News in Brief№ 1 June 2019

In late January 2019, Metalloinvest announced its operational results for the 12 months of 2018. As part of the strategy to increase the share of high value-added products, in 2018 the Company successfully reached record levels of production of high quality iron ore products. Steel production increased by 6.2% which also resulted in an increase in production of pig iron by 12.6% to 3 mn tonnes. Pellet and HBI/DRI output for the 12 months of 2018 grew by 10.2% and 12.1% respectively.

Metalloinvest hosted a tour of OEMK and Lebedinsky GOK for participants of the third international industrial conference “Electrosteel: Technology, Equipment, Materials”, which took place in Moscow in February 2019. Attendees visited OEMK’s electric arc furnace shop, learned about the work of steel furnaces, secondary refining areas, the different units of complex steel processing facilities and continuous casting machines. After this, the delegation visited the viewing point of the open-pit mine at Lebedinsky GOK and learned about HBI production processes.

In March 2019, Metalloinvest and OMK held a Coordination Committee meeting during which they discussed the production of concast billets at Ural Steel in order to produce railway wheels at Vyksa Steel Works (part of OMK), as well as plans to supply steel flat products and pipe billets. Andrey Prosyanik, Director of Domestic Sales at Management Company Metalloinvest, said: “Metalloinvest and OMK have been partners for many years. We are continuously improving the quality of billets at Ural Steel and the Coordination Committee meetings allow us to ensure we supply products that meet suppliers’ high demands.”

At the end of April 2019, Metalloinvest announced its operational results for Q1 2019. During the period, the Company increased shipments of pellets by 8% and HBI/DRI by 10% y-o-y. Thus, in line with the Company’s strategy to increase the share of high value-added products in the sales structure, the share of pellets and HBI/DRI in the total shipments of iron ore products amounted to 74% compared to 69% in Q1 2018.

ING Bank signed a loan agreement with Metalloinvest for a credit line in the amount of up to USD 100 mn until 30 November 2020, which has been recognised by the rating agency Ecovadis. The signing of the agreement took place in April 2019. The interest rate of the ‘Sustainability Improvement Loan’ depends on the level of the Company’s Corporate Social Responsibility (CSR) rating and may be reduced if Metalloinvest’s rating indicators improve. Sustainable development (ESG) is an integral part of Metalloinvest’s strategy. In cooperation with ING Bank, Metalloinvest has become one of the first companies in Russia to sign an agreement of green finance nature. This credit line stimulates the improvement of the Company's ESG performance and provides an additional source of liquidity.

In May 2019, Metalloinvest and KAMAZ held their fourth Coordination Committee meeting to discuss technical and commercial issues. Delegates met at OEMK (part of Metalloinvest), a leading supplier of high-quality rolled steel products (SBQ) for the automotive industry. In November 2017, Metalloinvest and KAMAZ signed a three-year memorandum of cooperation for the supply of SBQ. KAMAZ orders up to 80% of its long steel product requirements from OEMK. The Coordination Committee meetings, which take place twice a year, help both sides to define the course of future development.

On 31 May 2019, Metalloinvest reported their financial results for Q1 2019, which ended on 31 March 2019. The growth in high value-added product sales, favourable market conditions and the implementation of the operational improvement programme allowed Metalloinvest to enhance its financial results in Q1 2019. EBITDA grew by 8.1% compared to Q1 2018 and amounted to USD 730 mn. The Company's leveraging remained low with Net Debt / EBITDA LTM at 1.1x. The Company’s rating upgrades by S&P and Moody’s in Q1 2019, as well as Fitch and Expert RA in May 2019, were a positive assessment of the Company’s performance.

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