Slide 1: Q4'20 IFRS Results
1 Q4’20 IFRS Results 11 February 2021
Slide 2: Disclaimer
DISCLAIMER 2 This document is confidential and has been prepared by NLMK (the the industry in which the Company operates. By their nature, forwarding- “Company”) solely for use at the presentation of the Company and may looking statements involve risks and uncertainties because they relate to not be
Slide 3: Agenda: Market review, strategy update
3 • Market review Grigory • Strategy update Fedorishin CEO • Operating highlights • Q4’20 Financials • Business divisions results
Slide 4: Elevated raw material prices amid strong demand and supply concerns
ELEVATED RAW MATERIAL PRICES AMID STRONG DEMAND AND SUPPLY CONCERNS 4 MANUFACTURING PMI STEEL DEMAND IN KEY REGIONS, Q4’20, YoY Steel demand in Russia, the EU and 60 Activity expansion China posted yoy improvement in 15% 11% 55 4Q’20 while the US was lagging behind 10% 5.2% 5.4% 50 5% Iron ore price
Slide 5: Strong pricing environment in Q4'20
STRONG PRICING ENVIRONMENT IN Q4’20 5 Flat steel prices in Q4’20 increased qoq across HRC PRICES IN KEY REGIONS AND RUSSIAN EXPORT SLAB PRICES, $/t all regions on improved industrial activity and Q4'20 29-Jan-21 % 29-Jan-21 vs. Q4’20 misbalance between demand and supply 49% 34% 11% 35% 28% – In Chin
Slide 6: Utilization rates dynamics
UTILIZATION RATES DYNAMICS 6 CAPACITY UTILIZATION, % Russian assets – NLMK Lipetsk site continues to Q2'20 Q3'20 Q4'20 run at close to full capacity 100% 100% 97% – Long products capacity utilization 92% 92% 84% rates recovered in H2’20 72% 76% 64% – NLMK’s export share has 41% 42% 41% seasonally in
Slide 7: Q4'20 sales were lower on equipment upgrades and inventories build up
Q4’20 SALES WERE LOWER ON EQUIPEMENT UPGRADES AND INVENTORIES BUILD UP 7 Shipments decreased by 5% qoq to SHARE OF EXPORT MARKETS INCREASED SHARE OF FINISHED PRODUCTS DECLINED 4.2 m t -5% -5% – Deliveries of semi-finished products to 4.2 4.4 4.2 4.2 4.4 4.2 NBH increased 89% qoq 0.9 1.4 1.0 – Semis
Slide 8: Strategy 2022 – results snapshot
STRATEGY 2022 – RESULTS SNAPSHOT 8 Effects of Strategy 2022 implementation STRATEGY 2022 EFFECTS IN 2020, $ m pa 320 totaled $261 m in 2020 to 2019 base 270 Contributions from the operational 220 85 efficiency programs reached $176 m, well 261 170 above our annual target of $100 m 176 120 – The mini
Slide 9: Q1'21 Outlook
Q1’21 OUTLOOK 9 MARKETS The US, the EU: Q1’21 should be associated with strong price China: the Lunar New Year in the mid of the quarter coupled with environment with lead times staying well above average. However, increasing number of infections as well as seasonal factors to imposed lockdowns in t
Slide 10: Agenda: Operating highlights, Q4'20 financials
10 • Market review Shamil • Strategy update Kurmashov • Operating CFO highlights • Q4’20 Financials • Business divisions results
Slide 11: Q4'20 financial highlights: multi-year high margins
Q4’20 FINANCIAL HIGHLIGHTS: MULTI-YEAR HIGH MARGINS 11 Revenue increased by 7% qoq to $2.4 bn against the FCF, EBITDA AND MARGIN DYNAMICS backdrop of higher steel prices 0 37% 1,000 EBITDA expanded by 54% qoq to $890 m 0 900 – Widening price spreads 0 27% 26% 800 24% 700 – Production recovery at Sto
Slide 12: Q4'20 profitability gained momentum
Q4’20 PROFITABILITY GAINED MOMENTUM 12 Russian Flat products: EBITDA grew to $466 m EBITDA BY DIVISION, $ m – (+) Increased price spreads of steel to raw materials 1200.0 1195.0 1190.0 1185.0 1180.0 1175.0 1170.0 1165.0 1160.0 1155.0 1150.0 1145.0 1140.0 1135.0 1130.0 1125.0 1120.0 1115.0 1110.0 110
Slide 13: Q4'20 FCF marginally lower on working capital build-up
Q4’20 FCF MARGINALLY LOWER ON WORKING CAPITAL BUILD-UP 13 Q4’20 FCF BRIDGE, $ m Working capital build-up amounted to $256 m 0 100 200 300 400 500 600 700 800 900 1,0 00 – (-) $205 m: increase in receivables due to EBITDA 890 steel prices growth and longer payment periods as a result of higher sales
Slide 14: Strong debt portfolio and liquidity position
STRONG DEBT PORTFOLIO AND LIQUIDITY POSITION 14 DEBT* MATURITY, $ m COST OF DEBT REMAINS LOW, % Total debt grew by 9% qoq to $3.5 bn Working capital lines ECA lines Eurobonds Net debt / 12M EBITDA stood at 0.94x 4.9% 1,029 4.4% – Net debt rose by 28% qoq to $2.5 bn 4.2% 700 3.8% – Liquidity of $1 bn
Slide 15: Agenda: Business divisions results
15 • Market review • Strategy update • Operating highlights • Q4’20 Financials • Business divisions results
Slide 16: Q4'20: Russian flat products
Q4’20: RUSSIAN FLAT PRODUCTS 16 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Deliveries went down by 3% qoq to 3.2 m t as slab stocks at ports increased in Dec’20 -3% +11% 3.28 3.17 1.78 – (-) Semis sales to the market were lower with 3.50 1.60 redistribution of sales towards NBH with 0.41 0.36 0.74 0.1
Slide 17: Q4'20: Russian long products
Q4’20: RUSSIAN LONG PRODUCTS 17 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments went down to 0.7 m t (-15% qoq) -15% -2% – (-) Lower output due to routine repairs and upgrades of rolling equipment 0,80 0.45 0.45 0,09 0,68 0.12 – (-) High base of Q3’20 sales with lower than usual 0.12 0.07 0.03 in
Slide 18: Q4'20: Mining
Q4’20: MINING 18 SHIPMENTS (m t) AND REVENUE ($ bn) Deliveries were up 17% qoq to 4.8 m t due to the recovery of concentrate output after the +17% +28% incident in Sep’20 4.82 0.42 4.11 0.14 480 % 460 % 440 % 0.16 40% Revenue increased by 28% qoq to $0.42 bn 420 % 400 % 380 % 0.33 360 % supported by
Slide 19: Q4'20: NLMK USA
Q4’20: NLMK USA 19 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments were relatively flat at 0.37 mt +1% +11% – (+) Higher sales of HRC 0.37 0.37 0.25 0.22 – (-) Low capacity utilization at NLMK Pennsylvania due to a lack of slabs available 0.21 0.11 0.15 for duty-free imports and a strike 0.25 Rev
Slide 20: Q4'20: NLMK Dansteel
Q4’20: NLMK DANSTEEL 20 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments increased by 47% qoq to 0.14 m t +47% +19% – (+) Improved demand 0.14 0.10 – (+) Recognition of earlier sales 0.08 0.10 Revenue went up to $0.1 bn (+19% qoq) 0.14 0.09 following higher sales 0.07 0.10 EBITDA was -$4 m Sales v
Slide 21: Q4'20: NBH
Q4’20: NBH 21 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments grew by 19% qoq to 0.6 m t amid recovering demand from the automotive sector +19% +29% 0.55 Revenue increased to $0.39 bn (+29% qoq) due to 0.46 0.39 higher steel product supplies and prices growth 0.30 0.41 EBITDA was -$28 m 0.33 0.25
Slide 22: Appendix
22 Appendix
Slide 23: Q4'20: NLMK output, shipments, slab cash costs
Q4’20: NLMK OUTPUT, SHIPMENTS, SLAB CASH COSTS 23 STEEL PRODUCTION, m t GROUP SHIPMENTS TO EXTERNAL CUSTOMERS BY SEGMENT, m t qoq: +1% Q4'19 Q3'20 Q4'20 qoq: -15% Q4'19 Q3'20 Q4'20 yoy: +3% yoy: +3% qoq: +4% 3.50 4.50 3.86 yoy: 0% 2.44 3.00 4.00 2.97 2.50 3.50 qoq: -15% qoq: +11% qoq: -10% qoq: +19%
Slide 24: Sales geography and product mix without NBH
SALES GEOGRAPHY AND PRODUCT MIX WITHOUT NBH 24 STEEL PRODUCT SALES BY REGION, m t SALES STRUCTURE BY PRODUCT, m t 4.44 5 4.44 4.22 4.17 4.22 5 4.17 5 5 Others 0.30 1.00 0.55 4 1.53 4 0.56 1.47 Commercial products 0.57 1.51 4 M. East* 4 0.73 0.58 3 0.60 3 3 0.56 N.America 3 Semi-finished 2 0.79 0.48
Slide 25: Foreign assets performance
3,5 00 FOREIGN ASSETS PERFORMANCE 1,2 00 25 3,0 00 1,0 00 SLABS SALES FROM THE RUSSIAN FLAT PRODUCTS DIVISION, k t NBH ROLLED PRODUCTS SALES, k t 2,5 00 800 2,0 00 QoQ QoQ 518 10 549 1,497 10 Total +19% 600 1,314 Total -6% 5 461 65 328 1,229 CRC 1,5 00 102 79 CRC +91% 146 Dansteel & 74 140 NLMK Dans
Slide 26: 2020 sales expanded despite market challenges
2020 SALES EXPANDED DESPITE MARKET CHALLENGES 26 Shipments increased by 3% yoy to SHARE OF EXPORT MARKETS INCREASED SHARE OF FINISHED PRODUCTS DECLINED 17.5 m t +3% +3% – Sales in Russia were almost flat yoy 17.6 17.1 17.5 17.6 17.1 17.5 – Semis sales to third parties increased 4.4 3.9 +25% 4.9 by 2
Slide 27: 2020: EBITDA and FCF
2020: EBITDA AND FCF 27 2020 FCF BRIDGE, $ m EBITDA BY DIVISION, $ m 3,589 4000.0 3991.5 3983.0 3974.5 3966.0 3957.5 3949.0 3940.5 3932.0 3923.5 3915.0 3906.5 3898.0 3889.5 3881.0 3872.5 3864.0 3855.5 3847.0 3838.5 3830.0 3821.5 3813.0 3804.5 3796.0 3787.5 3779.0 3770.5 0 100 200 300 400 500 600 700
Slide 28: Company IR contacts
COMPANY IR CONTACTS 28 Dmitriy Kolomytsyn, CFA Director, Corporate Finance, IR 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 nlmkonair nlmk_group nlmk group