NLMK · RUS:NLMK
NLMK — Q1 2018 Earnings Presentation
24 slides from NLMK's earnings presentation, Apr 24, 2018
Slide 1: NLMK Q1 2018 IFRS Results
NLMK Q1 2018 IFRS Results 24 April 2018
Slide 2: Disclaimer
DISCLAIMER This document is confidential and has been prepared by NLMK (the “Company”) solely for use at the presentation of the Company and may not be reproduced, retransmitted or further distributed to any other person or published, in whole or in part, for any other purpose. This document does no
Slide 3: Agenda: Market review, Operating highlights
Grigory Fedorishin Market review President and CEO Operating highlights Q1’18 Financials Business divisions results Annex Q&A 3
Slide 4: Demand growth supported by restocking in China and US
DEMAND GROWTH SUPPORTED BY RESTOCKING IN CHINA AND US Global steel demand continues to recover driven by DM and China Q1’18 demand: the EU and US surprised on the upside %, qoq Strong demand from steel consumers in EU and USA 8,0% 6,5% China: seasonal restocking (Lunar New Year) 6,0% 5,1% Russia: se
Slide 5: Steel prices and spreads increased on demand growth
STEEL PRICES AND SPREADS INCREASED ON DEMAND GROWTH HRC prices increased in home markets Global steel prices were up on solid demand and supply disruptions fears $/t 4Q'17 1Q'18 %, qoq The US prices jumped $160/t on the Section 232 announcement +24% +9% +6% +6% +12% Prices in the EU rose on robust c
Slide 6: Strong Q1 sales despite seasonality
STRONG Q1 SALES DESPITE SEASONALITY 16% yoy growth in sales* driven by strong exports and Russian sales Higher sales* yoy driven by Russian divisions Robust shipments of longs in Russia and semis to the overseas markets Mt %, yoy Intragroup sales were up qoq to benefit from solid demand in EU and US
Slide 7: Operational efficiency gains delivered ahead of schedule
OPERATIONAL EFFICIENCY GAINS DELIVERED AHEAD OF SCHEDULE EBITDA gains from operational efficiency Operational efficiency gains contributed $57 m in 1Q’18, or 44% $m of the annual target 14 0 130 Additional volumes of production (pellets and steel) are the key 12 0 contributors to the gains 10 0 199
Slide 8: Outlook
OUTLOOK MARKETS Steel demand continues to recover underpinned by economic growth across the board Global pricing environment is expected to remain volatile on uncertainty from rising protectionism Russia: seasonally better demand will provide support to domestic prices Europe: continued demand incre
Slide 9: Agenda: Q1'18 Financials
Market review Operating highlights Q1’18 Financials SERGEY KARATAEV Business divisions results Acting CFO Annex Q&A 9
Slide 10: Q1'18 financial highlights: 5-year record profitability
Q1’18 FINANCIAL HIGHLIGHTS: 5-YEAR RECORD PROFITABILITY Profitability reached 5-year record levels on better price recovery and Profitability continued to expand defying seasonality continued cost control 0 EBITDA margin 29% Revenue $2,794 m (+30% yoy, -1% qoq ) 29% 0 0 28% EBITDA: $812 m (+31% yoy,
Slide 11: Margins improved on better pricing environment
MARGINS IMPROVED ON BETTER PRICING ENVIRONMENT EBITDA by divisions Group EBITDA up on higher price spreads despite lower sales qoq $M Q1'17 Russian Flat Products: softer EBITDA on higher raw materials 12 11 11 11 11 11 11 11 11 11 00,0 95,0 90,0 11 85,0 80,0 75,0 11 65,0 70,0 60,0 11 50,0 55,0 45,0
Slide 12: 3x growth in free cash flow
3X GROWTH IN FREE CASH FLOW Q1’18 CF bridge Net operating cash flow was up 55% qoq to $737 m on strong $m 0 100 200 300 400 500 600 700 800 900 1 00 0 profit and working capital release of $58 m: EBITDA 812 (+) Coal prices’ growth and FX movements (A/P increase) (+) Seasonal decline of scrap stock a
Slide 13: Further improvements in liquidity
FURTHER IMPROVEMENTS IN LIQUIDITY Net debt / 12M EBITDA dropped to 0.31x from 0.35x in 4Q’17 Liquidity and short-term debt* $m Total debt rose to $2.37bn (+4% qoq) due to W/C funding Net debt declined to $0.88 bn (-4% qoq) on strong FCF generation Liquidity increased to $1.5 bn (+8% qoq) Available c
Slide 14: Agenda: Business divisions results
Market review Operating highlights Q1’18 Financials Business divisions results Annex Q&A 14
Slide 15: Q1'18: Russian Flat Products
Q1’18: RUSSIAN FLAT PRODUCTS Sales increased by 3% qoq due to intersegmental sales of semis Revenue & steel sales volumes mt $ bn (+) Semis sales up 12% qoq due to sales to captive assets +3 % +5% (+55% qoq) on strong demand in the EU and the US 3,34 2,17 3,23 2,06 (-) Finished steel sales down 9% q
Slide 16: Q1'18: Russian Long Products
Q1’18: RUSSIAN LONG PRODUCTS Sales down 6% qoq Revenue & steel sales volumes (-) Seasonal slowdown in demand for longs in Russia kt -6 % $ bn -18 % 0,82 0,56 (-) Q4 high base due to YE sell off 0,77 0,46 (+) Sales to export markets 0,25 0,14 0,21 0,04 0,07 0,06 0,12 0,11 Revenue decreased by 18% on
Slide 17: Q1'18: Mining
Q1’18: MINING Sales volumes increased by 7% qoq Revenue & sales volumes (+) Concentrate and pellets sales rose 9% and 5% qoq, Kt +7 % $ Bn +36% respectively, on increased consumption at the Lipetsk site 4,23 4,51 0,34 40% 480 % 460 % 440 % 420 % Revenue increased by 36% qoq on higher selling prices
Slide 18: Q1'18: NLMK USA
Q1’18: NLMK USA Sales seasonally increased by 1% qoq Revenue & steel sales volumes (+) HRC & CRC sales drove segment sales up on demand growth kt +1% $m +5% 0,55 0,55 0,43 0,41 Revenue up by 5% qoq (+) Average selling prices increased by 4% qoq on the back of the 0,31 0,32 0,20 0,22 Section 232 reso
Slide 19: Q1'18: NLMK Dansteel
Q1’18: NLMK DANSTEEL Revenue & steel sales volumes Sales jumped 16% qoq driven by increase in demand kt $m +16% +20% 0,14 Revenue up 20% qoq following growth in deliveries 0,12 0,14 0,12 (+) Shipments were up 16% qoq (+) Selling prices increased by 3% qoq 0,14 0,14 0,12 0,11 EBITDA increased by $ 1
Slide 20: Annex
Market review Operating highlights Q1’18 Financials Business divisions results Annex Q&A 20
Slide 21: Q1'18 NLMK sales, output, Lipetsk slabs costs
Q1’18 NLMK SALES, OUTPUT, LIPETSK SLABS COSTS Steel production Group sales to external customers by segments Mt qoq: -14% Mt qoq: +0% 3,00 yoy: +3% yoy: +13% qoq: +0% 4,27 yoy: +0% 2,50 4,50 2,08 4,00 2,00 3,36 qoq: -6% 3,50 3,00 1,50 qoq: +3% qoq: +26% qoq: -1% yoy: yoy: +63% yoy: 0% qoq: +15% yoy:
Slide 22: Sales geography and product mix
SALES GEOGRAPHY AND PRODUCT MIX Steel product sales by region Sales structure by product mt mt 5 4,36 4,15 5 4,36 4,15 3,67 3,67 5 5 0,86 Others 0,45 Commercial 4 4 0,40 0,60 1,40 1,33 0,45 4 4 M. East* 1,32 products 0,74 0,70 0,81 3 3 0,66 3 3 0,65 N.America 1,76 Semi-finished 2 0,94 2 1,24 1,64 0,
Slide 23: Foreign assets performance
FOREIGN ASSETS PERFORMANCE Slabs sales from Russian Flat Division NBH Rolled product sales kt kt QoQ 1 823 599 640 QoQ 1 651 1 712 2 000,0 2 000 152 Total +6% 16 509 11 88 Total +26% 1 800,0 1 800 1 600,0 139 165 91 NLMK 1 600 186 503 -8% 12 CRC -14% 393 78 1 400,0 Dansteel 220 1 400 456 213 1 200,0
Slide 24: Company IR contacts
COMPANY IR CONTACTS Investor relations Address 40, Bolshaya Ordynka Str., Bldg. 3 Moscow, 119017, Russia . IR E-mail Address ir@nlmk.com Phone Number Office: +7 495 504 05 04; Mobile: nlmkonair nlmk_group nlmk group 24