"United Mining and Chemical Company" | News | PJSC UMCC increases production costs

PJSC UMCC increases production costs
PJSC UMCC increases production costs

09.08.2017

PJSC United Mining and Chemical Company reported positive financial results in H1 2017 based on the international financial reporting standards.
The company reported net income at UAH 302.7 mn, net revenue – UAH 1.306 bn, EBITDA – UAH 490.4 mn. Compared with H1 2016, the company saw nearly 16% increase of net revenue, 25% decrease of net income, nearly 7% EBITDA decrease.
PJSC UMCC's net revenue grew thanks to increase of export sales and price growth in the global markets. “Gradual recovery of demand on the global titanium market that has been observed since the end of last year and hard work of the company’s sales department has led to more than double increase of export volumes of ilmenite concentrate by Irshansk Mining and Processing Plant, UMCC’s subsidiary. The subsidiary shipped 414,000 t of products to foreign customers over the reported period, which is comparable to the plant’s annual production capacities,” says UMCC Acting Chairman of the Board Oleksandr Hladushko.
VMMP subsidiary is increasing sales of powder concentrates, including zircon that are in great demand in the world, and reducing the stock of its main products – ilmenite and rutile concentrates, he said.
The interest on the part of foreign companies in UMCC products, warmed up by the recovering market, made it possible to reverse the trend of accumulation of products at warehouses in the first half of the year and allowed to switch to sale of stocks through increase of export shipments. "We can say with confidence that the subsidiaries are increasing shipments of products that have been in stock," says Hladushko.
Recovery of the demand for titanium raw materials in the world demands rapid increase of the company's presence in the international markets. PJSC UMCC therefore has made a strategic decision to increase production of titanium ores, their processing and output. In particular, VMMP subsidiary increased mining by 34.9%, stripping works by 69.6% over H1 2017.
An increase in costs for all these types of work, as well as price growth for energy, 10% increase in salaries of the subsidiary's employees in April led to a 57.30% increase in the production costs of PJSC UMCC products. These factors have led to the decline in net profit and EBITDA in January-June 2017.
“Gradual recovery of the raw materials markets finally allowed us to increase product sales and plan further increase of output,” says Hladushko. “For the first time in the three years of the company’s operation in the titanium market we have invested over UAH 40 mn into renewal of the motor pool of the subsidiaries, as it was outdated and worn out. We will not spare funds or efforts for updating production and renewing the equipment and machinery of the plants in order to be up-to-date in the international markets,” summed up Hladushko.