News and events

20 February 2019

Kuzbasskaya Toplivnaya Company PJSC Reports Fourth Quarter and Full Year 2018 Operating and Financial Results

KEMEROVO, Russian Federation—February 20, 2019 2:00 PM (UTC +7:00)—Kuzbasskaya Toplivnaya Company PJSC (KTK, MICEX: KBTK), one of the largest producers and exporters of thermal coal in Russia, today announced operating and audited consolidated financial results under IFRS for the fourth quarter and full year ended December 31, 2018.

Fourth Quarter 2018 Key Production Results

 

Q4 2018     

% of tota      l

Q3 2018    

Chg.       

Q4 2017   

Chg.          

Coal production[1], in millions of tonnes, incl.:

4.25

 

3.88

10%

3.80

12%

Karakansky South open-pit mine

0.66

16%

0.80

(18%)

0.84

(21%)

Vinogradovsky open-pit mine

1.43

34%

1.37

4%

1.38

4%

Cheremshansky open-pit mine

1.18

28%

0.97

22%

0.74

59%

Bryansky open-pit mine

0.98

23%

0.74

32%

0.84

17%

Commercial products[2], in millions of tonnes

3.86

 

3.33

16%

3.27

18%

Coal processing[3], in millions of tonnes, incl.:

2.74

 

2.76

(1%)

2.68

2%

Sorted coal

1.60

58%

1.81

(12%)

1.69

(5%)

Washed coal

1.14

42%

0.95

20%

0.99

15%

Kaskad 1 washing plant

0.35

31%

0.16

119%

0.22

59%

Kaskad 2 washing plant

0.79

69%

0.79

0%

0.77

3%

Blasted rock mass[4], in millions of cbm

13.15

 

12.20

8%

11.15

18%

Average stripping transportation distance, km

2.79

 

2.81

(1%)

2.67

4%

  • In the fourth quarter of 2018 the Company produced 4.25 million tonnes of coal, a 12% increase over the year-ago period.
  • The volume of commercial products grew by 18% compared to the fourth quarter of 2017, reaching 3.86 million tonnes.
  • Coal processing amounted to 2.74 million tonnes, which is 2% more than in the year-ago quarter and 1% less than in the third quarter of 2018. Insignificant changes in coal processing volumes are due to the technical re-equipment of Kaskad 2.
  • Total coal washing went up by 15% compared to the fourth quarter of 2017 indicator, to 1.14 million tonnes, of which 69% belongs to the Kaskad 2 washing plant and 31% belongs to Kaskad 1.
  • Coal-sorting volume went down by 5% compared to the year-ago level and by 12% to the third quarter of 2018.
  • The volume of blasted rock mass was 13.15 million cbm, an increase of 8% for the quarter and 18% more compared to the year-ago period.

Fourth Quarter 2018 Key Commercial Results

 

Q4 2018        

% of total     

Q3 2018      

Chg.       

Q4 2017  

Chg.        

Sales volume[5], in millions of tonnes, incl.:

4.76

 

3.93

21%

3.73

28%

Export sales volume

3.34

70%

2.99

12%

2.47

35%

Domestic sales volume

1.42

30%

0.94

51%

1.26

13%

Own coal

3.76

79%

3.13

20%

3.34

13%

Coal resale

1.00

21%

0.80

25%

0.39

156%

  • In the fourth quarter sales grew by 21% versus the volume of the previous quarter, reaching 4.76 million tonnes of coal. Year-over-year this figure shows a growth by 28%.
  • The main increase in sales volumes was due to the growth of sales in export markets: export sales grew by 35% compared to the year-ago period and by 12% to the third-quarter level.
  • Fourth-quarter export sales stood at 2.47 million tonnes, while the share of export in total sales was 70%.
  • Domestic sales in the fourth quarter amounted to 1.42 million tonnes, 30% of all sales. They demonstrate a growth of 51% quarter-over-quarter, explained by a seasonal increase in demand for coal.

Full Year 2018 Key Production Results

 

FY 2018    

% of total    

FY 2017    

Chg.           

Coal production[6], in millions of tonnes, incl.:

15.66

 

13.23

18%

Karakansky South open-pit mine

2.65

17%

3.77

(30%)

Vinogradovsky open-pit mine

5.60

36%

4.93

14%

Cheremshansky open-pit mine

3.91

25%

2.79

40%

Bryansky open-pit mine

3.50

22%

1.74

101%

Commercial products[7], in millions of tonnes

13.87

 

11.44

21%

Coal processing[8], in millions of tonnes, incl.:

11.05

 

9.70

14%

Sorted coal

6.62

60%

5.69

16%

Washed coal

4.43

40%

4.00

11%

Kaskad 1 washing plant

1.20

27%

0.80

50%

Kaskad 2 washing plant

3.23

73%

3.20

1%

Blasted rock mass[9], in millions of cbm

49.53

 

38.65

28%

Average stripping transportation distance, km

2.81

 

2.79

1%

  • For the full year 2018 the Company produced 15.66 million tonnes of coal, which is 18% more than in 2017.
  • Commercial product volume in 2018 stood at 13.87 million tonnes, an increase of 21% in yearly terms.
  • Coal processing amounted to 11.05 million tonnes, 14% more than in 2017.
  • Total coal washing rose by 11% to 4.43 million tonnes.
  • Coal-sorting volume increased by 16% to 6.62 million tonnes.
  • The volume of blasted rock mass was 49.53 million cbm, a growth by 28%.
  • The average stripping transportation distance in the period rose slightly and reached 2.81 km.

Full Year 2018 Key Commercial Results

 

FY 2018      

% of total   

 FY 2017   

Chg.      

Sales volume[10], in millions of tonnes, incl.:   

16.27

 

12.08

35%

Export sales volume

12.43

76%

8.72

43%

Domestic sales volume

3.84

24%

3.36

14%

Own coal

13.23

81%

11.05

20%

Coal resale

3.04

19%

1.03

195%

 

  • In 2018 sales increased by 35% versus the volume of the previous year, reaching 16.27 million tonnes of coal.
  • The main increase in sales fell on export routes and amounted to 43%, representing 76% of total sales.
  • Domestic-market coal sales grew by 14% compared to 2017, to 3.84 million tonnes.
  • Coal resale stood at 3.04 million tonnes, a growth of almost two times compared to the year-ago level.

Fourth Quarter and Full Year 2018 Financial highlights

in millions of RUB

Q4 2018

Q3 2018

Chg.

FY 2018

FY 2017

Chg.

Revenue

20,573

17,336

19%

68,479

38,662

77%

Cost of sales

17,253

14,418

20%

56,525

32,580

73%

Gross profit

3,320

2,918

14%

11,954

6,082

97%

Gross profit margin

16.1%

16.8%

(0.7 ppts)

17.5%

15.7%

1.8 ppts

Selling, general and administrative expenses

1,003

960

4%

3,597

2,836

27%

Operating profit

2,317

1,958

18%

8,357

3,246

157%

Operating profit margin

11.3%

11.3%

0 ppts

12.2%

8.4%

3.8 ppts

EBITDA[11]

2,983

2,527

18%

10,627

5,080

109%

EBITDA margin

14.5%

14.6%

(0.1 ppts)

15.5%

13.1%

2.4 ppts

EBITDA per tonne, RUB

702

651

8%

679

384

77%

Net profit

1,610

1,380

17%

6,023

2,104

186%

Net profit margin

7.8%

8.0%

(0.2 ppts)

8.8%

5.4%

3.4 ppts































 

In 2018 the main financial indicators showed significant growth compared to the 2017 results.

  • Revenue for 2018 was RUB 68,479 million, 77% higher than for 2017. The main driver of revenue growth was the growth of sales and prices in export markets.
  • Cost of sales for 2018 amounted to RUB 56,525 million. The main reasons for this increase were: increase in production and sales volumes, as well as price growth for main material and technical resources and services consumed during production and transportation, such as lubricants, spare parts and railway tariffs.
  • Full-year gross profit rose by 97% to RUB 11,954 million.
  • Selling, general and administrative expenses for the full year were up by 27% to RUB 3,597 million.
  • Operating profit increased by 2.5 times compared to the results of 2017 and amounted to RUB 8,357 million.
  • EBITDA showed a 109% growth compared to the previous year, reaching RUB 10,627 million.
  • Net profit increased significantly, reaching RUB 6,023 million.

In the fourth quarter of 2018, all the indicators showed the following dynamics compared to the third-quarter level:

  • Revenue amounted to RUB 20,573 million, growing by 19% compared to the third quarter.
  • Gross profit grew by 14% to RUB 3,320 million.
  • Quarterly EBITDA reached RUB 2,983 million, showing a quarterly growth by 18%.
  • Net profit in the fourth quarter increased by 17% compared to the results of the third quarter, to RUB 1,610 million.

Debt portfolio management

in millions of RUB

31.12.18

% of total

30.09.18

Chg. 1

31.12.17

Chg. 2

Long-term loans

15,742

75%

12,261

28%

7,211

118%

Short-term loans

5,218

25%

3,897

34%

2,507

108%

Total debt, incl.:

20,960

100%

16,158

 

30%

9,718

 

116%

RUB loans

11,090

53%

7,803

42%

3,173

250%

Average interest rate for RUB loans

9.21%

 

9.03%

0.18 ppts

10.81%

(1.6 ppts)

USD loans

2,940

14%

2,776

6%

3,435

(14%)

Average interest rate for USD loans

4.73%

 

4.73%

0 ppts

4.28%

0.45 ppts

EUR loans

6,930

33%

5,579

24%

3,110

123%

Average interest rate for EUR loans

1.93%

 

1.89%

0.04 ppts

2.26%

(0.33 ppts)

Cash and cash equivalents

16,823

 

12,083

39%

5,430

210%

Net debt

4,137

100%

4,075

 

2%

4,288

 

(4%)

Net debt / 12M EBITDA

0.39

 

0.39

(1%)

0.84

(54%)

EBITDA (12months)

10,627

 

10,384

2%

5,080

109%





































 

  • Net debt at December 31, 2018 stood at RUB 4,137 million, showing a quarterly rise by 2% and down 4% year-over-year.
  • The net debt-to-12-month EBITDA ratio stood at 0.39, 54% less than in the previous year.
  • The majority of loans in the companys loan portfolio are denominated in rubles - 53%, 33% are denominated in euros and 14% in US dollars.
  • The average effective rate was 9.21% for loans denominated in RUB, 1.93% for loans denominated in EUR and 4.73% for dollar-denominated loans.

Cash flow and investments

in millions of RUB

Q4 2018

Q3 2018

Chg.

FY 2018

FY 2017

Chg.

Operating cash flow

882

1 497

(41%)

4,606

3,865

19%

Investment cash flow

(1,301)

(709)

83%

(3,728)

(2,243)

66%

Acquisition of property, plant and equipment

(1,385)

(712)

95%

(3,838)

(2,310)

66%

Financial cash flow

4,328

4,632

(7%)

9,015

64

13986%

Net increase / (decrease) in cash and cash equivalents

3,909

5,420

(28%)

9,893

1,686

487%















 

  • In 2018 operating cash flow went up by 19% compared to the previous year and amounted to RUB 4,606 million.
  • Investment cash flow went up by 66% to RUB (2,243) million.
  • Financial cash flow in 2018 stood at RUB 9.015 million.
  • Net increase in cash and cash equivalents for the full year stood at RUB 9,893 million.
  • In the fourth quarter of 2018 operating cash flow stood at RUB 882 million.
  • Quarterly investment cash flow amounted to RUB (1,301) million, including RUB (1,385) million on property, plant and equipment.
  • Quarterly net increase in cash and cash equivalents amounted to RUB 3,909 million.

Outlook for the first quarter of 2019

  • In accordance with the production plan, in the first quarter of 2019:
    1. coal production volume is expected to amount to 3.5 million tonnes.
    2. commercial products volume is expected to stand at 3.1 million tonnes.

Contacts for analysts, investors, and media:

Elena Sarycheva

Head of strategic communications department

+7 (495) 787 68 04

es@oaoktk.ru

KTK at a glance:

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

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Financial highlights under IFRS:

in millions of RUB

2018        

2017         

 2016            

Revenue

68,479

38,662

26,863

Cost of sales

56,525

32,570

23,220

EBITDA

10,627

5,080

2,628

EBITDA margin

15.5%

13.1%

9.8%

EBITDA per tonne, RUB

679

384

225

Net profit

6,023

2,104

647

Net profit margin

8.8%

5.4%

2.4%

Net debt

4,137

4,288

5,487

Net debt / EBITDA

0.39

0.84

2.09

 

























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 pr@oaoktk.ru.


[1] Including Kaskad 1 washing plant

[2] Volume of salable output after sorting and washing of produced coal

[3] Coal washing and sorting

[4] Included in stripping

[5] Sales for the group of companies, including third-party coal resale

[6] Including Kaskad 1 washing plant

[7] Volume of salable output after sorting and washing of produced coal

[8] Coal washing and sorting

[9] Included in stripping

[10] Sales for the group of companies, including third-party coal resale

[11] EBITDA for each period is defined as results from operating activities, adjusted for amortization and depreciation, impairment loss and profit or loss on disposal of property, plant and equipment. EBITDA is not a measurement of Company’s operating performance under IFRS and should not be considered as an alternative to net income, operating income or any other performance measures derived in accord