MMK Group Announce Financial Results for Jan-Mar Quarter
Russian Magnitogorsk Iron and Steel Works announced that MMK Group's revenue in January-March 2021 increased by 18.0% QoQ to USD 2,185 million
Russian Magnitogorsk Iron and Steel Works announced that MMK Group's revenue in January-March 2021 increased by 18.0% QoQ to USD 2,185 million due to higher steel prices in Russia and worldwide, EBITDA increased by 53.2% QoQ to USD 726 million reflecting revenue growth on the back of favourable market dynamics and net income was USD 477 million up 52.4% QoQ due to improved profitability. MMK'S CEO Mr Pavel Shilyaev said “The gradual recovery of Russia's economy that took shape at the end of the last year continued into the first quarter of 2021. The government's stimulus package launched last year continued to support all sectors of the economy, which in turn had a positive impact on apparent steel use and helped us demonstrate strong financial performance, corroborating once again that we are on a right track in our strategic development.”
The Russian steel segment's revenue for Q1 2021 increased by 21.4% to USD 2,105 million driven by the growth in global prices for metal products and the continuing strong demand. The increase in revenue by 31.2% YoY was caused by the global business recovery and favourable pricing. The segment's EBITDA for Q1 2021 grew by 58.2% QoQ to USD 707 million, as a result of growing sales margins amid an increase in global prices for metal products. EBITDA grew by 67.9% YoY, following the increase in revenue. The Group's Q1 2021 profitability saw a positive boost to the sum of USD 11 million for the quarter from the operational efficiency and cost optimisation programmes under our updated strategic initiatives. The slab cash cost in Q1 2021 increased by 19.3% to USD 340 per tonne, mainly reflecting the rising prices for key raw materials. The slab cash cost grew by 27.3% YoY.
The Turkish steel segment's revenue for Q1 2021 almost remained flat QoQ to USD 166 million, as higher steel prices fully offset lower sales. Revenue grew by 46.9% YoY, reflecting higher sales volumes and a favourable market environment. The favourable environment coupled with measures to improve business efficiency increased the segment's EBITDA for Q1 2021 by 28.6% to USD 27 million. Year-on-year, the Turkish steel segment's EBITDA grew nine fold to USD 27 million due to the last year's low base caused by the pandemic and lockdown restrictions.
The favourable conditions in global markets coupled with seasonal growth in demand in Russia will positively impact the Group's sales in Q2 2021. In May 2021, the reverse Cold-Rolling Mill 1700 is expected to be commissioned. Given 100% utilisation rate of our premium products facilities, we expect to see a further improvement in the structure of the Group's sales portfolio.
The start of the construction season in Russia along with positive dynamics of global steel prices on the back of the remaining deficit in international markets will support the growth of MMK Group's steel product prices in Q2 2021.
CAPEX for Q2 2021 is expected to grow q-o-q, in line with the implementation schedule for projects pursued under the Group's strategy.
Operational excellence initiatives under our updated strategy will further boost the Group's profitability in Q2 2021.