News and events

     PJSC KTK (KTK, MICEX: KBTK), one of the largest producers and exporters of thermal coal in Russia, today announced operating results and audited consolidated financial statements under International Financial Reporting Standards (IFRS) for the second quarter and six months 2019.
 
Second Quarter 2019 Key Production Results
 

	Q2	% of total	Q1		Q2	Changes
	2019		2019	Changes	2018
Coal production[1], MMt, incl.:	3.73		3.68	1%	3.68	1%
Karakansky South open-pit mine	0.42	11%	0,52	-19%	0,58	-28%
Vinogradovsky open-pit mine	1.50	40%	1,40	7%	1,30	15%
Cheremshansky open-pit mine	0.82	22%	0,75	9%	0,90	-9%
Bryansky open-pit mine	0.99	27%	1,01	-2%	0.90	10%
Commercial product[2], MMt	3.08		3.20	-4%	3.33	-8%
Coal processing[3], MMt, incl.:	2.85		2.94	-3%	2.80	2%
Sorted coal	1.62	57%	1.75	-7%	1.63	-1%
Washed coal	1.23	43%	1.18	4%	1.17	5%
Kaskad 1 Washing Plant	0.40	33%	0.37	8%	0.33	21%
Kaskad 2 Washing Plant	0.84	68%	0.81	4%	0.84	0%
Blasted rock mass[4], in millions of cbm	13.44		12.40	8%	13.25	1%
Average stripping transportation distance, km	3.01		3.18	-5%	2.87	5%

 

• In the second quarter of 2019 the Company produced 3.73 million tonnes of coal. Coal production grew against the year-ago quarter by 1% and fell by 4% compared to the first quarter 2019.
• The volume of commercial products in the second quarter 2019 fell by 8%, to 3.08 million tonnes, compared to the second quarter 2018, and fell insignificantly (by 4%) to the first quarter 2019.
• Coal processing amounted to 2.85 million tonnes, 2% higher than in the second quarter 2018 and 3% lower than in the first quarter of 2019.
• Total coal washing in the second quarter grew by 5% compared to the second quarter 2018 and amounted to 1.23 million tonnes, of which 68% were processed at the Kaskad 2 washing plant and 33% at the Kaskad 1 washing plant.
• Coal sorting and crushing insignificantly fell by 1% compared to the second quarter 2018 and by 7% compared to the first quarter 2019.
• The volume of blasted rock mass amounted to 13.44 million cbm, going up by 1% compared to the level of the previous year, and showed 8% increase compared to the first quarter 2019.

 
Second Quarter 2019 Key Commercial Results
 

• In the second quarter sales stood at 3.25 million tonnes of coal, 18% lower than the results of the previous year and 10 % lower than the first quarter 2019.
• The main decrease in sales was due to decline in domestic sales: -17% relative to the second quarter of 2018 and 2% against sales volume in the first quarter 2019.
• For the quarter, exports amounted to 2.89 million tonnes, the share of exports in total sales of coal amounted to 89%
• The volume of sales of coal in the domestic market amounted to 0.36 million tons, which is 11% of total sales. By the first quarter of 2019, domestic sales decreased by 55%, which is explained by the seasonal decline in demand for coal.

 
 

	Q2 2019	% of total	Q12019	Changes1	Q2 2018	Changes2
Coal sales[5], MMt, incl.	3.25		3,63	-10%	3.99	-18%
Export	2.89	89%	2.82	2%	3.49	-17%
Domestic sales	0.36	11%	0.81	-55%	0.50	-28%
Own coal	3.08	95%	3.32	-7%	3.23	-4.6%
Coal resale	0.17	05%	0.31	-45%	0.76	-77%

 

 
Key production results for the six months 2019
 

	6M	% of total	6M		Changes
	2019		2018
Coal production[6], MMt, incl.:	7.40		7.53		-2%
Karakansky South open-pit mine	0.93	13%	1.18		-21%
Vinogradovsky open-pit mine	2.90	39%	2.79		4%
Cheremshansky open-pit mine	1.57	21%	1.77		-11%
Bryansky open-pit mine	2.00	27%	1.79		12%
Commercial product [7], MMt	6.29		6.68		-6%
Coal processing [8], MMt, incl.:	5.79		5.56		4%
Sorted coal	3.37	58%	3.22		5%
Washed coal	2.42	42%	2.34		3%
Kaskad 1 Washing Plant	0.77	32%	0.68	13%
Kaskad 2 Washing Plant	1.65	68%	1.65	0%
Blasted rock mass[9], in millions of cbm	25.84		24.19	7%
Average stripping transportation distance, km.	3.10		2.83	10%

 

• For the six months of 2019 the Company produced 7.40 million tonnes of coal, 2% lower than in the year-ago period. All open-pit mines other than Bryansky and Vinogradovsky open-pit mines showed minor decline in production.
• For the six months of 2019 the Company produced 6.29 million tonnes of coal reducing this figure by 6% against the year-ago period.
• Total coal processing amounted to 5.79 million tonnes, growing by 4% to the year-ago levels, coal sorting volume rose by 5% and stood at 3.37 million tonnes.

 
Key commercial results for the six months 2019
 

	6M 2019	% of total	6M 2018	Changes
Coal sales[10], MMt, incl.	6,88		7,58	-9%
Export	5.71	83%	6.11	-6%
Domestic sales	1.17	17%	1.47	-20%
Own coal	6.40	93%	6.34	0.9%
Coal resale	0.48	7%	1.24	-61%

 

• For the six months the Company sold 6.88 million tonnes of coal compared to the year-ago period, which is lower by 0.7 million tones or 9%.
• Export sales showed general decline -0.4 million tonnes or -6%. Export share represented 83% of total sales.
• Domestic market coal sales also fell by 20% and reached 1.17 million tonnes.
• The volume of third parties coal resale for six months comprised 0.48 million tonnes, which is 2.5 times lower than the same period a year ago.
• As for own coal sales, they showed an increase by 0.6 million tones, which is 1% higher than the first quarter 2018.

 
Key financial highlights for the second quarter and six months 2019
 

In millions of rubles	Q2	Q1	Changes	6M	6M	Changes
	2019	2019		2019	2018
Revenue	12 145	16 033	-24%	28 178	30 570	-8%
Cost of sales	13 048	13 955	94%	27 003	24 854	9%
Gross profit	-903	2 078	n/a	1 175	5 716	-79%
Gross profit margin	-	13%	-	4%	19%	-15 ppts
Selling, administrative and other expenses	808	946	-15%	1 754	1 634	7%
Operating profit	-1 711	1 132	n/a	-579	4 082	n/a
Operating profit margin	-	7%	-	-	13%	-
EBITDA[11]	-1 098	1 747	n/a	649	5 117	-87%
EBITDA margin	-	11%	-	2%	17%	-15 ppts
EBITDA per tonne, RUB	-	475	-	88	679	-87%
Net profit	-1 740	456	n/a	-1 284	3 033	n/a
Net profit margin	-	3%	-	-	10%	-

 
According to the results of the first half 2019 key financial highlights demonstrated decline compared to the results of the first half 2018.
 

• In the reporting period the revenue of the Company amounted to RUB 28,178 million, which is lower compared to the results of the second half 2018. The main driver of revenue decline was dramatic price reduction in export markets.
• Cost of sales in the first quarter 2019 stood at RUB 27,003 million. The main increase in cost of sales is driven by rises in prices for basic materials and resources and the services used in production and product transportation, such as fuels and lubricants, spare parts, and railway tariff.
• The gross profit amounted to RUB 1,175 million, which is 4.8 times lower than the same result of the first half 2018.
• Selling, administrative and other expenses for the first six months 2019 increased by 7% to RUB 1,754 million.
• The operating income dropped to RUB -579 million showing virtually five times sharper decline compared to the last year.
• EBITDA for the reporting six months reached RUB 649 million, which is 7.8 times lower than the level of the same year-ago period.
• According to the Company’s results for the first six months 2019 the net profit of the Company dropped and amounted to RUB -1,284 million.

 
Debt portfolio management
 
 

In millions of rubles	30.06.2019	% of total	31.12.2018	Changes1	30.06.2018	Changes2
Long-term loans	7 642	36%	15 742	-51%	6 005	27%
Short-term loans	13 632	64%	5 218	161%	4 172	227%
Total debt, incl.:	21 274		20 960	1.5%	10 177	109%
RUB loans	12 124	57%	11 090	9%	5 530	119%
Average interest rate for RUB loans	9.34%		9.21%	0.13 ppts	9.14%	0.2 ppts
USD loans	2 399	11%	2 940	-18%	1 494	61%
Average interest rate for USD loans	4.74%		4.73%	0.01 ppts	4.54%	0.2 ppts
EUR loans	6 751	32%	6 930	-3%	3 152	114%
Average interest rate for EUR loans	1.94%		1.93%	0.02 ppts	1.92%	0.02 ppts
Cash and cash equivalents	15 643		16 823	-7%	6 363	146%
Net  debt	5 631		4 137	36%	3 814	48%
Net debt / 12M EBITDA	0.91		0.39	135%	0.41	122%
EBITDA (12months)	6 159		10 627	-42%	9 279	-34%

 

• Net debt at June 30, 2019 stood at RUB 5,631 million, which is 48% more than a year earlier and doubles the figures of the first quarter of the current year.
• The net debt/12-month EBITDA ratio stood at 0.91 which is 122% higher than a year-ago period.
• Most of the loans in the loan portfolio are denominated in RUB, 57%, in EUR, 32% and in USD, 11%.
• As of June 30, 2019, the average effective rate was 9.34% for loans denominated in RUB, 1.94% for EUR loans and 4.74% for loans denominated in USD.

 
 
Cash flow and investments
 

In millions of RUB	Q2	Q1	Changes	6M	6M	Changes
	2019	2019		2019	2018
Operating cash flow	-1 040	1 776	n/a	736	2 227	-67%
Investment cash flow	-1 038	-560	85%	-1 598	-1 718	-7%
Fixed assets investments	-1 055	-573	84%	-1 628	-1 741	-6%
Financial cash flow	2 418	-1 278	n/a	1 140	55	1 973%
Net increase /(decrease) in cash and cash equivalents	340	-62	n/a	278	564	-51%

 

• In the six months of 2019 operating cash flow of the Company decreased by three times and amounted to RUB 736 million.
• Investment cash flow decreased by 7%, amounting to RUB 1,598 million.
• Cash flow from financial activities for the first six months of 2019 was RUB 1,140 million.
• Net increase in cash and cash equivalents amounted to RUB 278 million.
• In the second quarter of 2018 operating cash flow was RUB 1,040 million.
• Investment cash flow reached RUB 1,038 million in the second quarter 2019, while RUB 1,055 billion were invested in fixed assets.
• Net increase in cash and cash equivalents amounted to RUB 340 million.

 
 

Contacts for analysts, investors, and media:   Elena Sarycheva, Head of Strategic Communications Department.   es@ktk.company

 
KTK at a glance:
    PJSC Kuzbasskaya Toplivnaya Company (KTK, MICEX: KBTK) is one of the largest manufacturers and exporters of thermal coal in Russia. Production assets of the Company include four current sites and one projected site at the Vinogradovsky open-pit 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 Western 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%.
 

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Key financial highlights under IFRS:
 

in millions of Rubles	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 possible errors:
Certain financial and production figures as well as specifically calculated ratios 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, however, if you find any inaccuracies or you have any questions, do not hesitate to contact us at pr@ktk.company