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10 I Companies & Markets bne March 2021
off as the end of the pandemic came into sight and began putting in orders for commodities well ahead of the work beginning to ensure supplies.
Metalloinvest began to react to the rapid pick-up in demand in Europe as early as the fourth quarter, when it cut supplies to Asia by more than half (55.9%), switching to the more profitable neighbouring markets in Europe. In 2020, demand in the domestic Russian market also decreased marginally from 52.5% to 48.8% as despite a strong consumer-led rally in the summer, a second wave of infections kicked in at the end of September taking the wind out of the sails of Russia’s recovery.
Overall, the company’s end-of-year iron ore production rose in 2020 despite the coronacrisis to end the year at 40.4mn tonnes, up 0.5% year-on-year, due to an increase in equipment productivity.
Pellet output decreased by 1.8% to 27.6mn tonnes due to reconstruction at Mikhailovsky GOK, one of the company’s biggest production units, in the third quarter, but picked up again in the fourth quarter by 3.1% on a quarter-on-quarter basis. The production of HBI/DRI another large unit in the group, decreased by 0.9% to 7.8mn tonnes in the same period, mostly driven by an overhaul in the third quarter of two out of three HBI units at LGOK, the company’s flagship plant.
Other metallurgical products the group produces did less well.
The production of pig iron at its Ural Steel unit decreased
by 16.3% to 2.3mn tons due to the repair of a blast furnace. But overall crude steel production increased by 2% y/y and reached 5mn tonnes in 2020, lifted in part by faster repairs
in 2019 at Metalloinvest’s OEMK production facility. Pig iron exports fell slightly, down from 1.7mn to 1.2mn tonnes. At the same time, overall pig iron and steel products supplies to the domestic market contributed 32.4% to the company’s total shipments.
While the trading operation results have been released, the financial results for 2020 have not. However, a pick-up in commodity and raw material prices over the fourth quarter are likely to lift the financial results for the year and put them on par with 2020.
In the last financial statements reported by the company for the third quarter of 2020, the company's net profit decreased by half to $752mn. Metalloinvest’s revenue for nine months also fell by 14.2% in the same period to $4.57bn from $5.3bn in the same period a year earlier.
Metalloinvest’s revenue in 2019 decreased by 3.2% to $6.96bn, while net profit increased by 5.1% to $1.73bn, compared with $1.65bn dollars in 2018.
Metalloinvest is the flagship company of USM, a holding company controlled by Alisher Usmanov and his partners.
Usmanov is one of Russia’s most successful businessmen and the first of Russia’s superrich to turn into a full-time phi- lanthropist. Having become a dollar-millionaire over thirty years ago from the production of plastic shopping bags he went on to dabble in trade, then became a financial investor. Usmanov moved into the metals sector in the noughties to build up Metalloinvest through acquiring assets on private market during those boom years. However, he is most famous for buying some 8% of Facebook’s stock well before the com- pany’s eventual IPO, earning him several billions of dollars
in profit. Usmanov is often described as a rare example of a Russian magnate who made his fortune in the open markets and not via government connections or privatisations.
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