Annual Report 2011 - Magnitogorsk Iron & Steel Works ...

2011 /
Steel production
ANNUAL REPORT
About Us Sales Markets
Finances
Risks
Social Sphere
Management
Information
Turkish steel segment
unit of measure 2010 2011 Сhange
Thousand
tonnes
156 505 349
Revenue from sales including USD million 138 458 320
Sales to the Group’s
companies
USD million 1 41 40
Third parties USD million 137 417 280
EBITDA USD million –11 –66 –55
EBITDA margin % –8.0 % –14.4 % –6.4 %
EBITDA per ton of steel
products
USD/t –71 -131 –60
Capital expenditures USD million 658 176 –482
The Turkish steel segment includes ММК Metalurji, a steel producer located at two sites in Turkey:
Iskenderun and Istanbul.
Output and sales revenue were both several times higher than in 2010 due to progress made on bringing
the project towards full capacity. However, the segment’s financial performance remained negative.
Target indicators are expected to be reached in 2012, resulting in positive financial performance.
Steel production
unit of
measure
Thousand
tonnes
Coal segment
2010 2011 Сhange Change (%)
2,960 3,216 256 9 %
Revenue from sales, of which USD million 556 649 93 17 %
sales to Group companies USD million 399 496 97 24 %
sales to third parties USD million 157 153 –4 –3 %
EBITDA USD million 270 222 –48 –18 %
EBITDA margin % 48.6 % 34.2 % –14.4 %
EBITDA per ton of steel
products
USD/t 91 69 –22 –24 %
Capex USD million 100 119 19
The coal segment includes OJSC Belon and its coal producing and dressing subsidiaries (Belon Group). All
of Belon Group’s material assets, production facilities and management and administrative resources are
located in Belovo, Russian Federation.
Most of the coal segment’s output is supplied to Belon Group’s parent company (OJSC MMK).
Segment EBITDA was USD 222 million, with a margin of 34 %. Despite a considerable increase in prices
for coal concentrate, the segment’s financial performance remained almost unchanged due to the large
amount of pre-production mining work carried out during the reporting year.
MMK Group Working Capital, USD million
40 41
01.01.11 01.01.12 Change Change (%)
Inventory 1,236 1,776 540 44 %
Uncompensated VAT 213 304 91 43 %
Receivables 828 700 (128) –15 %
Payables (971) (1,180)* (209) 22 %
Total working capital 1,306 1,600 294 23 %
*excluding the part of debts, related to indebtedness.
In the reporting period, the Group’s working capital grew by 22 % to USD 1,600 million, driven mostly by a
USD 540 million increase in inventory. Changes in the receivables and payables reduced working capital by
USD 128 million and 209 million, respectively.
Working Capital Productivity Indicators
01.01.11 01.01.12 Change Change (%)
Turnover period, days
Inventory 75 82 7 9 %
Receivables 39 27 (12) –30 %
Payables 49 48 (2) –5 %
Working capital, % of revenue 17 % 17 % 0%
The inventory turnover period slightly increased, while receivables turnover decreased considerably,
from 39 to 27 days, and payables turnover decreased insignificantly. As a result, working capital growth
of 23 % was comparable with revenue growth, and at the end of 2011 the working capital/revenue ratio
was the same as at the start of the year.