Nlmk · RUS:NLMK
Nlmk — Q1 2017 Earnings Presentation
25 slides from Nlmk's earnings presentation, Apr 27, 2017
Slide 1: NLMK Q1 2017 IFRS Results
NLMK Q1 2017 IFRS Results 27 April 2017
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: Market review, Operating highlights
OLEG BAGRIN Market review President and Operating highlights Chief Executive Officer Q1’17 Financials Business divisions results Annex Q&A 3
Slide 4: Steel market trends
STEEL MARKET TRENDS 2017 steel demand outlook revised upwards on better fundamentals 2017 steel demand outlook revised upwards %, yoy Protectionism and capacity reductions lead to lower pressure from Chinese exports 3.5% 3.0% 3.0% Steel prices stabilized supported by higher raw material prices 1.8%
Slide 5: NLMK home markets trends
NLMK HOME MARKETS TRENDS Steel prices in NLMK’s home markets outperformed Prices in NLMK’s home markets vs. export benchmarks $/t EU and USA steel demand continued to recover driven by improved 70 0 694 USA macro and lean inventories 65 0 605 EU 583 60 0 581 Russia Seasonality and high inventories w
Slide 6: Q1'17 operating highlights
Q1’17 OPERATING HIGHLIGHTS Shipments grew by 1% qoq driven by stronger exports and sales in Shipments growth driven by European and US divisions European and US divisions Mt 3.6 3.7 Product mix improved with 7% qoq growth in finished steel sales 1.3 1.4 +11% sales to export markets Strong growth acr
Slide 7: Continuing delivery on strategic targets
CONTINUING DELIVERY ON STRATEGIC TARGETS Stoilensky pelletizing plant ramp-up is on track Pelletizer output ramp-up is on track Mt Output growth a bit slower than expected but steady 3 April average utilization is ~90% with maximum daily output of 20 kt ~5,5 Strategy 2017 projects contributed $57 m
Slide 8: Outlook
OUTLOOK MARKETS Pricing environment globally to be somewhat weaker due to supply response and softer commodity prices Russia: demand weaker than normal due to high stocks, normalization is expected later in the year Europe: continued demand recovery on the back of supportive regional fundamentals US
Slide 9: Q1'17 Financials
Market review Operating highlights Q1’17 Financials SERGEY KARATAEV Business divisions results Acting Chief Financial Officer Annex Q&A 9
Slide 10: Financial highlights
FINANCIAL HIGHLIGHTS Margin expansion continues into Q1’17 Strong operational results and Strategy 2017 effects contributed to EBITDA margin high profitability in Q1’17 0 29% Revenue $2,156 m (+10% qoq) 0 EBITDA: $618 m (+19% qoq) 0 EBITDA margin: 29% (+3 pp qoq) 0 0 18% Profitability growth and mod
Slide 11: Margin expansion continues
MARGIN EXPANSION CONTINUES Russian Flat Products division EBITDA growth on the EBITDA by divisions back of strong sales $M Better prices 618 Q4'16 Improved product mix 518 Q1'17 369 Seasonality eroded margins in long products 326 We expect margins to recover in Q2 167 95 39 18 35 74 2 16 Record prof
Slide 12: Q1'17 free cash flow generation
Q1’17 FREE CASH FLOW GENERATION Q1’17 CF bridge Net operating cash flow decreased by 21% qoq to $310 m: $M 0 100 200 300 400 500 600 700 Accounts receivable growth from the low base of Q4 EBITDA 618 Inventories repricing on stronger RUB and higher raw material prices Inventories build-up at ports an
Slide 13: Debt portfolio optimization
DEBT PORTFOLIO OPTIMIZATION Net debt / 12M EBITDA: 0.4x Liquidity and short-term debt* $M Net debt: $0.94 bn (+23% qoq) Total debt: $2.34 bn (+3% qoq) 1,302 Available credit lines Active debt management in Q1’17: maturity extended Average maturity: 3.5 years (vs 2.6 yeas as of Q1’16) 447 851 1,480 1
Slide 14: Business divisions results
Market review Operating highlights Q1 Financials Business divisions results Q&A 14
Slide 15: Russian flat products
RUSSIAN FLAT PRODUCTS INCREASE OF SALES BY 6% qoq Sales & revenue from 3rd parties (+) Increase of slab shipments to captive by 27% qoq 1 935 -4% 1 853 1 091 +7% 1 170 (-) 3rd party sales down by 4% qoq due to seasonally low demand in Russia 9% 10% 26% 35% 21% 29% REVENUE WAS UP BY 20% qoq ON STRONG
Slide 16: Russian long products
RUSSIAN LONG PRODUCTS LONG STEEL SALES DOWN BY 30% qoq Sales & revenue from 3rd parties (-) Seasonally low demand in Russia and high inventories in supply chain -30% -19% 678 473 271 220 (-) Lower export sales 21% 13% 17% 10% EXTERNAL REVENUE DOWN BY 27% qoq 12% 14% 10% 11% (-) Lower 3rd parties rev
Slide 17: Mining
MINING SALES VOLUMES DOWN BY 5% qoq Sales & Revenue Iron ore sales almost entirely captive 4 345 -5% 4 127 175 +36% 238 Pellets sales of 1.1 mt 100 % 22% 23% REVENUE UP BY 36% qoq 80% (+) Uptick in sales prices 60% 100% 95% (+) Pellets added to product portfolio 40% 78% 71% 20% EBITDA MARGIN EXPANDE
Slide 18: NLMK USA
NLMK USA Q1’17 SALES JUMPED BY 33% qoq Sales & Revenue (+) Better underlying demand in USA 421 +33% 562 282 +41% 399 (+) Strong demand from key clients - construction and pipe-makers 51% 40% 47% REVENUE GREW 41% qoq ON STRONG VOLUMES AND PRICES 55% EBITDA WENT UP BY 90% 49% 58% 51% 44% MARGINS EXPAN
Slide 19: NLMK DanSteel
NLMK DANSTEEL SEGMENT SALES UP BY 10% qoq Sales & Revenue from 3rd parties (+) Better demand from shipbuilding and infrastructure sectors 121 +10% 134 90 +18% 106 (+) Lower pressure from imports 18% 18% REVENUE UP BY 18% qoq 100% 100% (+) Increase in sales volumes 82% 82% (+) Plate prices recovery S
Slide 20: Annex
Market review Operating highlights Q1’17 Financials Business divisions results Annex Q&A 20
Slide 21: Q1'17 NLMK sales and output
Q1’17 NLMK SALES AND OUTPUT Steel production Group sales structure qoq: 0% yoy: +4% qoq: +1% 4.13 4.15 3.64 3.68 4.50 yoy: +5% 1.37 4.00 3.35 1.24 1.32 3.50 3.00 qoq: -16% 1.45 2.50 qoq: +53% 2.00 yoy: -2% qoq: +14% 1.19 0.92 1.32 1.18 yoy: +15% 0.77 yoy: +20% 1.50 0.62 1.31 0.65 1.00 0.50 0.18 0.06
Slide 22: Sales geography and product mix
SALES GEOGRAPHY AND PRODUCT MIX Steel product sales by region Sales structure by product Mt Mt 5 4.13 4.13 3.64 3.68 3.64 3.68 0.76 4 0.41 Others Semi- 0.58 1.24 4 0.60 1.56 1.35 finished 0.46 0.64 3 0.40 N.America 0.47 0.70 3 Ordinary 2 0.82 0.77 M. East* 1.19 1.32 2 0.91 1.45 products EU 1.55 HVA
Slide 23: Foreign assets performance
FOREIGN ASSETS PERFORMANCE Slabs sales from Russian Flat Division NBH Rolled product sales Kt Kt 1,625 1,605 1,651 QoQ 599 QoQ 526 1,800.0 518 1,80 0 628.91 627.66 626.40 625.14 623.88 622.62 621.37 620.11 618.85 617.59 16 616.34 615.08 613.82 612.56 611.30 610.05 608.79 607.53 606.27 605.01 603.76
Slide 24: Costs
COSTS Cost of goods sold was up by 9% to $1.404 m NLMK Group cost of sales Key drivers: growth in sales volumes Stronger commodity prices Depreciation, 10% 10% 5% Iron ore, 5% -4% Coke & coal, 32% Other exp. & changes Consolidated cash cost of t of slabs was up by 15% qoq 12% 32% in inventories, -4%
Slide 25: Company IR contacts
COMPANY IR CONTACTS Sergey Takhiev Valentina Bogomolova Investor Relations Investor Relations Address 40, Bolshaya Ordynka Str., Bldg. 3 Moscow, 119017, Russia . IR E-mail Address st@nlmk.com Phone Number Office: +7 495 504 05 04; Mobile: +7 985 760 55 74 nlmkonair nlmk_group nlmk group 25