Metalloinvest Finance Designated Activity Company
METALLOINVEST ANNOUNCES FINANCIAL RESULTS FOR THE FULL YEAR 2011
OAO Holding Company METALLOINVEST / Key word(s): Final Results METALLOINVEST ANNOUNCES FINANCIAL RESULTS 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’.
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 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 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. 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:
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
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 Public Relations 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 02.05.2012 Dissemination of a Corporate News, transmitted by EquityStory.RS, LLC – a company of EquityStory AG. The issuer is solely responsible for the content of this announcement. EquityStory.RS, LLC’s Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de |
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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