JSC SUEK (“SUEK”, “the Group” or “Company”) has published today its 2016 financial results, prepared in accordance with IFRS and audited by KPMG.2016 Key financial and operational figures1 :
|Revenue, million USD||4,002||4,132|
|EBITDA, million USD||965||
|Net profit, million USD||303||200|
|Net debt/EBITDA, ratio2||2.9x||3.0x|
|Capital expenditure (CAPEX), million USD||492||355|
|Number of Employees||33,665||32,124|
|LTIFR (lost-time injury frequency rate), ratio||0.94||1.23|
|Production, million tonnes||105.4||97.8|
|Sales, million tonnes||103.1||101.1|
|- including international sales||51.9||46.9|
|- including domestic sales||51.2||54.2|
In 2016, the global coal market was characterised by high volatility. Prices dropped to historical lows in the first quarter and remained at these levels until mid-year before starting to recover.
Still, demand for coal was solid in export markets and in Russia, which together with smooth operations at most of its production facilities enabled SUEK to achieve a record 105.4 million tonnes of annual production, an 8% increase from 2015. Hard coal production grew 17% on the back of previous CAPEX investments and continued a focus on operational efficiency.
The Company continued to expand its coal washing capacity by increasing utilisation rates at new plants and upgrading existing facilities to satisfy the growing demand for higher-calorific coal. As a result, the volume of washed hard coal increased by 12% compared to 2015.
Another record was set as sales for the year grew to 103.1 million tonnes, a 2% increase year-on-year, with 50% of deliveries going to Russian customers and 50% to export markets. Export sales rose by 11% on strong demand from the Pacific and Mediterranean markets.
Revenue for the year amounted to US$ 4,002 million. The combination of a substantial increase of sales to premium markets, cost cautiousness, the use of our efficient logistic assets, and the expansion of the Group’s sales and distribution network generated an EBITDA of US$965 million for the year, a 9% increase as compared to 2015. Net profit reached US$ 303 million.
Capital expenditures increased to US$ 492 million. The major focus of the investment programme was on maintenance and key development projects. Major investments were allocated to the development of mining and washing capacity in the Kuzbass, Buryatia, Zabaikalye and Khabarovsk regions, the Vanino and Murmansk port facilities, as well as own railcar fleet.
SUEK maintained a strong balance sheet and finished the year with a net debt to EBITDA ratio of 2.9x, down from 3.0x as at the end of 2015.
Health, safety and the environment remain a paramount priority for SUEK. The improvements of industrial safety systems and the promotion of a safety culture across the Company supported a substantial decrease in the lost-time injury frequency rate (LTIFR). As compared to 1.23 a year ago, the Group finished 2016 with a LTIFR of 0.94, the lowest in the Company’s 15-year history and one of the lowest rates across the coal industry globally.
In September 2016 the Company completed its intragroup re-organisation. JSC SUEK became the holding company of the Group, the center of consolidated reporting and corporate governance.
Vladimir Rashevsky, CEO of SUEK:
“The last few years were challenging for our business and the coal industry as a whole. Despite the headwinds, we had significant breakthroughs over the past year: our timely investments in the development of high quality deposits, washing capacity, logistics and sales network, as well as our focus on health and safety and production efficiency led us to record levels of production and sales, while achieving the lowest injury rate in our history.
SUEK has entered a phase of sustainable development in all three business dimensions – financial, operational and social. The realisation of our strategy based on cost efficiency and the improvement of product quality provides us with the confidence that we will remain competitive even in an uncertain market environment."
Nikolay Pilipenko, CFO of SUEK:
“With strong balance sheet, conservative approach, and clear strategy we, at SUEK, are committed to deliver on our 2017 Group targets and realise value growth opportunities."
1 SUEK IFRS consolidated annual financial statements for the year ended 31 December 2016 are available at http://www.suek.com/investors/reporting/
2 Bank EBITDA is calculated in accordance with SUEK loan agreements