News and events

26 November 2015

Kuzbasskaya Toplivnaya Company PJSC Reports Third Quarter and Nine Months 2015 Financial Results

KEMEROVO, Russian Federation—November 26, 2015 2:00 PM (UTC +8:00)—Kuzbasskaya Toplivnaya Company PJSC (KTK, MICEX: KBTK), one of the largest producers and exporters of thermal coal in Russia, today announced unaudited interim consolidated financial results under IFRS for the third quarter and nine months ended September 30, 2015.

Financialhighlights

in millions of RUB Q31
2015
Q21
2015
Chg 9M1
2015
9M1
2014
Chg
Revenue 6 369 5 294 20% 17 676 14 520 22%
Cost of sales 5 491 4 559 20% 14 735 12 898 14%
Gross profit 878 735 19% 2 941 1 622 81%
Gross profit margin 13,8% 13,9% -0,1 ppts 16,6% 11,2% 5,4 ppts
Distribution, administrative and other
costs
724 485 49% 1 825 1 296 41%
Operating profit 154 250 -38% 1 116 326 242%
Operating profit margin 2,4% 4,7% -2.3 ppts 6,3% 2,2% 4,1 ppts

EBITDA2

494 549 -10% 1 995 1 167 71%
EBITDA margin 7,8% 10,4% -2,6 ppts 11,3% 8,0% 3,3%
EBITDA per tonne, RUB 189 220 -14% 250 154 62%
Net profit -169 45 n.a. 134 -469 n.a.
Net profit margin - 0,9% - 0,8% - -

Revenue

Revenue for the nine months of 2015 was RUB 17,676 million, 22% higher than for the nine months of 2014. In the third quarter of 2015 revenue went up by 20% to RUB 6,369 million. The revenue growth was due to the segments of domestic market own coal sales and export sales. The strengthening of the US dollar contributed to revenue growth as 73% of the Company’s total revenue is denominated in foreign currency.

Operating profit and EBITDA

For the nine months operating profit rose significantly, by 242%, compared to results for the same period of 2014, and amounted to RUB 1,116 million. Gross profit in the nine months of 2015 grew by 81% to RUB 2,941 million. EBITDA showed a 71% increase compared to the nine months of 2014, reaching RUB 1,995 million. Cost of sales for the nine months of 2015 increased by 14% to RUB 14,735 million. Commercial, administrative and other expenses were up by 41% to RUB 1,825 million. In the third quarter of 2015 the Company showed an operating income of RUB 154 million, 38% lower than in the previous quarter. Gross profit grew by 19% to RUB 878 million. Quarterly EBITDA reached RUB 494 million, showing a quarterly decline by 10%. Cost of sales in the third quarter rose by 20% to RUB 5,491 million. Commercial, administrative and other expenses went up by 49% to RUB 724 million. A significant increase in commercial expenses was due to higher volume of sales in Poland and a concomitant increase in the volume of services consumed. The strengthening of the Polish zloty influenced this item of expense.

Net profit

The Company shows a net profit of RUB 134 million in the first nine months of 2015. Net loss for the same period of 2014 was RUB 469 million. In the third quarter of 2015, the Company incurred a loss in the amount of RUB 169 million. In comparison with the result of the third quarter of 2014, the Company reduced the quarterly losses by 57%.

Debt portfolio management

in millions of RUB 30.09.15 % of
total
30.06.15 Chg 30.09.14 Chg3
Long-term loans 8 754 75% 8 340 5% 7 199 22%
Short-term loans 2 854 25% 617 363% 3 729 -23%
Total debt, incl.: 11 608   8 957 30% 10 928 6%
RUB loans 4 008 35% 2 702 48% 4 591 -13%
Average interest rate for RUB loans 12,86%   10,36% 2,5 ppts 10,96% 1,9 ppts
USD loans 7 601 65% 6 255 22% 6 338 20%
Average interest for USD loans 4,27%   -0,08 п.п. 4,35% 4,35% -0,08 п.п.
Cash and cash equivalents 5 922   3 314 79% 4 886 21%
Net debt 5 686   5 643 1% 6 042 -6%
Net debt / 12M EBITDA 1,70   1,74 -3% 3,29 -48%

Net debt at September 30, 2015 stood at RUB 5,686 million, increasing by 1% compared to June 30, 2015, down 6% year over year. The net debt to 12-month EBITDA ratio showed a 3% quarterly drop and stood at 1.70. Compared to June 30, 2014, this indicator fell by 48%. Cash and cash equivalents increased in the third quarter by 79%, to RUB 5,922 million. The management is planning to make payments on loans that were previously scheduled for 2016, as early as in the fourth quarter of 2015. The Company is one of the most reliable and efficient borrowers in the sector, which is reflected by the current interest rates for loans and credits. As of September 30, 2015, the average effective rate was 12.86% for loans denominated in RUB and 4.27% for foreign currency-denominated loans. The loan portfolio is distributed among 11 Russian and foreign banks.

Cash flow and investments

in millions of RUB Q3
2015
Q2
2015
Chg 9M
2015
9M
2014
Chg
Operating cash flow 1 104 406 172% 1 115 -607 n.a.
Investment cash flow -214 124 n.a. -489 -454 8%
Acquisition of property, plant and
equipment
-196 -142 38% -501 -568 -12%
Financial cash flow -2 455 535 n.a. -2 708 2 866 n.a.
Net increase / (decrease) in cash and cash
equivalents
2 075 -1 925 н.п. -2 082 1 805 n.a.

In the nine months of 2015 operating cash flow amounted to RUB 1,115 million. Investment cash flow went up by 8% to RUB (489) million. Acquisition of property, plant and equipment amounted to RUB 501 million, a decrease of 12% year on year. Net cash outflow from financial activities for the nine months was RUB 2,708 million. Net decrease in cash and cash equivalents stood at RUB 2,082 million.

In the third quarter of 2015 operating cash flow stood at RUB 1,104 million. Investment cash flow reached RUB 214 million, while RUB 196 million were invested in property, plant and equipment. Net cash flow from financial activities for the quarter was RUB 1,185 million. Net increase in cash and cash equivalents amounted to RUB 2,075 million.

Key events in the third quarter and after the reporting date

  • On July 3, 2015 the Extraordinary General meeting of shareholders approved the new composition of the Board of Directors, which now includes three independent ones. By a vote of shareholders, it included: Vladimir Baskakov (independent Director); Vadim Danilov; Igor Prokudin; Alexander Arthur John Williams (independent Director); Yuri Friedman (independent Director).
    The elected Board of Directors supported the decision on early termination of powers of General Director Igor Prokudin, who will continue working in the company as President, focusing on strategic development of the enterprise. Eduard Alexeenko was appointed new general director. He previously held the post of First Deputy General Director.
  • In the 3rd quarter of 2015, the Company diversified the coal transportation contract portfolio by concluding contracts with new carriers including those who apply innovative cars with increased capacity.
  • In August and September 2015, the management has consistently implemented a program to reduce inventory in their own warehouses in Russia and Poland. In the future, the Company plans to maintain inventories of coal at a minimum.

Outlook for the fourth quarter of 2015

  • In accordance with the production plan, the volume of coal production in the fourth quarter of 2015 will rise by 11% quarter over quarter, to 2.92 million tonnes.
  • The management expects the stripping ratio in the fourth quarter to fall by 12% to 4.91.
  • In the fourth quarter the Company is planning to produce its first coal at the Bryansky mine.

9M 2015 Financial Results Conference Call Details

KTK’s management will host a conference call for investors and analysts followed by a Q&A session.

The Company will be represented by:
Eduard Alekseenko – First deputy CEO
Vasily Rumyantsev – Head of Moscow office, IRO

Thursday, November 26, 2015
1:00 p.m. Moscow time (UTC +3:00)

We recommend that participants start dialing in 10 minutes before the indicated time to ensure a timely start to the conference call.

You can join the conference call by dial-in:
Russia: +7 (495) 705 94 72
Great Britain: +44 20 30 43 24 39
USA: +1 8669075925

Contacts for analysts and investors in Moscow:
Vasily Rumyantsev
Head of Moscow office, IRO
+7 (495) 787-68-05
vkr@oaoktk.ru

Contacts for press in Kemerovo:
Elena Sarycheva
Head of public affairs department
+7 (3842) 36-47-62
es@oaoktk.ru

Company at a glance:

KTK at a glance:

Kuzbasskaya Toplivnaya Company PJSC (KTK, MICEX: KBTK) is one of the largest manufacturers and exporters of thermal coal in Russia. Production assets of the Company include three current plots and one projected plot at the Vinogradovsky mine in Kemerovo region, as well as two washing plants and own railroad infrastructure located in the same industrial cluster with the production assets. The Company operates retail networks in four regions of Siberia and a wholesale network in Poland. The company employs over 4,400 people. KTK’s shares are traded on MICEX, the free float is 33.15%.

News and announcements (Russian only): www.facebook.com/oaoktk

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Video: www.youtube.com/oaoktkru

Financial highlights under IFRS:

 RUB mln
2014
2013
2012

Revenue

22 250
22 490
23 104

Cost of sales

18 925
19 523
18 982
Production cash costs per tonne, RUB
577
611
690

EBITDA

2 518
2 422
3 479
EBITDA margin
11%
11%
15%
EBITDA per tonne, RUB
237
239
399

Net profit

7
640
1 810
Net profit margin
-
3%
8%

Net debt

6 101
3 917
4 681
Net debt / EBITDA
2,42
1,62
1,35

Rounding and errors:

Certain numerical figures included in this press release have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that preceded them. Calculations of change in % are made after rounding of figures.

We make every effort to check and verify the materials, but if you find any errors or inaccuracies please report it to vkr@oaoktk.ru.

Appendix

Production

  Q3
2015
Q2
2015
Ch. 9M
2015
9M
2015
Ch.
Coal production, mln. tonnes, incl.: 2,62 2,49 5% 7,99 7,59 5%
Karakansky South 0,92 0,68 35% 2,78 2,36 18%
Vinogradovsky 1,03 1,18 -13% 3,40 2,90 17%
Cheremshansky5 0,67 0,63 6% 1,81 2,34 -23%
Coal processing6,mln. tonnes, incl.: 2,05 2,01 2% 6,16 6,29 -2%
Sorted coal 1,09 1,05 4% 3,36 3,97 -15%
Washed coal 0,96 0,96 - 2,80 2,32 21%
Stripping, mln. cbm., incl.: 14,55 15,20 -4% 44,74 45,04 -1%
Blasted rock mass7 ,mln cbm. 8,07 8,91 -9% 25,89 26,81 -3%
Average stripping ratio 8 5,60 6,10 -8% 5,60 5,90 -5%

Sales

  Q3
2014
Q2
2014
Ch. 9M
2014
9M
2013
Ch.
Sales volume9 ,
mln. tonnes, incl.:
2,58 2,40 8% 7,54 6,89 9%
Export sales volume 1,70 1,82 -7% 5,12 5,08 1%
Domestic sales volume 0,88 0,59 49% 2,42 1,81 34%