Severstal PJSC reports 51.3% Net Income growth in 2018 and 3.5 pp EBITDA Margin growth from 32.6% to 36.1%
05 Feb 2019 • About Severstal PJSC (
$SVST) • By InTwits
Severstal PJSC reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Severstal PJSC has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.6%. At the same time it's a lot of higher than industry average of 10.6%.
- CAPEX is quite volatile: 941 TRYm in 2018, 1,100 TRYm in 2017, 885 TRYm in 2016, 961 TRYm in 2015, 2,258 TRYm in 2014
- The company has highly profitable business model: ROIC is 49.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 9.3%. Having stable revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 25.2 pp from -416% to -390% in FY2018. EBITDA Margin followed a growing trend at 2.0 pp per annum in the last 5 years.
Gross Margin increased on 3.0 pp from 39.7% to 42.7% in 2018. SG&A as a % of Revenue decreased slightly on 0.96 pp from 11.3% to 10.3% in 2018. SG&A as a % of Revenue followed a declining trend at -0.82 pp per annum in the last 5 years.
Net Income margin increased on 6.6 pp from 17.3% to 23.9% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 Severstal PJSC had CAPEX/Revenue of 7.6%. Severstal PJSC showed small growth in CAPEX/Revenue of 1.2 pp from 6.4% in 2015 to 7.6% in 2018. It's average level of CAPEX/Revenue for the last three years was 7.7%.
Return on investment
The company operates at high and attractive ROIC (49.5%) and ROE (65.7%). ROIC surged on 10.7 pp from 38.8% to 49.5% in 2018. ROE jumped on 23.3 pp from 42.3% to 65.7% in 2018. ROIC grew at 7.2 pp per annum in 2014-2018.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.4x and Debt / EBITDA is 0.5x. Net Debt / EBITDA showed almost no change in 2018. Debt dropped on 27.0% while cash dropped on 77.9%.
Severstal PJSC has no short term refinancing risk: cash is higher than short term debt (196.6%).
Valuation and dividends
The company's trades at EV/EBITDA 0.5x and P/E 0.1x.
Management team
Alexander Shevelev is a Severstal PJSC's CEO. Alexander Shevelev is a founder and has spent 3 years with the company. Alexey G Kulichenko is a the company's CFO. Alexey G Kulichenko has spent 3 years at the company.
Financial and operational results
FY ended 31 Dec 2018
Severstal PJSC ($SVST) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 8,296 | 6,396 | 5,916 | 7,848 | 8,580 | 9.3% |
| Gross Profit | 2,856 | 2,586 | 2,343 | 3,113 | 3,662 | 17.6% |
| SG&A | 1,136 | 808 | 741 | 884 | 884 | -0.0% |
| EBITDA | 2,187 | 2,071 | 1,846 | 2,556 | 3,098 | 21.2% |
| Net Income | -1,595 | 605 | 1,621 | 1,356 | 2,051 | 51.3% |
Balance Sheet
|
|---|
| Cash | 1,897 | 1,647 | 1,154 | 1,031 | 228 | -77.9% |
| Short Term Debt | 775 | 507 | 673 | 586 | 116 | -80.2% |
| Long Term Debt | 2,655 | 1,945 | 1,340 | 1,507 | 1,412 | -6.3% |
Cash flow
|
|---|
| Capex | 700 | 412 | 494 | 560 | 653 | 16.6% |
Ratios
|
|---|
| Revenue growth | -12.1% | -22.9% | -7.5% | 32.7% | 9.3% | |
| EBITDA growth | 20.2% | -5.3% | -10.9% | 38.5% | 21.2% | |
|
|---|
| Gross Margin | 34.4% | 40.4% | 39.6% | 39.7% | 42.7% | 3.0% |
| EBITDA Margin | 26.4% | 32.4% | 31.2% | 32.6% | 36.1% | 3.5% |
| SG&A, % of revenue | 13.7% | 12.6% | 12.5% | 11.3% | 10.3% | -1.0% |
| Net Income Margin | -19.2% | 9.5% | 27.4% | 17.3% | 23.9% | 6.6% |
| CAPEX, % of revenue | 8.4% | 6.4% | 8.4% | 7.1% | 7.6% | 0.5% |
|
|---|
| ROIC | 17.7% | 30.3% | 29.7% | 38.8% | 49.5% | 10.7% |
| ROE | -32.6% | 23.9% | 61.4% | 42.3% | 65.7% | 23.3% |
| Net Debt/EBITDA | 0.7x | 0.4x | 0.5x | 0.4x | 0.4x | 0.0x |
Peers in Industrial Metals & Mining
Below you can find Severstal PJSC benchmarking vs. other companies in Industrial Metals & Mining industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Ezz Steel ($AEZD) | -8.9% | -14.2% | 39.3% | 80.0% | |
| Zibao Metals Recycling Hldgs Ltd ($ZBO) | | -9.0% | 23.1% | 62.8% | 6.0% |
| Magnitogorsk Iron & Steel Works ($MMK) | | -26.6% | -3.6% | 34.0% | |
| Norsk Hydro Asa ($NHY) | 20.1% | 12.6% | -6.5% | 33.3% | |
| Novolipetsk Iron And Steel Corp ($NLMK) | -4.7% | -23.0% | -4.6% | 31.8% | |
| |
|---|
| Median (13 companies) | 6.8% | -10.6% | -3.6% | 29.5% | 7.1% |
|---|
| Severstal PJSC ($SVST) | | -22.9% | -7.5% | 32.7% | 9.3% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Mmc Norilsk Nickel ($MNOD) | 52.2% | 55.7% | 49.9% | 49.7% | |
| Base Resources Ltd ($BSE) | 11.8% | 21.2% | 21.0% | 35.9% | 39.7% |
| Novolipetsk Iron And Steel Corp ($NLMK) | 28.3% | 31.4% | 33.6% | 32.5% | |
| Magnitogorsk Iron & Steel Works ($MMK) | 21.9% | 30.6% | 32.2% | 30.2% | |
| Cheliabinsk Elektrolit Zink Plant ($CHZN) | 28.6% | 24.8% | 29.4% | 27.9% | |
| |
|---|
| Median (11 companies) | 18.0% | 13.5% | 16.8% | 19.9% | 12.3% |
|---|
| Severstal PJSC ($SVST) | 34.4% | 40.4% | 39.6% | 39.7% | 42.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Base Resources Ltd ($BSE) | -2.0% | 37.7% | 35.8% | 50.9% | 54.9% |
| Mmc Norilsk Nickel ($MNOD) | 46.8% | 47.0% | 46.5% | 41.2% | |
| First Quantum Minerals ($FQM) | 39.9% | 17.8% | 36.1% | 32.5% | |
| Magnitogorsk Iron & Steel Works ($MMK) | 19.5% | 28.3% | 34.5% | 26.5% | |
| Novolipetsk Iron And Steel Corp ($NLMK) | 21.8% | 24.3% | 25.4% | 26.4% | |
| |
|---|
| Median (13 companies) | 12.6% | 14.6% | 16.8% | 18.4% | 13.6% |
|---|
| Severstal PJSC ($SVST) | 26.4% | 32.4% | 31.2% | 32.6% | 36.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| First Quantum Minerals ($FQM) | 81.7% | 72.5% | 56.0% | 60.9% | |
| Aluminium Bahrain Bsc ($ALBH) | 6.2% | 6.3% | 16.1% | 54.2% | |
| Mmc Norilsk Nickel ($MNOD) | 10.8% | 19.0% | 20.2% | 21.2% | |
| Magnitogorsk Iron & Steel Works ($MMK) | 6.3% | 6.0% | 8.2% | 8.8% | |
| Norsk Hydro Asa ($NHY) | 4.2% | 6.0% | 8.4% | 6.7% | |
| |
|---|
| Median (13 companies) | 6.3% | 6.3% | 5.9% | 5.9% | 3.3% |
|---|
| Severstal PJSC ($SVST) | 8.4% | 6.4% | 8.4% | 7.1% | 7.6% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Cheliabinsk Elektrolit Zink Plant ($CHZN) | 25.6% | 24.4% | 24.3% | 31.0% | |
| Magnitogorsk Iron & Steel Works ($MMK) | 9.1% | 18.1% | 26.7% | 24.4% | |
| Mmc Norilsk Nickel ($MNOD) | 34.1% | 31.7% | 28.7% | 23.8% | |
| Novolipetsk Iron And Steel Corp ($NLMK) | 12.0% | 15.7% | 17.5% | 22.3% | |
| Base Resources Ltd ($BSE) | -2.3% | 2.9% | 2.7% | 13.2% | 17.1% |
| |
|---|
| Median (14 companies) | 5.9% | 5.4% | 4.9% | 8.3% | 5.3% |
|---|
| Severstal PJSC ($SVST) | 17.7% | 30.3% | 29.7% | 38.8% | 49.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| First Quantum Minerals ($FQM) | 4.0x | 10.5x | 4.5x | 5.2x | |
| OAO TMK ($TMKS) | 3.8x | 4.3x | 5.2x | 4.8x | |
| Ezz Steel ($AEZD) | 19.4x | 13.3x | 7.8x | 4.5x | |
| Aluminium Bahrain Bsc ($ALBH) | 0.4x | -0.2x | -0.1x | 2.5x | |
| Posco ($PIDD) | 3.7x | 3.6x | 3.4x | 2.3x | 2.0x |
| |
|---|
| Median (13 companies) | 1.2x | 1.1x | 0.9x | 1.4x | 0.5x |
|---|
| Severstal PJSC ($SVST) | 0.7x | 0.4x | 0.5x | 0.4x | 0.4x |
