MMK Reports Significant Production Decline in 2024
Magnitogorsk Iron and Steel Works, a major player in the global steel industry, has reported a significant decline in its production for the year 2024. The company produced 11.19 million metric tons of steel, marking a 13.8% decrease compared to the previous year. This drop in steel production reflects several internal and external challenges faced by MMK during the year, which are outlined in their official statement.
The primary factors contributing to this decline include reduced steel demand in the first half of the year, coupled with extensive repair programs that impacted the production capabilities of both the rolling mill and the blast furnace. Additionally, MMK observed a slowdown in business activity during the latter half of 2024, further hindering overall production performance.
Impact on Pig Iron Production and Sales
In addition to a decrease in steel output, MMK's pig iron production also faced a decline. The company produced 9.49 million metric tons of pig iron in 2024, which is a 4.5% reduction from the previous year. The decrease in pig iron production can be attributed to the repair and maintenance work carried out in the blast furnace department, which affected the company's ability to produce at full capacity.
Sales of metal products across the MMK Group also saw a notable decrease of 9.8%, totaling 10.62 million metric tons. These lower sales figures were primarily caused by the rolling equipment repairs at the start of the year, combined with the overall reduction in market demand and business activity.
Premium products, which are a critical segment of MMK's sales, totaled 4.71 million metric tons in 2024. While this was still a significant volume, it reflects a reduction compared to previous years, driven by the same factors impacting overall production and sales.
Coal Concentrate Production Faces Major Setback
Another key area of concern for MMK in 2024 was its coal concentrate production. The company experienced a 25.7% decrease, with production falling to 2.59 million metric tons. This reduction was due to a combination of factors, including MMK's diminished demand for coal concentrate and challenging mining and geological conditions that affected extraction.
The decreased output of coal concentrate is another indication of the operational difficulties faced by MMK throughout the year. As coal concentrate is a crucial component in steelmaking, this reduction also reflects the broader challenges impacting the company's overall productivity.
Revenue and Profit Trends: Mixed Performance
Despite the declines in production and sales, MMK's revenue for the first nine months of 2024 saw a positive growth trajectory. The company reported an 8.2% increase in revenue, totaling RUB 602.83 billion. However, this growth in revenue did not translate into equally positive results for the company’s profitability.
EBITDA for the first three quarters of 2024 dropped by 8.7%, amounting to RUB 129.7 billion. Additionally, MMK's net profit saw a sharp decline, falling by 20.4% to RUB 67.8 billion. These figures indicate that while MMK managed to generate higher revenues, it faced increased costs and operational inefficiencies, likely tied to the extensive maintenance and repairs across its facilities.
