Severstal dividends for the 4th quarter.
In April 2018, Severstal updated its dividend policy with the goal of increasing the company's shareholder value. Basic principles of the new dividend policy:
- The company plans to use 100% of its free cash flow for dividend payments, provided that the net debt / EBITDA ratio under IFRS is below 1.0x;
- If the net debt / EBITDA ratio is below 0.5x, then the amount of paid dividends may exceed 100% of free cash flow.
Key financial indicators of Severstal in the third quarter
- Revenue in the first 9M 2018 increased by 14.6% year-on-year to $ 6,495 million (9M 2017: $ 5,670 million). The significant growth was driven by a favorable pricing environment in 2018 and a 4% increase in steel sales volumes yoy;
- EBITDA increased by 28.8% year-on-year to $ 2,348 million (9M 2017: $ 1,823 million) driven by revenue growth, which was partially offset by higher cost of sales;
- The company generated $ 1,368 million in free cash flow, up 42.6% year-on-year (9M 2017: $ 959 million) due to revenue growth;
- Net debt rose to $ 438 mn at the end of Q3. 2018 (Q2 2018: $ 153 million) after dividend payment in Q3 2018 year. Net debt / EBITDA remained unchanged at 0.1x at the end of Q3 (Q2 2018: 0.1x).
Severstal's share capital is divided into 837,718,660 ordinary shares. Thus, the company will pay more than RUB 37 billion in dividends for the third quarter. This is more than 100% of free cash flow. The final decision on the payment and amount of dividends will be made at the general meeting of shareholders on November 23.
The closing date of the register of shareholders to receive dividends is December 4, 2018. The last day to buy shares for inclusion in the register for receiving dividends is November 30.
The cost of one ordinary Severstal share on the Moscow Exchange on October 19 is 1,059.10 rubles. Thus, if you bought shares at this price, the dividend yield will be 4.2%.
Severstal shares are included in our Total dividend yield may exceed 16% per annum. Recall that the company has already paid dividends this year for the first and second quarters - 38.32 and 45.94 rubles per share, respectively. Excluding dividends for the 4th quarter, the amount of dividend payments amounted to 128.65 rubles per share, and the dividend yield was 12.15% to current quotes.
Table 2. Terms and amounts of Severstal dividend payments for 2017. Source: investfuture.ru
Period for which income is paid | Size d iwedenda per 1 ordinary share, rub. | Total payments, rub. | Register Closing Date (Dividend Cutoff) | Payment Schedule |
2017, 4th quarter | 27,72 | 92.2 billion | 19.06.2018 | 20.06.2018 – 14.07.2018 |
2017, 3 quarter | 35,61 | 05.12.2017 | 06.12.2017 – 01.01.2018 | |
2017, half year | 22,28 | 26.09.2017 | 01.11.2017 – 14.07.2017 | |
2017, 1st quarter | 24,4 | 20.06.2017 | 21.06.2017 – 01.08.2017 |
What dividends will the company pay for the IV quarter of 2017?
Severstal began paying dividends in 2001, gradually increasing their size.
Interesting fact! In 2017, the Company paid shareholders income that is three times the amount of attracted investments.
This makes the company one of the most attractive funds for investments, including due to its reliable dividend history.
Table 3. History of Severstal dividend payments in 2010-2017 Source: official site
How to get income from owning stocks?
The decision on payment or non-payment of dividends is made by the Meeting of Shareholders based on the analysis of indicators and recommendations provided by the Board of Directors, which, after evaluating and redistributing profit for a new period, sets the maximum possible earnings per share.
Important! According to the dividend policy, the announcement of a decision on payment is a right, not an obligation of the Company. In his absence, the company may not pay money to shareholders, and the latter may not make demands.
However, Severstal is considered a highly reliable company for investors and provides regular payments.
The meeting of shareholders announces:
- amount of dividend income;
- form and procedure for payment;
- the closing date of the register;
- payment period.
An individual must first of all consider the date of the register closing (dividend cutoff). At this time, all holders of the company's securities are fixed, for whom income will be calculated and paid. Accordingly, in order to receive Severstal's dividends for the IV quarter of 2017, it is necessary to buy shares and get into the register before the cutoff.
Important! Rthe register will close on June 19, 2018 (Tuesday). To be included in the list of dividend recipients, you must purchase Severstal securities 2 business days before the specified date, that is, no later than June 15 (Friday).
How to become a shareholder?
You can buy Severstal shares with the help of a brokerage or investment company that has the right to participate in trading on the stock exchange. This is an intermediary who will help a private person to purchase securities, register them in their own name and send the data to the register of shareholders.
An official agreement is concluded with this kind of company, a brokerage account is opened, after which the intermediary will be able to buy shares.
It is recommended to follow important news regarding Severstal's dividend payments, which can be found on the company's website - www.severstal.com. All the necessary information appears in advance: for example, you can learn about the upcoming Meeting of Shareholders 30 days before it.
Video. Features of Severstal's dividend payments:
Higher education. Orenburg State University (specialization: economics and management at heavy engineering enterprises).
March 10, 2018.
On February 2, Severstal released a report on the results of 2017 - the management showed financial and production results, spoke about plans and announced the payment of dividends for the fourth quarter of 2017.
Sergey Shabolkin
private investor
We go to the official website of Severstal and pick up the dollar statements, operating results report and presentation. Russian companies are also required to publish statements in rubles, but I took statements in dollars, because almost all the company's cash and liabilities are in them. Bitcoin has not yet reached the heavy industry.
Revenue has grown
In 2017, Severstal's revenue grew by 32.6% to $ 7.8 billion. A year ago it was 5.9 billion. At the same time, sales are growing slowly: sales of iron ore raw materials for the year increased by 9%, rolled products - by 6%. The revenue growth was driven by rising steel prices. The company publishes average sales prices in operating results.
![](https://i2.wp.com/img-cdn.tinkoffjournal.ru/sevstal-otchet-4.nzjbgmmcz4yx.png)
At the same time, there was a drop in sales of semi-finished products by 28% and coal by 42%, but do not worry - this is an insignificant segment for Severstal and the company did not receive losses from these segments. Saved by the rise in raw material prices. The company was modernizing its production this year - because of this, coal production fell. Maybe in 2018, these segments will get better.
Profit fell 16.3%
In 2016, Severstal received $ 1.6 billion in profit, and in 2017 - $ 1.4 billion. Net profit fell due to taxes and accounting revaluations. In 2016 they paid 5.6% tax, in 2017 - 23%. Also, Severstal liquidated its foreign subsidiaries and received a reserve of exchange rate differences - a one-time loss of $ 307 million was obtained.
Profits have fallen, but business efficiency does not show this. Therefore, we consider the operating margin - an indicator of the company's profitability from its core activities. We consider this: operating profit / revenue. Bigger is better.
Operating margin of Severstal
Operating profit
Revenue
Operating margin
Now we can see that Severstal has started to work a little better. Severstal's competitor, MMK, has an operating margin of 19.2%. Therefore, first evaluate the effectiveness of the company, and then look at the bottom line.
Dividends for the 4th quarter approved
Severstal will pay RUB 27.72 in dividends per share for Q4 2017. The share price as of February 14 is 930 rubles, resulting in a dividend yield of 2.9%. To receive dividends, you need to have time to buy shares before June 15, 2018. At the end of 2017, there will be 110.05 rubles per share. At current prices, the dividend yield is about 12% per annum.
Severstal pays dividends for each quarter depending on the ratio of net debt to EBITDA. More than 1 - pay 25% of net profit under IFRS. Below 1 - pay 50% of net profit under IFRS. Below 0.5 - they can pay up to 100% of the net cash flow.
It is not worth calculating the indicators on your own: Severstal uses various adjustments in its calculations, so it is easier to see the ratio of net debt to EBITDA in the company's presentation, and to take free cash flow from the press release.
![](https://i0.wp.com/img-cdn.tinkoffjournal.ru/sevstal-prez-13.b4fmixoeyrdr.png)
In 2017, the ratio of net debt to EBITDA did not exceed 0.4. As soon as it gets above 0.5, pay attention to the bottom line.
We count multipliers
Collecting data from the dollar report.
![](https://i0.wp.com/img-cdn.tinkoffjournal.ru/sevstal-doll-7.kkz0y8gz68jb.png)
![](https://i2.wp.com/img-cdn.tinkoffjournal.ru/sevstal-doll-9.ixvdwkwnp34y.png)
![](https://i1.wp.com/img-cdn.tinkoffjournal.ru/sevstal-doll-10.focowstq7xyp.png)
![](https://i2.wp.com/img-cdn.tinkoffjournal.ru/sevstal-press-1.x2wwzlvqxf4g.png)
I took the market cap from Google Finance for February 14th. Capitalization is indicated in rubles, so we translate it into dollars. We take the rate from the Central Bank website - 57.8 rubles. We transfer the data to the table.
Severstal results for 2017
Index
million $
Profit before taxes
Net profit
Interest paid
Interest received
Cash and cash equivalents
Commitments
Free cash flow
Depreciation
Capitalization
P / E is the ratio of market capitalization to earnings. Shows how many years the company will pay for itself. If the result is between 0 and 5, then the company is probably undervalued.
P / BV is the ratio of market capitalization to company equity. Helps to understand how much money the investor will have in case of bankruptcy. If the indicator is more than one, it will not be enough for everyone.
P / FCF is the ratio of market capitalization to free cash flow. Less is better. The multiplier shows how much money the company has left to pay dividends and buy back shares. Use this multiplier for companies paying dividends from free cash flow: MMK, Severstal and NLMK.
FCF - Free Cash Flow. Shows how much money the company has left after paying capital expenditures.
EV is the value of the company, taking into account all sources of financing - from investors and lenders. Decreases in cash, because it can help reduce debt.
EBITDA - shows how much the company earns net money excluding taxes, interest on loans and depreciation.
EV / EBITDA is similar to P / E, but takes into account more data.
Debt / EBITDA - reflects the number of years it takes a company to pay off all of its debt.
ROE is the return on equity as a percentage per annum. Formula: net profit / equity.
We already have a competitor to Severstal. Let's take the data from the survey, update the capitalization and compare. Look in our calculation how we calculated the multipliers.
PAO Severstal (MICEX-RTS: CHMF; LSE: SVST), one of the world's leading vertically integrated steel and mining companies, today announces financial results for the third quarter and nine months of 2017.
CONSOLIDATED FINANCIAL RESULTS FOR THE ENDED QUARTER
$ million, unless otherwise stated |
3rd quarter. 2017 |
2 - th sq.. 2017 |
Rev., % |
9 months 2017 |
9 months 2016 |
Change,% |
Revenue |
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EBITDA 1 |
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Profitability by EBITDA,% |
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Operating profit |
||||||
Operating profitability, % |
||||||
Free cash flow |
||||||
Net profit 2 |
||||||
Basic profit per share 3 , $ |
Notes:
1) Index EBITDA represents the sum of operating profit and depreciation expense of production assets (taking into account the Group's share in depreciation of associates and joint ventures), adjusted by the amount of profit / (loss) from the sale of property, plant and equipment and intangible assets, as well as the share of non-operating income / (expenses) of associates and joint ventures.
2) Net profit including gain / (loss) from exchange rate differences.
3) Basic earnings per share are calculated as follows: net income divided by the weighted average number of shares during the period (810.6 million shares for the second quarter of 2017 and 9 months of 2016, 811.4 million shares for the third quarter of 2017, 810.9 for the nine months 2017).
RESULTS OF THE THIRD QUARTER 2017 COMPARED TO THE RESULTS OF THE SECOND QUARTER 2017:
- The Group's revenue increased by 2.1% qoq to $ 1,972 million.
- (Q2 2017: $ 1,931 million) due to higher sales volumes, with moderate declines in average realized prices during the third quarter of 2017;
- Group EBITDA declined 2.1% qoq to $ 616 million (Q2 2017: $ 629 million) as the Group's increase in revenues was partially offset by higher operating costs for raw materials, repairs and work in progress ... EBITDA margin remained strong, reaching 31.2% (Q2 2017: 32.6%). At the same time, the Group's profitability remains one of the highest in the industry;
- Net income was $ 297 million (Q2 2017: $ 136 million), which includes a foreign exchange loss of $ 23 million. Excluding this non-monetary factor, Severstal's Q3 net income was $ 136 million. 2017 would have been $ 320 million (Q2 2017: $ 448 million);
- Free Cash Flow grew significantly to $ 507 million (Q2 2017: $ 382 million) due to lower net working capital. Stable positive free cash flow remains one of the key strategic priorities of the Company;
- CAPEX cash flows were $ 144 million, up 3.6% year-on-year (Q2 2017: $ 139 million);
- The Company's net debt decreased by 15.0% to $ 703 million at the end of Q3. 2017 (Q2 2017: $ 827 million) amid growing cash and cash equivalents balance while total debt declines;
- The recommended dividend for the three months ended September 30, 2017 is RUB 35.61 per share.
THE RESULTS OF NINE MONTHS OF 2017 COMPARED WITH THE RESULTS OF NINE MONTHS OF 2016:
- Group revenue for the first 9 months 2017 increased by 32.9% y-o-y to $ 5,670 million (9M 2016: $ 4,265 million) due to higher selling prices during 9M. 2017, which allowed Severstal to significantly increase this indicator;
- The Group's EBITDA increased by 31.8% year-on-year to $ 1.823 million (9M 2016: $ 1.383 million) driven by revenue growth;
- The company generated $ 959 million in free cash flow, surpassing the same period last year (9M 2016: $ 633 million). This dynamics is due to a more favorable price environment;
- Capital investment cash flows totaled $ 421 million, up 17.6% year-on-year (9M 2016: $ 358 million), driven by the strengthening of the Russian currency over the previous year.
FINANCIAL POSITION OF THE COMPANY, KEY POINTS:
- Cash and cash equivalents at the end of the third quarter of 2017 amounted to $ 1,990 million.
- (Q2 2017: $ 1,895 mln), due to an increase in free cash flow, which was partially offset by dividend payments;
- The Group's total debt changed slightly, decreasing by 1.1% at the end of Q3. 2017 to $ 2.693 million (Q2 2017: $ 2.722 million);
- The Company's net debt decreased by 15.0% to $ 703 million at the end of Q3 2017 (Q2 2017: $ 827 million), reflecting an increase in the cash and cash equivalents balance, as well as a decrease in total debt. The net debt / EBITDA ratio declined slightly to 0.3x at the end of the third quarter (Q2 2017: 0.4x). Net debt / EBITDA ratio remains one of the lowest among steel companies worldwide, which allows the Company to maintain a balance between low debt burden and continued commitment by management to increase Severstal shareholder value;
- Liquidity of $ 1,990 million in cash and cash equivalents, as well as guaranteed unused funds under open credit lines in the amount of $ 725 million, all of which more than covers the body of short-term financial debt of $ 1,152 million.
Alexander Shevelev, General Director of Severstal Management JSC, commented on the results:
“Within 3 sq. In 2017, prices in the export and domestic markets remained stable, supported by demand in China, which, together with the vertically integrated business model, allowed Severstal to demonstrate stable financial results for the ended quarter. At the same time, Severstal achieved one of the highest profitability indicators in the steel industry.
The company continues to focus on achieving a qualitatively new level of its production processes, and also continues to work to improve efficiency and minimize negative impact on the environment. Our goal remains to maintain a leading position in increasing the value of the Company for all stakeholders. Work safety and customer focus remain our top priorities.
Experts expect the global economy to continue to grow. We expect further stabilization in the steel and raw materials markets during 2017, supported by the closure of excess steel capacity in China, and this will stimulate further economic growth and reduce the negative impact on the environment. Steel demand in Russia is expected to grow by about 5% in 2017, following the growth of GDP.
The flexibility of distribution channels and the timely ability to distribute products between domestic and export markets, in response to changes in the price environment, allows Severstal to remain in a stable position due to the recovery in demand for steel in Russia. "
In the third quarter of 2017, the Company once again demonstrated robust financial results, despite the downtrend in the global raw materials and steel markets, driven by the performance of our production processes, as well as management's continued focus on improving operating efficiency. The share of HVA products reached a record 49% on the back of the sale of HVA inventory accumulated in previous periods. The ongoing construction season caused the share of sales in Russia to rise to 65%, as the favorable geographic location allows the Company to quickly redirect part of its external sales to the domestic market, depending on the market conditions.
Growth in sales volumes, as well as consistently high prices for the Company's products, allowed Severstal to increase its revenue. Moreover, in 3 sq. 2017 saw an increase in operating costs. As a result, the group's EBITDA in Q3. 2017 declined slightly by 2.1% qoq. Free cash flow reached $ 507 mn, helped by a decrease in net working capital, due to the positive impact of the dynamics of inventories and short-term liabilities. Strong asset management has enabled Severstal to maintain its group EBITDA margin at one of the highest levels in the steel industry at 31.2% and generate free cash flow, increasing the Company's shareholder value.
Severstal continues to seek the optimal financial balance between maintaining a low level of debt burden on the one hand, and focusing on maximizing shareholder value on the other. Net debt / EBITDA declined slightly to 0.3x at the end of Q3. 2017 year. This allowed the Board of Directors to recommend dividends in the amount of 35.61 rubles. per share for 3 sq. 2017.
DIVIDENDS
The approval of the decision on the payment of dividends is expected at the extraordinary meeting of shareholders, which will be held on November 24, 2017. The date on which the list of shareholders for participation in the EGM is drawn up is October 30, 2017.
The recommended date for which the list of shareholders is drawn up to receive dividends is December 5, 2017. Approval of the decision on the date on which the list of shareholders is drawn up to receive dividends is expected at an extraordinary meeting of shareholders to be held
FORECAST
World steel production in August rose 6.3% on the back of an increase in steel production in China. Reducing overcapacity in China contributed to a temporary increase in capacity utilization to 85% and increased margins for steel producers. Steel consumption in Russia continues to exceed expectations, increasing 8% in the first eight months of 2017, driven by increased construction activity and investment in infrastructure. A stable macroeconomic environment continues to improve the economic environment. Due to the recent rise in world prices, the Company expects a stronger Q4 results. 2017, despite seasonal factors.
On February 2, Severstal released a report on the results of 2017 - the management showed financial and production results, spoke about plans and announced the payment of dividends for the fourth quarter of 2017.
Sergey Shabolkin
private investor
We go to the official website of Severstal and pick up the dollar statements, operating results report and presentation. Russian companies are also required to publish statements in rubles, but I took statements in dollars, because almost all the company's cash and liabilities are in them. Bitcoin has not yet reached the heavy industry.
Revenue has grown
In 2017, Severstal's revenue grew by 32.6% to $ 7.8 billion. A year ago it was 5.9 billion. At the same time, sales are growing slowly: sales of iron ore raw materials for the year increased by 9%, rolled products - by 6%. The revenue growth was driven by rising steel prices. The company publishes average sales prices in operating results.
![](https://i2.wp.com/img-cdn.tinkoffjournal.ru/sevstal-otchet-4.nzjbgmmcz4yx.png)
At the same time, there was a drop in sales of semi-finished products by 28% and coal by 42%, but do not worry - this is an insignificant segment for Severstal and the company did not receive losses from these segments. Saved by the rise in raw material prices. The company was modernizing its production this year - because of this, coal production fell. Maybe in 2018, these segments will get better.
Profit fell 16.3%
In 2016, Severstal received $ 1.6 billion in profit, and in 2017 - $ 1.4 billion. Net profit fell due to taxes and accounting revaluations. In 2016 they paid 5.6% tax, in 2017 - 23%. Also, Severstal liquidated its foreign subsidiaries and received a reserve of exchange rate differences - a one-time loss of $ 307 million was obtained.
Profits have fallen, but business efficiency does not show this. Therefore, we consider the operating margin - an indicator of the company's profitability from its core activities. We consider this: operating profit / revenue. Bigger is better.
Operating margin of Severstal
Operating profit
Revenue
Operating margin
Now we can see that Severstal has started to work a little better. Severstal's competitor, MMK, has an operating margin of 19.2%. Therefore, first evaluate the effectiveness of the company, and then look at the bottom line.
Dividends for the 4th quarter approved
Severstal will pay RUB 27.72 in dividends per share for Q4 2017. The share price as of February 14 is 930 rubles, resulting in a dividend yield of 2.9%. To receive dividends, you need to have time to buy shares before June 15, 2018. At the end of 2017, there will be 110.05 rubles per share. At current prices, the dividend yield is about 12% per annum.
Severstal pays dividends for each quarter depending on the ratio of net debt to EBITDA. More than 1 - pay 25% of net profit under IFRS. Below 1 - pay 50% of net profit under IFRS. Below 0.5 - they can pay up to 100% of the net cash flow.
It is not worth calculating the indicators on your own: Severstal uses various adjustments in its calculations, so it is easier to see the ratio of net debt to EBITDA in the company's presentation, and to take free cash flow from the press release.
![](https://i0.wp.com/img-cdn.tinkoffjournal.ru/sevstal-prez-13.b4fmixoeyrdr.png)
In 2017, the ratio of net debt to EBITDA did not exceed 0.4. As soon as it gets above 0.5, pay attention to the bottom line.
We count multipliers
Collecting data from the dollar report.
![](https://i0.wp.com/img-cdn.tinkoffjournal.ru/sevstal-doll-7.kkz0y8gz68jb.png)
![](https://i2.wp.com/img-cdn.tinkoffjournal.ru/sevstal-doll-9.ixvdwkwnp34y.png)
![](https://i1.wp.com/img-cdn.tinkoffjournal.ru/sevstal-doll-10.focowstq7xyp.png)
![](https://i2.wp.com/img-cdn.tinkoffjournal.ru/sevstal-press-1.x2wwzlvqxf4g.png)
I took the market cap from Google Finance for February 14th. Capitalization is indicated in rubles, so we translate it into dollars. We take the rate from the Central Bank website - 57.8 rubles. We transfer the data to the table.
Severstal results for 2017
Index
million $
Profit before taxes
Net profit
Interest paid
Interest received
Cash and cash equivalents
Commitments
Free cash flow
Depreciation
Capitalization
P / E is the ratio of market capitalization to earnings. Shows how many years the company will pay for itself. If the result is between 0 and 5, then the company is probably undervalued.
P / BV is the ratio of market capitalization to company equity. Helps to understand how much money the investor will have in case of bankruptcy. If the indicator is more than one, it will not be enough for everyone.
P / FCF is the ratio of market capitalization to free cash flow. Less is better. The multiplier shows how much money the company has left to pay dividends and buy back shares. Use this multiplier for companies paying dividends from free cash flow: MMK, Severstal and NLMK.
FCF - Free Cash Flow. Shows how much money the company has left after paying capital expenditures.
EV is the value of the company, taking into account all sources of financing - from investors and lenders. Decreases in cash, because it can help reduce debt.
EBITDA - shows how much the company earns net money excluding taxes, interest on loans and depreciation.
EV / EBITDA is similar to P / E, but takes into account more data.
Debt / EBITDA - reflects the number of years it takes a company to pay off all of its debt.
ROE is the return on equity as a percentage per annum. Formula: net profit / equity.
We already have a competitor to Severstal. Let's take the data from the survey, update the capitalization and compare. Look in our calculation how we calculated the multipliers.