Dear shareholders, partners, and colleagues,
Our performance in 2017 has reaffirmed Metalloinvest’s global leadership in the high valueadded iron ore raw materials market. For us, the highlight of the year was the launch of the third hot briquetted iron plant (HBI-3 Plant) at Lebedinsky GOK.
The launch of HBI-3 Plant, one of the world’s largest hot briquetted production facilities with an annual capacity of 1.8 million tonnes, has considerably reinforced Metalloinvest’s position in the metallised raw materials sector.
The Company has grown its share in the global merchant HBI market to approximately 50%.
The increased output and sales of high valueadded products had a significant positive impact on Metalloinvest’s financial performance in 2017. The pricing of our products has been bolstered by the closures of underperforming steelmaking facilities in China and a recovery in the global demand for steel.
The timely delivery of our capex programme, a favourable market environment, and the implementation of the programme to improve our operational efficiency have also contributed to Metalloinvest’s strong financial performance.
In 2017, the Company’s revenue grew by 46% to USD 6.2 billion, with EBITDA up 68.5% to USD 2.1 billion, and an EBITDA margin of 34%.
In 2017 and early 2018, we worked hard to optimise our debt portfolio, with a tender held for the early redemption of the Company’s Eurobonds using the proceeds from a new bond placement, and the refinancing of previous pre-export finance facilities. As a result, the Company has cut its debt servicing costs and extended debt maturities, while reducing its USD-denominated repayments due in 2018–2019 to zero.
In 2017, the Company made significant progress in augmenting its customer-centric approach. In response to market demand, the Company has put in place multiple initiatives, including the commissioning of a concentrate intake facility at Mikhailovsky GOK, and further coordination meetings with key customers. The Company has been consistently improving the quality of its products and expanding target sales markets for its high valueadded products, primarily HBI and SBQ. We have ramped up HBI shipments to our customers by 44% to 3.5 million tonnes, while SBQ shipments have exceeded 1 million tonnes for the first time in the Company’s history.
During the year, Metalloinvest focused heavily on its work in the field of health, safety, and environment (HSE). The Company has designed and implemented key standards in the field of occupational health and safety, and approved a uniform corporate Health, Safety, and Environment Policy. Our aim is to minimise the rate of accidents, injuries, and occupational diseases, as we truly believe that any incident can be prevented.
One of our key competitive advantages is the environmental performance of our operations. By applying the best available technologies in constructing and upgrading our production facilities, Metalloinvest has been able to meet the highest international environmental standards and successfully operate in a competitive global market.
In 2017, the Company allocated over RUB 6.5 billion to equipment upgrades, the installation of state-of-the-art filters and gas as well as water treatment systems, and land recultivation projects. Tests run by independent laboratories confirm that the environmental impact resulting from each of the Company’s plants is significantly lower than the maximum permissible levels.
Last year, we focused on implementing our Industry 4.0 comprehensive business transformation programme. We have also launched our Multifunctional Shared Services Centre (MF SSC), centralising a range of functions including finance and accounting, HR, treasury, centralised procurement, and other services. The Company has completed the design of an integrated SAP S/4HANA-based financial and business management system, covering all of Metalloinvest’s enterprises. The system will enhance our business processes and speed up management decision making, while providing a robust platform for the Company to retain its leading position in the market.
In 2017, we continued our efforts in developing social and economic partnerships with regional administrations in the areas in which the Company operates. We aim to improve the quality of life and environment in Gubkin, Zheleznogorsk, Stary Oskol, and Novotroitsk where our employees, their families and close ones live.
Metalloinvest is well-positioned to continue its successful growth trajectory, benefitting all our stakeholders. On behalf of the Company, I would like to express our gratitude to our shareholders, the Board of Directors, employees, investors, and partners for their trust and cooperation!