 2013.
In September and October 2011, Bailkal Mining Company signed the Memorandum
of intent with Vnesheconombank regarding the project financing and the
Cooperation Agreement with the Industrial and Commercial Bank of China was
signed.
OPERATIONAL RESULTS
tonnes-- 000 FY 2011 FY 2010 Change, y-o-y
Production
Iron ore 40,148 36,832 9.0%
Pellets 22,410 21,970 2.0%
HBI/DRI 5,151 4,703 9.5%
Hot metal 2,458 2,618 -6.1%
Crude steel 5,821 6,090 -4.4%
Shipments
Iron ore 12,743 9,827 29.7%
Pellets 13,620 13,220 3.0%
HBI/DRI 2,324 2,113 10.0%
Pig iron 1,126 929 21.2%
Steel products 5,226 5,433 -3.8%
In 2011, the Company–s iron ore production amounted to 40.1 million tonnes,
an increase of 9.0% y-o-y, with iron ore shipments to external customers
increasing by 29.7% y-o-y.
Due to the optimisation of METALLOINVEST–s production facilities, the
Company increased the output of pellets to 22.4 million tonnes in 2011,
with shipments of pellets increasing by 3.0% y-o-y.
HBI/DRI production increased to 5.2 million tonnes from 4.7 million in
2010, as a result of in-line equipment modernisation, with HBI/DRI
shipments increasing by 10.0% y-o-y.
The Company reduced its production of hot metal and crude steel by 6.1% and
4.4% respectively.
METALLOINVEST has continued to diversify its customer base by increasing
shipments to export markets and signing a number of new long-term
agreements. In February 2011, the Company singed a 4-year contract with
NLMK to ship 21.6 million tonnes of pellets during 2011-2014. The company
also signed a 3-year contract with MMK in September 2011 to supply iron ore
and pellets.
During the reporting period, the Company–s shipments of iron ore products
to the Chinese market increased by a factor of 2.5 to 10.2 million tonnes,
accounting for over 50% of total export shipments. The increase was
primarily driven by the Company–s growing utilization of the railroad route
through Zabaikalsk.
SIGNIFICANT EVENTS AFTER THE END OF THE REPORTING PERIOD
In January 2012, the Company paid dividends of US$ 290 million for the
first 9 months of 2011.
In January 2012, METALLOINVEST executed the draw-down in the total amount
of US$ 916 million (an equivalent of RUR 28,900 million) under the terms of
its existing credit facility agreements with the purpose to enhance the
liquidity profile.
In March 2012, the Company issued the US$ 853 million RUB-denominated
unsecured corporate bonds (an equivalent of RUR 25,000 million) with a
coupon rate of 9.0% maturing in 2022, with an early redemption option in
2015.
In March 2012, Fitch Ratings affirmed a corporate long-term credit rating
–BB— with the –Stable– outlook.
In March 2012, the Company launched the air separation unit and vacuum
degasser at Ural Steel.
In April 2012, METALLOINVEST entered into the agreement to sell 100% of its
shares in the freight rail operator Metalloinvesttrans (MIT) for a cash
consideration of US$ 540 million to Globaltrans. As part of the
transaction, Globaltrans and METALLOINVEST have agreed on a three-year
service contract, according to which Globaltrans will provide rail freight
transportation and logistics services to METALLOINVEST, handling 100% of
all its rail transportation cargo volumes in year one based on agreed
pricing terms, and 60% of its cargo volumes in the following two years
based on a –right of first refusal– principle.
# # # # #
For further information, please visit www.metalloinvest.com or contact:
Investor Relations
Artem Lavrischev?el: +7 (495) 981-55-55
Email: a.lavrischev@metinvest.com
Public Relations
Dmitry Kravchenko
Tel: +7 (495) 981-55-55
Email: d.kravchenko@metinvest.com
METALLOINVEST is a leading iron ore and HBI producer and supplier
globally.The Company owns the largest iron ore reserves in the world and
demonstrates one of the lowest iron ore production costs. METALLOINVEST
generated US$ 9.9 billion of revenues and an EBITDA margin of 39% for the
full year 2011.
Alisher Usmanov–s investment holding company Gallagher Holdings is the
majority shareholder in METALLOINVEST with a 50% stake. Other shareholders
are Vladimir Skoch–s Serapaem Holdings with 30% and VTB Bank with 20%*
* – 20% is the approximation of 19.9999%
End of Corporate News
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Language: English
Company: OAO Holding Company METALLOINVEST
28, Rublevskoye shosse
121609 Moscow
Russia
Phone: +7 (495) 981-5555
Fax: +7 (495) 981-9992
E-mail: info@metinvest.com
Internet: http://metalloinvest.com
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