News and events

KEMEROVO, Russian Federation—April4, 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, today announced audited consolidated financial results under IFRS for the fourth quarter and full year ended December31,2017.

Financial highlights

in millions of RUB	Q42017[1]	Q32017[2]	Chg.[3]	FY 2017	FY2016	Chg.[4]
Revenue	13,233	10,332	28%	38,662	26,863	44%
Cost of sales	10,024	8,752	15%	32,570	23,220	40%
Gross profit	3,209	1,580	103%	6,092	3,643	67%
Gross profit margin	24.2%	15.3%	8.9 ppts	15.8%	13.6%	2,2 ppts
Selling, general and administrative expenses	953	673	42%	2,846	2,341	22%
Operating profit	2,256	907	149%	3,246	1,302	149%
Operating profit margin	17.0%	8.8%	8.2 ppts	8.4%	4.8%	3.6 ppts
EBITDA[5]	2,740	1,422	93%	5,080	2,628	93%
EBITDA margin	20.7%	13.8%	6.9 ppts	13.1%	9.8%	3.3 ppts
EBITDA per tonne, RUB	721	419	72%	384	225	71%
Net profit	1,564	514	204%	2,104	647	225%
Net profit margin	11.8%	5.0%	6.8 ppts	5.4%	2.4%	3.0 ppts

• Revenue for 2017 was RUB 38,662 million, 44% higher than for 2016.
• Full-year gross profit rose by 67% to RUB 6,092 million.
• Operating profit also increased by 149% compared to the results of 2016 and amounted to RUB 3,246 million.
• EBITDA showed a 93% growth compared to the previous year, reaching RUB 5,080 million.
• Cost of sales for 2017grew by 40% to RUB 32,570 million. The main reasons for this increase were: increase in expenses for inventory holdings consumed in the production process, as well as stripping volume growth, contractors’ services, the growth of railway transportation expenses, cost of equipment repair and maintenance, and salary indexation.
• Selling, general and administrative expenses for the full year were up by 7% to RUB 2,846 million.
• Net profit increased significantly, reaching RUB 2,104 million.

In the fourth quarter of 2017, all the indicators showed considerable growth compared to the third-quarter level:

• Revenue amounted to RUB 13,233 million, growing by 28% compared to the third quarter.
• Operating profit rose to RUB 2,256 million, which is 149% more than the amount reached in the previous quarter.
• Gross profit grew by 103% to RUB 3,209 million.
• Quarterly EBITDA reached RUB 2,740 million, showing a quarterly growth by 93%.
• Cost of sales for the quarter increased by 15% to RUB 10,024 million.
• Net profit in the fourth quarter increased by 204% compared to the results of the third quarter, to RUB 1,564 million.

The main factors that influenced the yearly financial result were the growth of world coal prices and that of sales, by 9%.

 

Debt portfolio management

in millions of RUB	31.12.17	% of total	30.09.17	Chg.[6]	31.12.16	Chg.[7]
Long-term loans	7,211	74%	4,461	62%	5,946	21%
Short-term loans	2,507	26%	6,269	(60%)	3,378	(26%)
Total debt, incl.:	9,718	100%	10,730	(9%)	9,324	4%
RUB loans	3,173	33%	6,342	(50%)	2,304	38%
Average interest rate for RUB loans	10.81%		11.07%	(0.26 ppts)	11.36%	(0.54 ppts)
USD loans	3,435	35%	4,389	(22%)	6,526	(47%)
Average interest rate for USD loans	4.28%		4.61%	(0.33 ppts)	4.72%	(0.44 ppts)
EUR loans	3,110	32%	-	-	493	530%
Average interest rate for EUR loans	2.26%		0.00%	2.26 ppts	2.32%	(0.06 ppts)
Cash and cash equivalents	5,430		5,196	5%	3,837	42%
Net debt	4,288		5,534	(23%)	5,487	(22%)
Net debt / 12M EBITDA	0.84		1.45	(42%)	2.09	(60%)
EBITDA (12months)	5,080		3,829	33%	2,628	93%

• Net debt at December 31, 2017 stood at RUB 4,288 million, showing a quarterly decline by 23% and down 22% year-over-year.
• The net debt-to-12-month EBITDA ratio stood at 0.84, the lowest indicator in the past six years.
• The average effective rate was down by 0.54ppts for loans denominated in RUB and by 0.44ppts for USD-denominated loans.
• The loan portfolio is distributed among 12 Russian and foreign banks.

Cash flow and investments

in millions of RUB	Q42017	Q32017	Chg.[8]	FY 2017	FY 2016	Chg.[9]
Operating cash flow	1,928	1,355	43%	3,865	1,384	179%
Investment cash flow	(734)	(424)	73%	(2,243)	(1,553)	44%
Acquisition of property, plant and equipment	(746)	(445)	68%	(2,301)	(1,741)	32%
Financial cash flow	(974)	337	n/a	64	1,297	(95%)
Net increase / (decrease) in cash and cash equivalents	220	1,268	(82%)	1,686	1,128	49%

• In 2017 operating cash flow went up by 179% compared to the previous year and amounted to RUB 3,865 million.
• Investment cash flow went up by 44% to RUB (2,243) million.
• Acquisition of property, plant and equipment grewby32% year-on-year. New mining and transportation equipment acquisitions and modernization of washing plants were the most important parts of these investments.
• Cash and cash equivalents for the full year stood at RUB 1,686 million showing positive dynamics compared to the last-year indicator.
• In the fourth quarter of 2017 operating cash flow went up by 43% and stood at RUB 1,928 million.
• Quarterly investment cash flow grew by 73% compared to the previous quarter, to RUB 734 million.
• Acquisition of property, plant and equipment increased as well, by 68% compared to the third quarter.
• Quarterly net decrease in cash and cash equivalents amounted to 82%.

 

Key events after the reporting date

• Kaskad-1 washing plant, since 2016, is going through a technical re-equipment. In April 2017 the second stage of it started. Execution of works of the second stage will let achieve the capacity of 2.5 thousand tonnes per year. The final third stage of technical re-equipment is scheduled to end before the end of 2018.

Outlook for 2018

• In accordance with the production plan, coal production volume in the first quarter of 2018is expected to amount to4.04 million tonnes.
• In 2018, it is planned to increase the scale of investment activity to RUB 3 billion including the purchase of the main mining and transport equipment.
• It is planned to expand the capacity of the railway stage between Karakanstation and Fadeevskiy halt. 
• By the end of 2018, it is planned to re-equip Kaskad 2 to reach the capacity from 4 to 7 million tonnes, as well as Kaskad 2to reach the capacity from 2.5 to 3 million tonnes.

Commenting on the Company’s 2017 financial results, Eduard Alexeenko, KTK’s General Director, said,

KTK PJSC showed good financial results for 2017. The whole year was devoted to the preparation of all directions of the company for a significant growth in all parameters of the enterprise. All we undertook in 2017, became a preparation of a production breakthrough for the expansion of sales markets over the next few years. With this in mind we have adapted all technological processes of the enterprise and begun works on expanding company transport infrastructure capacity. We have also begun to modernize the first washing plant last year, and in the course of this year we plan to finish it, and to begin work on the technical re-equipment of the second factory, Kaskad 2, which will allow us to continue to have a stable resource for the export direction. During 2017, we entered the new sales markets of Western Europe through the port of Vysotsky, we are also engaged in the expansion of the Eastern direction through other ports. I estimate the last year as a productive period which in many respects has become a reserve for the next promising stage of development of the enterprise".

Contacts for analysts, investors, andmedia: Elena Sarycheva, head of strategic communications department +7 (3842) 77 18 80 (ext.1209) 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	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

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.

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[1] Hereinafter the unaudited figures for Q4 2017 are shown.

[2]Hereinafter the unaudited figures for Q3 2017 are shown.

[3]Change Q4/Q3 2017.

[4] Change 2017/2016.

[5]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 accordance with IFRS or as an alternative to cash flow from operating activities or as measure of the Company’s liquidity.

[6]Indicator change 31.12.17/30.09.17

[7] Indicator change 31.12.17/31.12.16

[8]Indicator change Q4/Q3

[9]Indicator change 2017/2016