REG - EN+ Group Intnl PJSC - EN+ GROUP ANNOUNCES 4Q AND FY 2021 TRADING UPDATE

S & S Power SwitchgearAnnouncement

09/02/2022 08:05

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RNS Number : 1367B  EN+ Group Intnl PJSC  09 February 2022

EN+ GROUP ANNOUNCES 4Q AND FY 2021 TRADING UPDATE

Stable operational performance supported by strong aluminium price environment

9 February 2022 - EN+ GROUP IPJSC (the "Company", "En+ Group" or the
"Group") (LSE: ENPL; MOEX: ENPG), the world's largest producer of low-carbon
aluminium and independent hydropower, today announces its operational results
for the twelve month and three month periods ended 31 December 2021.

FY 2021 key highlights 1  (#_edn1) :

·    Aluminium production was broadly unchanged, totalling 3,764 kt (up
0.2% y-o-y).

·    Aluminium sales decreased 0.5% y-o-y to 3,904 kt.

·    The average aluminium realised price 2  (#_edn2) increased 41.4%
y-o-y to USD 2,553 per tonne.

·    The London Metal Exchange (LME) QP(( 3  (#_edn3) )) component
increased 38.9% y-o-y to USD 2,303 per tonne, while realised premiums
increased 70.4% y-o-y to USD 250 per tonne.

·    Sales of value added products(( 4  (#_edn4) )) ( )(VAP) increased
18.1% y-o-y to 2,034 kt, representing 52% of aluminium sales compared to 44%
in 2020.

·    Electricity production 5  (#_edn5) by the Group's Power segment grew
by 10.0% y-o-y to 90.4 TWh.

·    Hydropower5 output from the Group's Power segment increased 12.1%
y-o-y to 77.7 TWh. Bratsk HPP and Krasnoyarsk HPP generated record power
volumes in their entire history.

·    A worldwide increase in inflation had a negative impact on
manufacturing companies throughout the year, raw materials prices
significantly increased. The Company has also gradually increased wages of the
employees in the Siberian and other regions throughout the year. These factors
may impact the Group's operating and capital expenditures.

 

                                            FY21   FY20   chg,%   4Q'21  4Q'20  chg,%
 Power segment
 Electricity production(5)         TWh      90.4   82.2   10.0 %  24.7   23.5   5.1%
 Heat production                   mn Gcal  28.5   26.9   5.9%    9.3    9.6    (3.1%)
 Metals segment
 Aluminium production              kt       3,764  3,755  0.2%    953    950    0.3%
 Aluminium sales                   kt       3,904  3,926  (0.5%)  989    1,028  (3.8%)
 VAP sales(4)                      kt       2,034  1,722  18.1%   527    483    9.1%
 Aluminium avg. realised price(2)  USD/t    2,553  1,805  41.4%   2,927  1,940  50.9%

 

Vladimir Kiriukhin, CEO of En+ Group, commented:

"2021 was a successful year for En+ Group in terms of our operational
performance. In both segments we saw an increase in demand for our products
and this was naturally reflected in pricing. The London Metal Exchange
aluminium price again reached levels above USD 3,000/tonne in 4Q 2021.
Furthermore, despite the challenging conditions relating to the ongoing
COVID-19 pandemic, our performance was supported by our large-scale
modernisation programme and the dedicated work of the Сompany's employees.

"In 2021, the Group continued to progress all of our social projects,
including the housing programme for our Power segment employees, and launched
several new initiatives. In particular, I would like to highlight our new
educational projects and scholarship programme. Thanks to these initiatives we
are building up a strong pool of future talent for both our Company and the
broader industry.

"In addition, En+ Group raised salaries for its employees in Irkutsk,
Krasnoyarsk, Nizhny Novgorod and other regions gradually throughout the year.
We aim to ensure that salaries at our enterprises are at least 15% higher than
the regional average, and this is aligned to the Company's ESG goal of
reducing inequality.

"One of the key events of the past year was the completion of the construction
of the world's most advanced low-carbon aluminium production plant, the
Taishet Aluminium Smelter (TaAZ) in Siberia. This development further
demonstrates, our Metals segment's commitment to the decarbonisation of its
operations and consumer supply chains. The En+ Group Power segment has also
made significant progress in line with the Group's decarbonisation strategy.
The "New Energy" HPP modernisation continued apace and five new EV charging
stations were opened in the Irkutsk region."

 

POWER SEGMENT

 

                                                                                       FY21   FY20   chg,%       4Q'21  4Q'20       chg,%
 Production volumes5
 Total Electricity Production                                          TWh             90.4   82.2   10.0%       24.7   23.5        5.1%
   HPPs, incl.                                                         TWh             77.7   69.3   12.1%       20.3   19.5        4.1%
     Angara cascade 6  (#_edn6)                                        TWh             53.0   47.3   12.1%       13.8   13.1        5.3%
     Yenisei cascade 7  (#_edn7)                                       TWh             24.7   22.0   12.3%       6.4    6.4         -
   CHPs                                                                TWh             12.7   12.9   (1.6%)      4.4    4.1         7.3%
   Abakan SPP                                                          GWh             6.1    5.5    10.9%       0.7    0.6         16.7%
 Heat                                                                  mn Gcal         28.5   26.9   5.9%        9.3    9.6         (3.1%)

 Market prices

 Average electricity spot prices(( 8  (#_edn8) )):
    1(st) price zone                                                   RUB/MWh         1,406  1,211  16.1%       1,404  1,201       16.9%
    2(nd) price zone:                                                  RUB/MWh         934    872    7.1%        1,006  823         22.2%
          Irkutsk region                                               RUB/MWh         807    793    1.8%        811    705         15.0%

                                                                       RUB/MWh
          Krasnoyarsk region                                                    857    789    8.6%         955   713         33.9%

Power segment operations update

The Group's power plants generated 90.4 TWh of electricity (up 10.0% y-o-y) in
2021 and 24.7 TWh (up 5.1% y-o-y) in 4Q 2021.

The Group's hydro power output increased to 77.7 TWh (up 12.1% y-o-y) in 2021
and to 20.3 TWh (up 4.1% y-o-y) in 4Q 2021.

The Group's Angara cascade HPPs (Irkutsk, Bratsk and Ust-Ilimsk HPPs)
increased power generation to 53.0 TWh (up 12.1% y-o-y) in 2021 and to 13.8
TWh (up 5.3% y-o-y) in 4Q 2021. This was due to increased water reserves in
Lake Baikal and the Bratsk reservoir due to high water levels in the HPPs'
reservoirs of the Angara cascade. Water levels in Lake Baikal reached 457.23
metres in 2021 vs. 457.12 metres in 2020. Water levels in the Bratsk reservoir
reached 402.03 metres in 2021 vs. 400.60 metres in 2020.

The total power generation at the Group's Krasnoyarsk HPP increased to 24.7
TWh (up 12.3% y- o-y) in 2021. In 4Q 2021, power generation at the
Krasnoyarsk HPP was 6.4 TWh (flat y- o- y). The increase in 2021 was a
result of a more intensive state regulated drawdown in the Krasnoyarsk
reservoir due to high water reserves which resulted from abnormally high water
inflows in 2Q 2021. The maximum mark of the headwater level of the Krasnoyarsk
reservoir was 242.60 metres (1.5 meters higher than last year).

In 2021, the Abakan Solar Power Plant generated 6.1 GWh (up 10.9% y-o-y) and
0.7 GWh (up 16.7% y-o-y) in 4Q 2021, due to a higher number of sunny days
during the reporting period.

Power generation at the Group's CHPs decreased to 12.7 TWh (down 1.6% y-o-y)
in 2021, mainly due to increased generation by the Angara cascade HPPs in
2021. At the same time, in 4Q 2021, power generation increased to 4.4 TWh (up
7.3% y-o-y) due to a 7.0% increase in power consumption in the Irkutsk energy
system compared to the same period last year, partially reflecting more
limited COVID-19 restrictions on industrial enterprises.

Heat generation at the Group's CHPs increased to 28.5 mn Gcal (up 5.9% y-o-y)
reflecting weather conditions - the average temperature during 2021 was
1.7⁰С lower than during the last year. In 4Q 2021, heat generation
decreased to 9.3 TWh (down 3.1% y-o-y) due to weather conditions - the average
temperature during the reporting period was 1.3⁰С higher than during the
same period last year.

"New Energy" HPP modernisation programme

Upgraded equipment at the Group's Bratsk, Ust-Ilimsk, Irkutsk and Krasnoyarsk
HPPs supported an increase in hydropower production of 467.5 GWh in 4Q 2021
(2,104.4 GWh in 2021), helping to prevent greenhouse gas emissions by
approximately 542 thousand tonnes of CO(2)e, due to the partial replacement of
prior thermal power generation volumes (2,439 thousand tonnes of CO(2)e in
2021).

Russian energy market update 9  (#_edn9)

·    In 2021, according to the System Operator of the United Power System,
power production in the Russian United Power System increased 6.3% y-o-y and
amounted to 1,131.2 TWh. Consumption increased 5.4% y-o-y to 1,107.1 TWh.

·    Power production in the integrated energy systems in the first price
zone 10  (#_edn10)  increased by 7.0% and accounted for 851.7 TWh in 2021.
Consumption increased 5.9% y-o-y to 830.2 TWh.

·    In 2021, the Siberian integrated energy system (the Company's key
region of operations) produced 215.9 TWh of electricity (up 4.3% y-o-y).
Output from HPPs in Siberia increased by 8.5% y-o-y, while thermal power
plants and captive power stations decreased their electricity production by
1.4% y-o-y.

·    In 2021, electricity consumption in the Siberian integrated energy
system increased 3.8% y-o-y and accounted for 217.3 TWh.

·    In 2021, the Group generated approximately 41.1% of the total
electricity produced in the Siberian integrated energy system. The Group's
HPPs generated approximately 60.8% of the total electricity produced by
hydropower stations in the Siberian integrated energy system.

·    In 2021, the average electricity spot price on the day-ahead market
in the second price zone, increased 7.1% y-o-y to 934 RUB/MWh. This dynamic
was driven by fewer low price periods compared to 2020, when there were
transmission constraints on the transit between East and West Siberia on the
back of high HPP generation. These factors predominantly affected prices in 4Q
2021. In addition, higher coal prices, which affected the CHPs' price bids
levels on the market, and change in market demand structures contributed to
the price increases. In 2021, average electricity spot prices in the Irkutsk
region increased 1.8% y-o-y to 807 RUB/MWh and in Krasnoyarsk region
increased 8.6% y-o-y to 857 RUB/MWh. The lower prices in Irkutsk region
reflected ongoing transmission constraints on the transit between East and
West Siberia in the period from October to December.

Projected water inflows into reservoirs

The Hydrometeorological Centre of Russia forecasts water inflows into the main
reservoirs of En+ Group's generating assets in 1Q 2022, as follows:

·    Useful water inflows into Lake Baikal are expected to be 300-500
cubic metres per second or 81-135% of normal levels. In 4Q 2021, the water
inflow was 850 cubic metres per second, or 305% of normal levels, compared to
567 cubic metres per second (203% of normal levels) in 4Q 2020 (up 50%
y-o-y). In 2021, the water inflow was 2,602 cubic metres per second, or 136%
of normal levels, compared to 1,898 cubic metres per second (99% of normal
levels) in 2020 (up 37% y-o-y).

·    Lateral inflows into the Bratsk Reservoir are expected to be 195-225
cubic metres per second or 109-126% of normal levels. In 4Q 2021, water
inflows were measured at 615 cubic metres per second or 125% of normal level,
compared to 755 cubic metres per second or 153% of normal levels in 4Q 2020
(down 19% y-o-y). In 2021, water inflows were measured at 1,370 cubic metres
per second or 132% of normal level, compared to 1,089 cubic metres per second
or 105% of normal levels in 2020 (up 26% y-o-y).

·    The lateral water inflows into the Krasnoyarsk Reservoir are expected
to be 220-280 cubic metres per second or 86-109% of normal levels. In 4Q
2021, the lateral inflows were measured at 529 cubic metres per second or 84%
of normal level, compared to 762 cubic metres per second or 121% of normal
levels in 4Q 2020 (down 30% y-o-y). In 2021, the water inflow was
1,697 cubic metres per second, or 126% of normal levels, compared to 1,550
cubic metres per second, or 115% of normal levels, in 2020 (up 9% y-o-y).

 

METALS SEGMENT

 

                                          FY21                FY20    chg,%   4Q'21           4Q'20  chg,%
 Production volumes
 Aluminium                         kt     3,764               3,755   0.2%    953             950    0.3%
   Utilisation rate                %      99%                 96%     3pp     99%             97%    2pp
 Alumina                           kt            8,304        8,182   1.5%    2,138           2,142  (0.2%)
 Bauxite                           kt     15,031              14,838  1.3%    3,602           3,539  1.8%
 Nepheline                         kt     4,390               4,599   (4.6%)       1,108      1,121  (1.2%)
 Sales volumes
 Aluminium, incl.                  kt     3,904               3,926   (0.5%)  989             1,028  (3.8%)
      VAP sales 11  (#_edn11)      kt     2,034               1,722   18.1%   527             483    9.1%
      Share of VAP sales           %      52%                 44%     8pp     53%             47%    6pp
 Average prices
 Aluminium average realised price  USD/t  2,553               1,805   41.4%   2,927           1,940  50.9%
 LME QP component                  USD/t  2,303               1,658   38.9%   2,622           1,781  47.2%
 Realised premium                  USD/t  250                 147     70.4%   305             159    91.8%

Metals segment operations update

Aluminium

In 2021, aluminium production remained stable at 3,764 thousand tonnes (up
0.2% y-o-y), with Siberian smelters accounting for 93% of the Group's total
aluminium output. In 4Q 2021, aluminium production remained broadly unchanged
at 953 thousand tonnes (up 0.3% y-o-y).

In 2021, aluminium sales decreased 0.5% y-o-y to 3,904 thousand tonnes. In
4Q 2021, sales were 989 thousand tonnes (down 3.8% y-o-y).

In line with its strategy, the Group continued to grow the share of VAPs in
total sales. During 2021 VAP sales increased 18.1% to 2,034 thousand tonnes,
with VAP share in total sales mix now at 52%, compared to 44% in 2020, which
was then affected by market volatility caused by the COVID-19 pandemic. In 4Q
2021, VAP sales increased to 527 thousand tonnes (up 9.1% compared to 4Q
2020), and the share of VAP sales as a proportion of total sales was 53% (up
by 6 percentage points y-o-y).

In 2021, European destinations continued to dominate the sales mix at 41%, but
were down 4 percentage points y-o-y, while sales to Asia remained stable at
24% of total sales (down 1 percentage point y-o-y). The shift during the
period was towards the Russian & CIS regions and America with the former
growing to a share of 27% (up 4 percentage points y-o-y) and the latter up to
8% (up 1 percentage points y-o-y) respectively.

In 2021, the average aluminium realised price 12  (#_edn12) increased 41.4%
y-o-y to USD 2,553 per tonne. The increase was driven both by the LME QP(( 13 
(#_edn13) )) component (up 38.9% y-o-y to USD 2,303 per tonne) and the
average realised premium component (up 70.4% y-o-y to USD 250 per tonne). In
4Q 2021, the average aluminium realised price increased 50.9% y- o- y to
USD 2,927 per tonne. The increase was driven both by the LME QP component (up
47.2% y-o-y to USD 2,622 per tonne) and the average realised premium component
(up 91.8% y-o-y to USD 305 per tonne). The increase of the realised premium
during 2021 is attributed to the improved commodity component, as well as the
growth of the VAP share in product sales mix (52% in 2021 vs 44% in 2020) and
a positive shift in VAP upcharge. Together these factors reflect the
significant changes in global market conditions.

Alumina

In 2021, alumina production increased 1.5% y-o-y to 8,304 thousand tonnes. In
4Q 2021, it remained broadly unchanged at 2,138 thousand tonnes (down 0.2%).
The Group's operations in Russia accounted for 37% in 2021 and 36% in 4Q 2021
of the total output.

Bauxite and nepheline ore

In 2021, bauxite output increased 1.3% y-o-y to 15,031 thousand tonnes. In 4Q
2021, bauxite production increased 1.8% y-o-y to 3,602 thousand tonnes.

In 2021, nepheline production decreased 4.6% y-o-y to 4,390 thousand tonnes.
In 4Q 2021 it decreased 1.2% y-o-y to 1,108 thousand tonnes.

Aluminium market overview 14  (#_edn14)

•  In 4Q 2021, the LME aluminium price again reached levels above USD
3,000/tonne. This was a result of soaring power prices in Europe, due to
significantly increased natural gas prices and low renewable power supply
levels. A number of European aluminium smelters also faced significant
smelting cost pressures and negative margins. As a result, more than 720
thousand tonnes of EU aluminium smelting capacity was fully or partly closed
from the beginning of 4Q 2021. This has triggered a strong growth in EU
aluminium ingot premiums, which rose by 30% on average over November -
December 2021 period.

•  In 2021, global primary aluminium demand grew by 8.8% y-o-y to 69.0
million tonnes. In the Rest of the World ex-China (RoW) demand increased by
12.8% to 28.6 million tonnes, while demand in China increased by 6.1% to 40.4
million tonnes. Demand in China, which was suppressed from August to November
due to power rationing policy, strongly rebounded in December amid a
normalization of power supply.

•  The worldwide supply of primary aluminium continued to grow in 2021,
increasing by 3.9% y-o-y to 67.8 million tonnes. At the same time, RoW
production increased by only 2.8% to 28.9 million tonnes. High gas prices in
Europe have caused significant disruption to the aluminium smelting production
due to smelters' negative cash margins. Nine European smelters with 1.46 Mtpa
capacity executed or announced c. 720 ktpa of operating aluminium capacity
cuts starting from 4Q 2021, equivalent to c.14.4% of total installed aluminium
capacity in the region (c. 5.02 Mtpa).

•  Supply growth in China slowed significantly from 7.6% in 9M 2021 to 4.7%
for FY 2021 and the resulting supply in China was 39.0 million tonnes. Despite
an easing of power supply tightness in China and a drop in domestic thermal
coal prices, significant smelting capacity cuts are still in place due to
power constraints in some provinces and dual control for decarbonisation
targets. As a result, Chinese primary aluminium production has fallen steadily
since July 2021.

•  Chinese unwrought aluminium and semis exports continued to recover
during 4Q 2021 and numbers for the full year 2021 demonstrate strong growth of
15.6% y-o-y to 5.6 million tonnes. This result was largely due to attractive
export arbitrage and rising overseas demand. At the same time Chinese import
of unwrought aluminium and products, which include primary metal and
unwrought, alloyed aluminium was 3.2 million tonnes in 2021, a new record high
and up from 2.7 million tonnes in 2020.

•  During 2021 aluminium inventories generally declined, starting from
March, with total LME stocks staying below 0.9 million tonnes at the end of
the year. Metal held outside of LME warehouses (off-warrant reported stocks)
fell to 447 thousand tonnes by the end of November 2021.

•  Regional premiums remained strong and elevated with the Midwest Al
premium reaching levels above 32.0 cents/lb and EU DU premium - above USD
360/tonne. This growth occurred against the backdrop of sellers raising
quotations on expectations that the premium will continue to climb in line
with strong physical demand, and in anticipation of possible further smelting
disruptions in Europe following a significant rise in the cost of power.

•  Overall, the global market recorded a deficit of 1.2 million tonnes in
2021 compared to the 1.9 million tonnes of surplus observed during the same
period of 2020.

 

 

***

For further information, please visit https://www.enplusgroup.com
(https://www.enplusgroup.com)  or contact:

 

 For media:                                                             For investors:

 Tel: +7 (495) 642 7937                                                 Tel: +7 (495) 642 7937

 Email: press-center@enplus.ru (mailto:press-center@enplus.ru)          Email: ir@enplus.ru (mailto:ir@enplus.ru)

 Hudson Sandler LLP

 Andrew Leach

 Tel: +44 (0) 20 7796 4133

 Email: ENplus@hudsonsandler.com (mailto:ENplus@hudsonsandler.com)

 

All announcements and press releases published by the Company are available on
its website under the link: https://www.enplusgroup.com/en/investors/
(https://www.enplusgroup.com/en/investors/)

***

This announcement may include statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements may be
identified by the use of forward-looking terminology, including the terms
"believes", "estimates", "plans", "projects", "anticipates", "expects",
"intends", "may", "will" or "should" or, in each case, their negative or other
variations or comparable terminology, or by discussions of strategy, plans,
objectives, goals, future events or intentions. Forward-looking statements may
and often do differ materially from actual results. Any forward-looking
statements reflect the Company's current view with respect to future events
and are subject to risks relating to future events and other risks,
uncertainties and assumptions relating to the Group's business, results of
operations, financial position, liquidity, prospects, growth or strategies.
Forward-looking statements speak only as of the date they are made.

The industry and market data contained in this announcement come from official
or third-party sources. Third-party industry publications and studies
generally state that the data contained therein have been obtained from
sources believed to be reliable, but that there is no guarantee of the
accuracy or completeness of such data. While the Company reasonably believes
that each of these publications, studies and surveys has been prepared by a
reputable source, the Company have not independently verified the data
contained therein.

 

 1  (#_ednref1) Operating results are based on preliminary data and may be
updated in FY 2021 financial results. Please note, the text of this
announcement may contain inaccuracies in the calculation of proportions,
percentages, and amounts when rounding estimated values.

(( 2  (#_ednref2) )) The realised price includes three components: LME
component, commodity premium and VAP upcharge.

 3  (#_ednref3)  QP (quotation period) prices differ from the real time LME
quotes due to a time lag between LME quotes and sales recognition and due to
contract formula specialty.

(( 4  (#_ednref4) )) VAP includes alloyed ingots, slabs, billets, wire rod and
special purity aluminium.

 5  (#_ednref5)  Excluding Onda HPP (installed capacity 0.08 GW), located in
the European part of the Russian Federation, leased to RUSAL since October
2014.

 6  (#_ednref6) Includes Irkutsk, Bratsk, Ust-Ilimsk HPPs.

(( 7  (#_ednref7) )) Krasnoyarsk HPP.

 8  (#_ednref8) Day ahead market prices, data from ATS and Association "NP
Market Council". The prices average electricity spot prices are calculated as
an average of the prices reported in the Monthly Day Ahead Prices Overview by
Association "NP Market Council".

 9  (#_ednref9)  According to the FY 2021 Report prepared by the System
Operator of the Unified Power System of the Russian Federation
(https://so-ups.ru/ (https://so-ups.ru/) ).

 10  (#_ednref10) Comprises the Central, Central Volga, Urals, North-West and
South energy systems.

 11  (#_ednref11) VAP includes alloyed ingots, slabs, billets, wire rod,
wheels, high and special purity aluminium.

 12  (#_ednref12) The realised price includes three components: LME component,
commodity premium and VAP upcharge.

 13  (#_ednref13)  QP (quotation period) prices differs from the real time
LME quotes due to a time lag between LME quotes and sales recognition and due
to contract formula specialty.

 14  (#_ednref14) Unless otherwise stated, data for the "Market overview"
section is sourced from Bloomberg, CRU, CNIA, IAI and Antaike.

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