The results that reflect the continued negative conjuncture in the steel market. In this post, we will briefly consider the results and give our view of the company.
Severstal
• Saluations of steel products increased by 4% g/g to 2.8 million tons mainly due to an increase in the sales of cast iron and slabs. Sales of commercial steel decreased by 7% g/g to 1.1 million tons due to a fall in demand. Sales of products with VDS decreased by 3% g/g to 1.4 million tons
• revenue decreased by 16% g/g to 185 billion rubles. Due to the drop in prices for metal products and an increase in the share of semi-finished products in the sales portfolio
• EBITDA decreased by 36% g/g to 39 billion rubles. Following the reduction in revenue and the growth of production costs as a result of inflation
• FCF decreased by 85% g/g to 4 billion rubles. Due to the reduction of EBITDA and the implementation of the investment program. In the 2nd quarter, FCF supported a decrease in working capital due to a reduction in stocks and a decrease in receivables. Without an influx of funds from working capital, FCF, as in the 1st quarter, would remain negative
• The board of directors recommended not to pay dividends for 2 square meters. 2025, against the backdrop of a negative situation in the steel market and a negative FCF based on the results of 1 floor. To ensure the financial stability of the company
mmk
• Sales of product metal products decreased by 18% g/g to 2.5 million tons due to adverse conditions and overhaul in the rolling redistribution
• revenue decreased by 31% g/g to 155 billion rubles. Due to the decrease in sales and sales prices against the background of a high key rate and slowing down business activity in Russia
• EBITDA decreased by 56% g/g to 22 billion rubles. Against the background of reducing revenue and inflation of production costs
• FCF was negative and amounted to -4 billion rubles. (against 20 billion rubles in 2 sq. 2024), reflecting the decrease in EBITDA
• Against the background of a negative FCF, we do not expect that the company will pay dividends for 1 floor. 2025
the view of the company
we have repeatedly noted that the high key rate in Russia exerts pressure on economic activity, especially in the construction industry and mechanical engineering, which affects the volume of metal consumption (according to Severstal estimates, -15% g/g for 1 floor, 2025) and prices for steel. And strengthening the ruble complicates access to export markets. At the same time, Severstal notes that in the domestic market, due to strengthening the ruble, competition from Kazakhstan and China is growing.
KS reduction can become a factor in an increase in demand for steel, and MMK can become one of the main beneficiaries of demand, because Its sales were oriented mainly on the domestic market (94%).
But according to Severstal, the restoration of demand for steel is expected only with a significant
