MAGNESITA REFRATARIOS SA Contagem, Brazil - August 11th, 2017 - MAGNESITA REFRATÁRIOS S.A. ("Magnesita" or "Company") - (BM&FBOVESPA Novo Mercado: MAGG3) - announces today its 2017 second quarter results ("2Q17") and 2017 first half ("1H17") results. Comparisons are made with 2016 second quarter ("2Q16"), 2017 first quarter ("1Q17") and 2016 first half ("1H16") results. Operational and financial information of the Company, unless otherwise stated, were prepared according to International Financial Reporting Standards (IFRS), and should be read together with our Quarterly Financial Information (ITR) filed with the CVM. This Earnings Release presents the results in millions of U.S. Dollars ("US$"). Exchange Rates used to translate foreign currencies into U.S. Dollars are presented on page 15.
FINANCIAL SUMMARYIn $ million, unless otherwise indicated | Quarter | Var. % | |||
2Q17 (a) | 1Q17 (b) | 2Q16 (c) | a/b | a/c | |
Refractories volume ('000 tonnes) | 252.5 | 239.0 | 229.1 | 5.6% | 10.2% |
Net operating revenues | 268.1 | 284.2 | 252.9 | -5.7% | 6.0% |
Gross profit | 89.8 | 94.1 | 87.7 | -4.6% | 2.3% |
Gross margin (%) | 33.5% | 33.1% | 34.7% | 40 bp | -120 bps |
EBIT | -13.7 | 28.4 | 26.6 | -148.3% | -151.5% |
EBIT margin (%) | -5.1% | 10.0% | 10.5% | -1510 bp | -1560 bps |
Adjusted EBIT¹ | 32.6 | 35.3 | 30.7 | -7.7% | 6.1% |
Adjusted EBIT margin (%) | 12.2% | 12.4% | 12.1% | -30 bp | 0 bps |
EBITDA | -0.6 | 40.2 | 37.3 | -101.5% | -101.7% |
EBITDA margin (%) | -0.2% | 14.2% | 14.8% | -1440 bp | -1500 bps |
Adjusted EBITDA¹ | 44.6 | 46.6 | 41.4 | -4.4% | 7.6% |
Adjusted EBITDA margin (%) | 16.6% | 16.4% | 16.4% | 20 bp | 30 bps |
Net income | -52.8 | 16.0 | 22.7 | -430.8% | -333.1% |
Net margin (%) | -19.7% | 5.6% | 9.0% | -2530 bp | -2870 bps |
-1.04 | 0.31 | 0.43 | -432.7% | -341.4% | |
Year | Var. % | |
1H17 (d) | 1H16 (e) | d/e |
491.5 | 460.2 | 6.8% |
552.2 | 486.8 | 13.4% |
183.9 | 166.2 | 10.6% |
33.3% | 34.1% | -80 bps |
14.7 | 56.0 | -73.8% |
2.7% | 11.5% | -880 bps |
67.9 | 59.3 | 14.5% |
12.3% | 12.2% | 10 bps |
39.6 | 77.2 | -48.7% |
7.2% | 15.9% | -870 bps |
91.2 | 80.5 | 13.2% |
16.5% | 16.5% | 0 bps |
-36.8 | 45.4 | -181.2% |
-6.7% | 9.3% | -1600 bps |
-0.73 | 0.87 | -184.1% |
Earnings per share (US$/share)²
¹Excluding other income and expenses
²EPS considers the weighted amount of shares in the period minus shares held in treasury
Earnings Conference Call: Wednesday, August 14th, 2017 In English, with simultaneous translation to Portuguese11am (Brasília time) - Phone: +55 11 2188-0155 (Brazil)*
10am (New York time) - Phone: +1 646 843 6054 (USA)
3pm (London time) - Phone: +44 203 051 6929 (Other countries)
Password: Magnesita
*In the above dial-in, the participant will be directed automatically to the original audio in English. In case you would like to listen to the audio in Portuguese (simultaneous translation), please ask the operator.
Webcast (English): http://cast.comunique-se.com.br/Magnesita/2Q17
Webcast (Portuguese): http://cast.comunique-se.com.br/Magnesita/2T17
Investor Relations Contacts Eduardo Gotilla - Global CFO Daniel Domiciano - IR Manager
Phone: +55 11 3152 3237 / 3241 / 3202
www.magnesita.com/ir
MESSAGE FROM THE MANAGEMENT"During the 1st half of 2017, the overall environment improved in our underlying markets, especially in South America, where steel production rebounded, increasing 11% over 2016. Steel production in Western Europe grew by 2% in the period, while growth in North America (excl. Mexico) was more subdued at 1%, with a stronger 1st quarter than 2nd quarter.
Accordingly, our deliveries to the steel industry expanded by 10%. Our consolidated revenue amounted to US$552 million in the 1H17, a 14% increase over the same period of 2016, driven by higher sales to the steel industry and a substantial rise of DBM sales, reaching record levels for Magnesita.
We continued to pursue strict cost control across our operations. Despite the price increases of both heavy oil in Brazil and certain Chinese sourced raw materials, our EBITDA¹ reached US$91 million in the 1H17, a 13% increase over the 1H16, with a 16.5% margin.
In addition to the positive financial performance in the 1H17, the combination with RHI progressed significantly since the 1st quarter, with approvals from all the necessary antitrust authorities. Additionally, RHI shareholders approved the combination with Magnesita at the AGM held on August 4th, 2017. These events represent major milestones, which place us much closer to the conclusion of the transaction. The next
important step is the listing of RHI Magnesita on the Main Market of the London Stock Exchange, which is expected for the 4Q17. We are confident that we will complete the transaction to create a leading refractory company by year-end."
Octavio Pereira Lopes
Chairman
¹ EBITDA adjusted
Segment | Quarter | Var. % | |||
2Q17 (a) | 1Q17 (b) | 2Q16 (c) | a/b | a/c | |
Refractory Solutions | |||||
Volume ('000 tonnes) | 252.5 | 239.0 | 229.1 | 5.6% | 10.2% |
Revenues (US$ million) | 233.4 | 250.9 | 221.3 | -7.0% | 5.4% |
Industrial Minerals | |||||
Revenues (US$ million) | 16.5 | 16.5 | 16.4 | 0.0% | 0.7% |
Services | |||||
Revenues (US$ million) | 18.1 | 16.7 | 15.1 | 8.4% | 20.4% |
TOTAL | |||||
Revenues (US$ million) | 268.1 | 284.2 | 252.8 | -5.7% | 6.0% |
Year | Var. % | |
1H17 (d) | 1H16 (e) | d/e |
491.5 | 460.2 | 6.8% |
484.3 | 430.1 | 12.6% |
33.1 | 27.3 | 21.0% |
34.9 | 29.2 | 19.3% |
552.2 | 486.7 | 13.5% |
6.0%
5.7%
88.3%
5.6%
6.0%
88.4%
Refractories Minerals Services
REVENUE AND GROSS MARGINRefractory Solutions
Refractory Solutions | Quarter | Var. % | |||
2Q17 (a) | 1Q17 (b) | 2Q16 (c) | a/b | a/c | |
Volume ('000 tonnes) | 252.5 | 239.0 | 229.1 | 5.6% | 10.2% |
Revenues (US$ million) | 233.4 | 250.9 | 221.3 | -7.0% | 5.4% |
Refractory Solutions - Steel | Quarter | Var. % | |||
2Q17 (a) | 1Q17 (b) | 2Q16 (c) | a/b | a/c | |
Volume ('000 tonnes) | 224.2 | 200.4 | 196.8 | 11.9% | 13.9% |
Revenues (US$ million) | 206.6 | 204.5 | 187.0 | 1.0% | 10.5% |
Refractory Solutions - Industrial | Quarter | Var. % | |||
2Q17 (a) | 1Q17 (b) | 2Q16 (c) | a/b | a/c | |
Volume ('000 tonnes) | 28.3 | 38.6 | 32.3 | -26.9% | -12.5% |
Revenues (US$ million) | 26.8 | 46.4 | 34.3 | -42.2% | -21.9% |
Year | Var. % | |
1H17 (d) | 1H16 (e) | d/e |
491.5 | 460.2 | 6.8% |
484.3 | 430.1 | 12.6% |
Year | Var. % | |
1H17 (d) | 1H16 (e) | d/e |
424.6 | 385.0 | 10.3% |
411.1 | 356.1 | 15.4% |
Year | Var. % | |
1H17 (d) | 1H16 (e) | d/e |
66.9 | 75.2 | -11.1% |
73.2 | 74.1 | -1.1% |
Revenue from the refractory segment amounted to US$484.3 million in the 1H17, 12.6% above the previous year, driven by higher deliveries to the steel industry and the currency effect on sales in Brazilian real. Year-over-year, consolidated refractory volume reached 491,500 tonnes, a 6.8% increase versus the previous year, as the 10.3% increase in sales to the steel industry offset the 11.1% decrease on deliveries to the industrial segment.
South America accounted for 38% of revenue from refractory sales in the 1H17, compared to 34% in the previous year. The increase was supported by higher deliveries in the region, especially in Brazil, as well as the effect from the appreciation of the Real against the US Dollar.
Refractory sales per region (in US$)1H17
8%
6%
17%
31%
38%
7%
19%
1H16
8%
32%
34%
South America
Europe
Asia Pacific
North America MEA - CIS
The outperformance of the steel segment versus the industrial segment in the 1H17 led to a slight change on the relative participation of each segment on the consolidated refractory revenue, as follows:
Refractories sales by segment (US$)1H17 1H16
15.1%
17.2%
84.9%
Steel Industrial
82.8%
Magnesita Refratários SA published this content on 14 August 2017 and is solely responsible for the information contained herein.
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