Kuzbasskaya Toplivnaya Company PJSC (KTK, MICEX: KBTK), one of the largest producers and exporters of thermal coal in Russia, today announced condensed interim consolidated unaudited financial results under IFRS for the second quarter and six months ended June 30,2016.
Financial highlightsfor the second quarter and six months 2016
| in millions of RUB | Q2 2016 | Q1 2016 | Chg. | 6M 2016 | 6M 2015 | Chg. |
|
Revenue |
4 750 | 6 343 | (25%) | 11 093 | 11 307 | (2%) |
| Cost of sales | 4 845 | 5 417 | (10%) | 10 262 | 9 244 | 11% |
| Gross profit | (95) | 926 | n/a | 831 | 2 063 | (60%) |
| Gross profit margin | - | 14,6% | - | 7% | 18,2% | (10.7 ppts). |
| Selling, general and administrative expenses | 427 | 619 | (31%) | 1 046 | 1 101 | (5%) |
| Operating profit | (22) | 307 | n/a | (215 ) | 962 | n/a |
| Operating profit margin | - | 4,8% | - | - | 8,5% | - |
| EBITDA2 | (247) | 649 | n/a | 402 | 1 501 | (73%) |
| EBITDA margin | - | 10,2% | - | 4% | 13,3% | (9.7 ppts). |
| EBITDA per tonne, RUB | - | 233 | - | 73 | 280 | -74% |
| Net profit | (541) | 148 | n/a | (393) | 303 | n/a |
| Net profit margin | - | 2,3% | - | - | 2,7% | - |
Revenue
Revenue for the six months of 2016went down insignificantly, by 2%, compared to the corresponding period of 2015.In the second quarter of 2016 revenue fell by 25% over the first-quarter results under the influence of the seasonal drop in demand and having diminished in the segment of sales of own coal in the domestic market.
Operating profit and EBITDA
Compared to the first half of 2015, operating profit for the six months of 2016showed a negative results, while gross profit dropped by 60% to RUB 831 million. EBITDA showed a73%decrease, reaching RUB 402 million. The above figures were mainly influenced by the reduction in revenue. Cost of sales for the first six months of 2016grew by 11% to RUB 10,262 million as a result of increase in tariff sat the end of last year. Selling, general and administrative expenses in the first six months were down by 5%, to RUB 1,046 million.
In the second quarter of 2016 the Company showed an operating loss of RUB 522 million.
Quarterly gross profit and EBITDA went down into negative territory.
Net profit
The Company shows a net loss of RUB 393 million in the first six months of 2016.The second quarter saw a net loss of RUB 541 million. Due to the seasonality of coal consumption in the domestic market, the second quarter is traditionally the weakest in the company's annual business cycle. Another factor impacting the financial result was a price decline on major export routes.
Debt portfolio management
| in millions of RUB |
30.06.2016 |
% of total |
31.03.2016 |
Chg. |
30.06.2015 |
Chg. |
| Long-term loans | 4 635 | 49,56% | 8 481 | (45,35%) | 8 340 | (44,42%) |
| Short-term loans | 4 717 | 50,44% | 1 443 | 226,90% | 617 | 664,52% |
| Total debt, incl.: | 9 352 | 1 | 9 924 | (5,76%) | 8 957 | 4,41% |
| RUB loans | 5 346 | 57,17% | 3 941 | 135,65% | 2 702 | 97,86% |
| Average interest rate for RUB loans | 11,01% | - | 10,99% | 0,02 ppts | 10,36% | 0,65 ppts |
| USD loans | 4 006 | 42,83% | 5 983 | (33,05%) | 6 255 | (35,96%) |
| Average interest for USD loans | 4,06% | - | 4,13% | (0,67 ppts) | 4,35% | (0,29 п.п.) |
| Cash and cash equivalents | 3 647 | - | 4 150 | (12,12%) | 3 314 | 10,05% |
| Net debt | 5 705 | - | 5 774 | (1,19%) | 5 643 | 1,10% |
| Net debt / 12M EBITDA | 3,57 | - | 2,41 | 48,03% | 1,74 | 105,18% |
Net debt at June 30, 2016stood at RUB 5,705 million, remaining virtually unchanged compared to the year-ago level and to that of the previous quarter of this year. The net debt/12-month EBITDA ratio stood at 3.57. This is the highest figure in the company’s history. Its grow this mainly due to the decrease of EBITDA in the recent period.
The Company is one of the most reliable and efficient borrowers in the sector, which is reflected by the current interest rates for loans and credits. As of June 30, 2016, the average effective rate was 11.01% for loans denominated in RUB and 4.06% for loans denominated in USD.
Cash flow and investments
| in millions of RUB | Q22016 | Q12016 | Chg.. | 6M 2016 | 6M 2015 | Chg. |
| Operating cash flow | 369 | 365 | 1% | 734 | 11 | 6573% |
| Investment cash flow | (350) | (591) | (41%) | (941) | (275) | 242% |
| Acquisition of property, plant and equipment | (411) | (595) | (31%) | (1 006) | (305) | 230% |
| Financial cash flow | (317) | 1 364 | n/a | 1 047 | (3 893) | n/a |
| Net increase / (decrease) in cash and cash equivalents | (298) | 1 138 | n/a | 840 | (4 157) | n/a |
In the six months of 2016 operating cash flow amounted to RUB 734 million, growing considerably compared to the first half of 2015. Investment cash flow went up by 242%. Investment in fixed assets amounted to more than RUB 1billion, most of which were spent on equipment acquisition. Net cash flow from financial activities for the six months was also more than RUB 1billion. Net increase in cash and cash equivalents stood at RUB 840 million.
In the second quarter of 2016 operating cash flow stood at RUB 369 million. Investment cash flow reached RUB 350 million, while RUB 411 million were invested in fixed assets. Net decrease in cash and cash equivalents amounted to RUB 298 million
Key events in the second quarter of 2016 and after the reporting date
Outlook for the third quarter of 2016
Contacts for analysts, investors, and media: Elena Sarycheva, head of public affairs 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 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 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 | 2015 | 2014 | 2013 |
| Revenue | 24 994 | 22 250 | 22 490 |
| Cost of sales | 20 932 | 18 925 | 19 523 |
| Production cash costs per tonne, RUB | 577 | 611 | |
| EBITDA | 2 697 | 2 518 | 2 422 |
| EBITDA margin | 10,8% | 11% | 11% |
| EBITDA per tonne, RUB | 245 | 237 | 239 |
| Net profit | 37 | 7 | 640 |
| Net profit margin | - | - | 3% |
| Net debt | 5 642 | 6 101 | 3 917 |
| Net debt / EBITDA | 2,09 | 2,42 | 1,62 |
Additional information about the Company and investor calendar: www.oaoktk.ru/en/investors
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.
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