News and events

KEMEROVO, Russian Federation—November 6, 2018 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 unaudited interim consolidated financial results under IFRS for the third quarter and nine months ended September 30, 2018.

 

Third Quarter 2018 Key Production Results

 

	Q3 2018	% of total	Q2 2018	Chg.	Q3 2017	Chg.
Coal production[1], in millions of tonnes, incl.:	3.88		3.68	5%	3.39	14%
Karakansky South open-pit mine	0.80	21%	0.58	38%	1.09	(27%)
Vinogradovsky open-pit mine	1.37	35%	1.30	5%	1.31	5%
Cheremshansky open-pit mine	0.97	25%	0.90	8%	0.68	43%
Bryansky open-pit mine	0.74	19%	0.90	(18%)	0.31	139%
Commercial products[2], in millions of tonnes	3.33		3.33	0%	2.95	13%
Coal processing[3], in millions of tonnes, incl.:	2.76		2.80	(1%)	2.54	9%
Sorted coal	1.81	66%	1.63	11%	1.57	15%
Washed coal	0.95	34%	1.17	(19%)	0.97	(2%)
Kaskad 1 washing plant	0.16	17%	0.33	(52%)	0.17	(6%)
Kaskad 2 washing plant	0.79	83%	0.84	(6%)	0.80	(1%)
Blasted rock mass[4], in millions of cbm	12.20		13.25	(8%)	9.65	26%
Average stripping transportation distance, km	2.81		2.87	(2%)	2.99	(6%)

 

• In the third quarter of 2018 the Company produced 3.88 million tonnes of coal, raising this indicator by 14% versus the year-ago quarter and by 5% compared to the second quarter of 2018.
• The volume of commercial products also went up, to 3.33 million tonnes, by 13% to the year-ago quarter and remaining at the same level compared to the second-quarter.
• Coal processing amounted to 2.76 million tonnes, 9% higher than in the third quarter of 2017. Compared to the second quarter of 2018 coal processing went slightly down, by 1%, due to reduction of processing volumes at washing plants in connection with the ongoing work of technical re-equipment and modernization of washing equipment.
• As a result, total coal washing in the third quarter fell by 1% to the level of this indicator of the year-ago quarter, and by 19% to that of the second quarter, and amounted to 0.95 million tonnes, of which 83% were processed at the Kaskad 2 washing plant and 17% at Kaskad 1.
• Coal sorting at mobile sorting plants rose by 15% compared to the third quarter of 2017 and by 11% compared to the second quarter of 2018, to 1.81 million tonnes.
• The volume of blasted rock mass in the third quarter of 2018 went up by 26% over the year-ago quarter and down by 8% quarter-over-quarter.

 

Third Quarter 2018 Key Commercial Results

 

	Q3 2018	% of total	Q2 2018	Chg.	Q3 2017	Chg.
Sales volume[5], in millions of tonnes, incl.:	3.93		3.99	(2%)	3.16	24%
Export sales volume	2.99	76%	3.49	(14%)	2.25	33%
Domestic sales volume	0.94	24%	0.50	88%	0.92	3%
Own coal	3.13	80%	3.23	(3%)	2.88	9%
Coal resale	0.80	20%	0.76	5%	0.28	186%

 

• In the third quarter sales grew by 24% versus the volume of the year-ago quarter, standing at 3.93 million tonnes of coal. Compared to the previous quarter there is an insignificant decline of 2%.
• In the third quarter export sales also showed an increase of 33% relative to the third quarter of 2017, amounting to 2.99 million tonnes.
• Domestic sales increased slightly by 3% compared to the previous year, compared with the results of the second quarter of 2018 they showed an increase of 88% and amounted to 0.94 million tonnes, due to the beginning of the heating season.
• For the quarter, the share of exports in total sales of coal amounted to 76%.

 

 

Key production results for the nine months to September 30, 2018

 

	9M 2018	% of total	9M 2017	Chg.
Coal production[6], in millions of tonnes, incl.:	11.41		9.43	21%
Karakansky South open-pit mine	1.98	17%	2.93	(32%)
Vinogradovsky open-pit mine	4.17	37%	3.55	17%
Cheremshansky open-pit mine	2.73	24%	2.05	33%
Bryansky open-pit mine	2.53	22%	0.90	181%
Commercial products[7], in millions of tonnes	10.01		8.17	23%
Coal processing[8], in millions of tonnes, incl.:	8.31		7.02	18%
Sorted coal	5.02	60%	4.01	25%
Washed coal	3.29	40%	3.01	9%
Kaskad 1 washing plant	0.85	26%	0.57	49%
Kaskad 2 washing plant	2.44	74%	2.44	0%
Blasted rock mass[9], in millions of cbm	36.38		27.50	32%
Average stripping transportation distance, km	2.82		2.81	0%

 

• For the nine months of 2018 the Company produced 11.41 million tonnes of coal, 21% more than in the same period a year ago. Bryansky open-pit mine was the main contributor to this growth and produced 2.53 million tonnes of coal, 22% of all production.
• Commercial product volume for the nine months stood at 10.01 million tonnes, a 23% increase over the year-ago corresponding period indicator.
• Coal processing amounted to 8.31 million tonnes, a yearly growth of 18%.
• Total coal washing for the nine months went up by 9%, to 3.29 million tonnes.
• Coal-sorting volume rose by 25% and stood at 5.02 million tonnes.

 

 

Key commercial results for the nine months to September 30, 2018

 

	9M 2018	% of total	9M 2017	Chg.
Sales volume[10], in millions of tonnes, incl.:	11.51		8.35	38%
Export sales volume	9.09	79%	6.26	45%
Domestic sales volume	2.42	21%	2.10	16%
Own coal	9.47	82%	7.71	23%
Coal resale	2.04	18%	0.64	219%

 

• In the nine months of 2018 sales grew by 38% compared to the level of the previous corresponding period.
• Domestic-market coal sales fell by 16%. Export sales stood at 9.09 million tonnes, an increase of 45% in yearly terms, representing 79% of total sales.
• At the end of the nine months of the year coal resale went up by 219%, amounting to 2.04 million tonnes, its share being 18% of total sales during this period.

 

 

Financial highlights for the third quarter and nine months 2018

 

in millions of RUB	Q3 2018	Q2 2018	Chg.	9M 2018	9M 2017	Chg.
Revenue	17,336	17,073	2%	47,906	25,429	88%
Cost of sales	14,418	14,120	2%	39,272	22,546	74%
Gross profit	2,918	2,953	(1%)	8,634	2,883	200%
Gross profit margin	16.8%	17.3%	(0.5 ppts)	18.0%	11.3%	6.7 ppts
Selling, general and administrative expenses	960	819	17%	2,594	1,893	38%
Operating profit	1,958	2,134	(8%)	6,040	990	510%
Operating profit margin	11.3%	12.5%	(1.2 ppts)	12.6%	3.9%	8.7 ppts
EBITDA	2,527	2,628	(4%)	7,644	2,340	227%
EBITDA margin	14.6%	15.4%	(0.8 ppts)	16.0%	9.2%	6.8 ppts
EBITDA per tonne, RUB	651	713	(9%)	670	248	170%
Net profit	1,380	1,631	(15%)	4,413	540	717%
Net profit margin	8.0%	9.6%	(1.6 ppts)	9.2%	2.1%	7.1 ppts

 

In the nine months of 2018 all major financial results showed a significant increase compared to the first nine months of 2017.

• Revenue rose by 88% to the year-ago period.
• Gross profit increased two-fold, operating profit amounted to RUB 6,040 million, showing a considerable, five-time, increase over the last-year period, EBITDA showed a 2.27-time increase, reaching a value of RUB 7,644 million.
• The level of selling, general and administrative expenses for the first nine months of 2018 increased by 38% to RUB 2,594 million, mainly due to the increase of sales volumes.
• Net profit reached RUB 4,413 million at the end of the first nine months of 2018, having grown significantly compared to the level of this indicator a year ago.
• EBITDA margin amounted to 16%, 6.8 higher than a year ago.

 

At the end of the third quarter:

• Revenue was up by 2% compared to the second quarter.
• Gross profit showed an insignificant decline, reaching RUB 2,918 million.
• Quarterly EBITDA went down by 4% and reached RUB 2,527 million.
• Net profit was at RUB 1,380 million.

 

 

Debt portfolio management

 

in millions of RUB	30.09.18	% of total	30.06.18	Chg. 1	30.09.17	Chg. 2
Long-term loans	12,261	76%	7,211	70%	4,461	175%
Short-term loans	3,897	24%	2,507	55%	6,269	(38%)
Total debt, incl.:	16,158	100%	9,718	66%	10,730	51%
RUB loans	7,803	48%	3,173	146%	6,342	23%
Average interest rate for RUB loans	9.03%		10.81%	(1.78 ppts)	11.07%	(2.04 ppts)
USD loans	2,776	17%	3,435	(19%)	4,389	(37%)
Average interest for USD loans	4.73%		4.28%	0.45 ppts	4.61%	0.12 ppts
Cash and cash equivalents	5,579	35%	3,110	79%	5,196	-
Net debt	1.89%		2.26%	(0.37 ppts)	5,534	1.89 ppts
Net debt / 12M EBITDA	12,083		5,430	123%	1.45	133%
	4 075	100%	4 288	-5%		-26%
EBITDA (12months)	0.39		0.84	(54%)	3,829	(73%)

 

• Net debt at September 30, 2018 stood at RUB 4,075 million, 26% less compared to the year-ago level and a 5% decrease to that of the previous quarter of this year.
• The net debt/12-month EBITDA ratio stood at 0.39, which is the lowest value since the founding of the Company. This indicator is at a level which is comfortable for management, being 64% lower than in the second quarter of this year and 73% lower than a year ago.
• As of September 30, 2018, the average effective rate was 9.03% for loans denominated in RUB, 1.89% in EUR, and 4.73% for loans denominated in USD.

 

Cash flow and investments

 

in millions of RUB	Q3 2018	Q2 2018	Chg.	9M 2018	9M 2017	Chg.
Operating cash flow	1,497	1,159	29%	3,724	1,933	93%
Investment cash flow	(709)	(1,041)	(32%)	(2,427)	(1,509)	61%
Acquisition of property, plant and equipment	(712)	(1,057)	(33%)	(2,453)	(1,555)	58%
Financial cash flow	4,632	(674)	n/a	4,687	1,038	352%
Net increase / (decrease) in cash and cash equivalents	5,420	(556)	n/a	5,984	1,462	309%

 

 

 

 

 

 

 

 

 

 

 

• In the nine months of 2018 operating cash flow grew significantly, by 93%, compared to the previous-year corresponding period, and amounted to RUB 3,724 million.
• Investment cash flow went up by 61%, amounting to RUB (2,427) million.
• Net financial cash flow for the nine months of 2018 stood at 4,687 million.
• Net increase in cash and cash equivalents stood at RUB 5,984 million.
• In the third quarter of 2018 operating cash flow went up by 29%, to RUB 1,497 million.
• Quarterly investment cash flow reached RUB (709) million.
• RUB 712 million were invested in property, plant and equipment.
• Net increase in cash and cash equivalents amounted to RUB 5,420 million.

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. 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 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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Financial highlights under IFRS:

in millions of RUB	2017	2016	2015
Revenue	38,662	26,863	24,994
Cost of sales	32,570	23,220	20,932
Production cash costs per tonne, RUB	871	612	676
EBITDA	5,080	2,628	2,697
EBITDA margin	13.1%	9.8%	10.8%
EBITDA per tonne, RUB	384	225	245
Net profit	2,104	647	37
Net profit margin	5.4%	2.4%	-
Net debt	4,288	5,487	5,642
Net debt / EBITDA	0.84	2.09	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.

 

 

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[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 parties 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 parties coal resale