News and events

KEMEROVO, Russian Federation—April3, 2017 1:00 PM(UTC +7:00)—Kuzbasskaya Toplivnaya Company PJSC (KTK, MICEX: KBTK), one of the largest thermal coal producers and exporters in Russia, todayannouncedaudited consolidated financial results under IFRS for thefourth quarter and full year ended December31,2016.

 

Financial highlights

in millions of RUB	Q42016[1]	Q32016[2]	Chg.	FY 2016	FY2015	Chg.
Revenue	8,594	7,176	20%	26,863	24,994	7%
Cost of sales	6,785	6,173	10%	23,220	20,932	11%
Gross profit	1,809	1,003	80%	3,643	4,062	(10%)
Gross profit margin	21.0%	14.0%	7.0 ppts	13.6%	16.3%	(2.7 ppts)
Selling, general and administrative expenses	659	636	4%	2 341	2 508	(7%)
Operating profit	1,150	367	213%	1,302	1,554	(16%)
Operating profit margin	13.4%	5.1%	8,3 ppts	4.8%	6.2%	(1,4ppts)
EBITDA[3]	1,490	736	102%	2,628	2,697	(3%)
EBITDA margin	17.3%	10.3%	7.0 ppts	9.8%	10.8%	(1.0 ppts)
EBITDA per tonne, RUB	478	242	97%	225	245	(8%)
Net profit	798	242	230%	647	37	1649%
Net profit margin	9.3%	3.4%	5.9 ppts	2.4%	0.1%	2.3 ppts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

• Revenue for 2016 was RUB 26,863 million, 7% higher than for 2015.
• Full-year gross profit fell by 10% to RUB 3,643 million.
• Operating profit also decreased by 16% compared to the results of 2015 and amounted to RUB 1,302 million.
• EBITDA showed a 3% decline compared to the previous year, reaching RUB 2,628 million.
• Cost of sales for 2016grew by 11% to RUB 23,220 million. The main reasons for this increase were, like in the previous periods, the growth of transportation expenses, increase in the cost of fuel, and cost of equipment repair and maintenance.
• Selling, general and administrative expenses for the full year were down by 7% to RUB 2,341 million.
• Net profit increased significantly, reaching RUB 647 million.

In the fourth quarter of 2016, all the indicators showed considerable growth compared to the third-quarter level:

• Revenue amounted to RUB 8,594 million, growing by 20% compared to the third quarter.
• Operating profit rose to RUB 1,150 million, which is 213% more than the amount reached in the previous quarter.
• Gross profit grew by 80% to RUB 1,809 million.
• Quarterly EBITDA reached RUB 1,490 million, showing a quarterly growth by 102%.
• Cost of sales for the quarter increased by 10% to RUB 6,785 million.
• Net profit in the fourth quarter increased by 230% compared to the results of the third quarter.

The main factors that influenced the yearly financial result weregrowth of railway tariffs at the end of the year and problems with cars in the second half of the year, which increased the transportation costs of the enterprise.Rising coal prices in the third quarter helped neutralize the negative factors and allowed to make a profit at the end of 2016.

 

Debt portfolio management

in millions of RUB	31.12.16	% of total	30.09.16	Chg.[4]	31.12.15	Chg.[5]
Long-term loans	5,946	64%	3,152	89%	7,379	(19%)
Short-term loans	3,378	36%	6,594	(49%)	1,653	104%
Total debt, incl.:	9,324		9,747	(4%)	9,032	3%
RUB loans	2,304	25%	5,390	(57%)	2,651	(13%)
Average interest rate for RUB loans	11.36%		11.02%	0.33 ppts	9.25%	2.11 ppts
USD loans	6,526	70%	4,357	50%	6,071	7%
Average interest rate for USD loans	4.72%		3.97%	7.54 ppts	4.13%	0.59 ppts
EUR loans	493	5%	-	-	-	-
Average interest rate for EUR loans	2.32%	-	-	-	-	-
PLN loans	-	-	-	-	310	-
Average interest rate for PLN loans	-	-	-	-	2.87%	-
Cash and cash equivalents	3,837		3,835	0.05%	3,390	13%
Net debt	5,487		5,912	(7%)	5,642	(3%)
Net debt / 12M EBITDA	2.09		3.14	(34%)	2.09	-
EBITDA (12months)	2,628		1,880	40%	2,697	(2%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net debt at December 31, 2016stood atRUB 5,487 million, showing a quarterly decline by 7% anddown 3% year-over-year.

The net debt-to-12-month EBITDA ratioremained at the previous-year level and stood at 2.09.

The average effective rate was up by 2.11 ppts for loans denominated in RUB and up by 0.59 ppts for USD-denominated loans.

The loan portfolio is distributed among 9 Russian and foreign banks.

 

Cash flow and investments

in millions of RUB	Q42016	Q32016	Chg.[6]	FY 2016	FY 2015	Chg.[7]
Operating cash flow	506	144	251%	1,384	2,318	(40%)
Investment cash flow	(222)	(390)	(43%)	(1,553)	(849)	83%
Acquisition of property, plant and equipment	(262)	(473)	(45%)	(1,741)	(971)	79%
Financial cash flow	(209)	459	n/a	(1,297)	(6,506)	n/a
Net increase / (decrease) in cash and cash equivalents	75	213	(65%)	(1,128)	(5,037)	n/a

 

 

 

 

 

 

 

 

 

• In 2016 operating cash flow went down by 40% compared to the previous year andamounted to RUB 1,384 million.
• Investment cash flow went up by 83% to RUB (1,553) million.
• Acquisition of property, plant and equipment grewby79% year-on-year. New equipment acquisitions and modernization of processing plants were the most important parts of these investments.
• Cash and cash equivalents for the full year stood at RUB (1,128) million showing positive dynamics compared to the last-year indicator.
• In the fourth quarter of 2016 operating cash flow went up by 251% and stood at RUB 506 million.
• Quarterly investment cash flow, as well as acquisition of property, plant and equipment,decreased compared to the third quarter.
• Quarterly net decrease in cash and cash equivalents amounted to 65%.

 

Key events after the reporting date

• On August 23a collective agreement was signed at the Vinogradovsky open-pit mine between the miners union and the management of Kuzbasskaya Toplivnaya Company PJSC for 2016-2019. Despite the difficult economic situation, all the clauses of the collective agreement, adopted in 2013 and in force until June 30,2016, weremet. The new version of the collective agreement retains all the privileges and guarantees of employees which were included in previous versions of the agreement.
• In December 2016 a subsidiary was established, Kuzbass Energocompany Ltd., and concession agreements were signed between the said company and Polysayevskiy and Tayginskiy urban districts, according to which the company takes responsibility for the maintenance of the main boilers of the cities of Polysayevo and Tayga. The agreement also includes a number of actions for repair and reconstruction of heating plants in these cities and districts.

 

Outlook for the first quarter of 2017

• In accordance with the production plan, coal production volume in the first quarter of 2017is expected to rise compared to the fourth quarter of 2016, and will amount to3.4 million tonnes.

 

Commenting on the Company’s financial results, Eduard Alexeenko, KTK’s General Director, said,

Overall, I think the results of the past year are positive for the Company. We’ve managed to finish the year with higher profit than we have predicted. In the beginning of the year coal prices were critically low, but in the end, the increase in coal prices in the third quarter allowed us to obtain a positive result for the year.

This year has become a significant one for the company, in the course of the year we continued to develop the main directions of our business strategy.

We have started working with new ports and new customers in Thailand, Taiwan, China, and Korea. KTK Overseas, oursubsidiary, hassuccessfully started operations and sold 1 million tonnes of coal for the year.

We carried out the plans for the concession of boilers in Kuzbass and are planning to develop this project in the future.

In 2016, KTK began to mine coal on the Bryansky mine, while geological scout works were started at the Listvyanichnymine.

KTK aims to further systematically increase the production and sale of coalevery year. All the opportunities and requirements of the market and production needed for this, are there.

As a result, in the near future we plan to see the opening of new opportunities for enterprise development in all major areas.

Contacts for analysts, investors, andmedia: Elena Sarycheva, head of strategic communications department +7 (3842) 36-47-62 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 two projected plots 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	2016	2015	2014
Revenue	26,863	24,994	22,250
Cost of sales	23,220	20,932	18,925
Production cash costs per tonne, RUB	612	676	577
EBITDA	2,628	2,697	2,518
EBITDA margin	9.8%	10.8%	11%
EBITDA per tonne, RUB	225	245	237
Net profit	647	37	7
Net profit margin	2.4%	-	-
Net debt	5,487	5,642	6,101
Net debt / EBITDA	2.09	2.09	2.42

 

 

 

Additional information about the Company and investor calendar: www.oaoktk.ru/en/investors

 

Rounding and errors:

Certain financial and production indicators, as well as calculated ratios 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 them to pr@oaoktk.ru.

Appendix

Production

	Q42016	Q32016	Chg.	FY 2016	FY 2015	Chg.
Coal production[8], in millions of tonnes, incl.:	3.12	3.04	3%	11.68	11.00	6%
Karakansky South open-pit mine	0.50	1.13	(56%)	3.37	3.96	(15%)
Vinogradovsky open-pit mine	1.13	1.20	(6%)	4.65	4.47	4%
Cheremshansky open-pit mine	0.66	0.63	5%	2.38	2.57	(7%)
Bryansky open-pit mine	0.83	0.08	937%	1.28	0.00	-
Coal processing[9], in millions of tonnes, incl.:	2.11	2.41	(12%)	8.83	8.32	6%
Sorted coal	1.09	1.38	(21%)	4.71	4.59	3%
Washed coal	1.02	1.03	(1%)	4.11	3.73	10%
Blasted rock mass[10], in millions of cbm	8.87	8.84	0.3%	33.56	35.45	(5%)

Sales

	Q42016	Q32016	Chg.	FY 2016	FY 2015	Chg.
Sales volume[11], in millions oftonnes, incl.:	3.27	2.94	11%	11.11	10.69	4%
Export sales volume	1.93	1.94	(0.5%)	7.47	6.90	8%
Domestic sales volume	1.34	0.99	35%	3.63	3.78	(4%)
Average sale price, RUB/tonne[12]	1,465	1,326	10%	1,278	1,330	(4%)