Slide 1: Q2'20 IFRS Results
1 Q2’20 IFRS Results 23 July 2020
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: Market review, operating highlights
3 • Market review Grigory • Operating Fedorishin highlights CEO • Q2’20 Financials • Business divisions results
Slide 4: Market Overview
MARKET OVERVIEW 4 PMI dynamics reflects the timeline of MANUFACTURING PMI STEEL DEMAND IN KEY REGIONS, Q2’20, QoQ lockdowns across the regions: 60 Activity expansion – In China, economic activity quickly 0.0% 55 rebounded already in March -5.0% 50 backed by government stimulus -10.0% 45 – The US and
Slide 5: Divergent Price Trends Across Regions, Spreads Improving
DIVERGENT PRICE TRENDS ACROSS REGIONS, SPREADS IMPROVING 5 Flat steel prices in Q2’20 were lower qoq across HRC PRICES IN KEY REGIONS AND RUSSIAN EXPORT SLAB PRICES, $/t key regions, reflecting weak market demand Q2'20 17-Jul-20 % 17-Jul-20 vs. Q2’20 caused by ongoing Covid-19 pandemic -6% -4% 14% 7
Slide 6: Strategy 2022 – Results Snapshot
STRATEGY 2022 – RESULTS SNAPSHOT 6 During the first half of 2020, total effect STRATEGY 2022 EFFECTS IN H1’20, $ m pa of Strategy 2022 amounted to $113 m 120 Contributions from the operational 115 16 113 110 efficiency programs during H1’20 are 105 close to our annual target of $100 m 100 95 – The m
Slide 7: Investment Projects Status
INVESTMENT PROJECTS STATUS 7 CONTINUOUS CASTING MACHINE #9, NLMK NEW ADDITIONAL BENEFICIATION UNIT, STOILENSKY NLMK: continuous casting machine #9 HOT TESTING HOT TESTING – Productivity to increase by 80% to 1.8 m t pa – Production of unique 'heavy' slabs (up to 400 mm thickness) Stoilensky: new ben
Slide 8: Utilization Rates Dynamics
UTILIZATION RATES DYNAMICS 8 Russian assets CAPACITY UTILIZATION, % – NLMK Lipetsk site continues to run April 2020 June 2020 at 100% utilization 100% 100% – Flat products shipments are being 89% booked for September 65% 66% 60% 58% – Long products – the start of the 50% construction season coupled
Slide 9: Q3'20 Outlook
Q3’20 OUTLOOK 9 MARKETS The EU and the US: steel demand is expected to be below Russia: the ease of restrictions and monetary policy support average seasonal levels as the pace of economic recovery remains combined with state economic initiatives, including preferential slow. Future recovery is cont
Slide 10: Q2'20 Financials
10 • Market review Shamil • Operating highlights Kurmashov • Q2’20 Financials CFO • Business divisions results
Slide 11: Q2'20 Sales Impacted by Declining Demand in Traditional Markets
Q2’20 SALES WERE IMPACTED BY DECLINING DEMAND IN TRADITIONAL MARKETS 11 Shipments were down 3% qoq to SHIPMENTS REDISTRIBUTED TO EXPORT… …WITH INCREASED EXPOSURE TO SEMIS 4.4 m t mainly due to foreign divisions’ -3% -3% weak performance 4.5 4.3 4.5 4.4 4.3 4.4 – Sales outside Russia grew by +43% 0.8
Slide 12: Resilient Q2'20 Results, Strong EBITDA Margin
RESILIENT Q2’20 RESULTS, STRONG EBITDA MARGIN 12 Revenue declined by 12% qoq due to lower sales volumes FCF, EBITDA AND MARGIN DYNAMICS and steel product prices, with an increased share of semi- finished products in the sales mix 1,000 0 26% 25% 27% 900 EBITDA almost flat qoq at $582 m supported by
Slide 13: Q2'20 Profitability Improved Driven by Operational Efficiency Programs
Q2’20 PROFITABILITY IMPROVED DRIVEN BY OPERATIONAL EFFICIENCY PROGRAMS 13 Russian Flat products: EBITDA declined to $303 m EBITDA BY DIVISION, $ m – (-) Shipments decreased by 1% qoq amid weaker demand 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
Slide 14: FCF in Q2'20 Remained Relatively Flat QoQ
FCF IN Q2’20 REMAINED RELATIVELY FLAT QOQ 14 Net operating cash flow decreased by 11% qoq Q2’20 FCF BRIDGE, $ m to $549 m 0 100 200 300 400 500 600 700 EBITDA 582 Working capital release amounted to $57 m – (+) $109 m: decrease in receivables was driven by Net working capital change +57 improved cus
Slide 15: Strong Debt Portfolio and Liquidity Position
STRONG DEBT PORTFOLIO AND LIQUIDITY POSITION 15 Total debt down 3% qoq to $3.36 bn LIQUIDITY AND SHORT-TERM DEBT, $ m DEBT* MATURITY, $ m – Scheduled repayment of working capital lines Working capital lines ECA lines Eurobonds Net debt / 12M EBITDA stood at 0.79x 897 Available credit lines – Net deb
Slide 16: Business Divisions Results
16 • Market review • Operating highlights • Q2’20 Financials • Business divisions results
Slide 17: Q2'20: Russian Flat Products
Q2’20: RUSSIAN FLAT PRODUCTS 17 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments decreased by 1% qoq amid weaker demand for finished products in April and May 3.47 -1% 3.43 4.00 1.79 -9% 1.62 3.50 – (-) Semis sales were redistributed from captive 0.60 3.00 0.97 0.41 0.24 assets to 3rd parties 0.76
Slide 18: Q2'20: Russian Long Products
Q2’20: RUSSIAN LONG PRODUCTS 18 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments increased by 4% qoq due to higher exports of billets and the effect of delayed demand +4% 0.59 0.32 +3% 0.33 0.57 – (+) Billet exports increased almost 4x 0.03 0.06 0.08 0.12 0.06 0.03 0.04 – (+) Delayed demand effect
Slide 19: Q2'20: Mining
Q2’20: MINING 19 SHIPMENTS (m t) AND REVENUE ($ bn) Deliveries increased by 6% qoq to 4.9 m t, following output growth +6% +8% 4.88 0.34 Iron ore sales to 3rd parties increased to 0.45 m t 490 % – 0.31 0.02 470 % 4.60 0.45 0.01 0.02 Revenue grew by 8% qoq to $0,34 bn due to 450 % higher sales and in
Slide 20: Q2'20: NLMK USA
Q2’20: NLMK USA 20 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments went down by 39% qoq due to a sharp demand drop on the US market amid the COVID-19 pandemic 0.54 0.38 – (-) Planned routine repairs were carried out in 0.28 June at the NLMK Indiana plant -39% 0.33 0.17 -37% 0.24 – (-) Lower sales
Slide 21: Q2'20: NLMK Dansteel
Q2’20: NLMK DANSTEEL 21 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments decreased by 26% qoq to 0.12 m t on lower demand due to the COVID-19 pandemic 0.16 0.13 -26% 0.12 -27% 0.10 Revenue was down 27% qoq – (-) Sales decreased qoq 0.16 0.12 0.12 0.09 – (-) Plate prices decreased qoq EBITDA amount
Slide 22: Q2'20: NBH
Q2’20: NBH 22 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments decreased by 23% qoq, mainly as a result of lower strip sales amid the overall 0.60 -23% demand drop on the European market 0.47 0.38 -19% 0.45 0.31 Revenue was down 19% qoq due to lower sales 0.32 0.25 – (-) Shipments decreased qoq 0.
Slide 23: Appendix
23 Appendix
Slide 24: Q2'20: NLMK Output, Shipments, Slab Cash Costs
Q2’20: NLMK OUTPUT, SHIPMENTS, SLAB CASH COSTS 24 STEEL PRODUCTION, m t GROUP SHIPMENTS TO EXTERNAL CUSTOMERS BY SEGMENT, m t qoq: +13% Q2'19 Q1'20 Q2'20 yoy: +34% Q2'19 Q1'20 Q2'20 qoq: -9% yoy: -3% qoq: -5% 3.00 2.83 3.81 yoy: +7% 4.50 2.50 3.14 4.00 3.50 2.00 qoq: +4% qoq: -36% qoq: -23% 3.00 qoq
Slide 25: Sales Geography and Product Mix Without NBH
SALES GEOGRAPHY AND PRODUCT MIX WITHOUT NBH 25 STEEL PRODUCT SALES BY REGION, m t SALES STRUCTURE BY PRODUCT, m t 4.51 4.35 4.51 4.35 5 4.27 5 4.27 5 0.36 5 0.28 Others 1.40 4 0.41 0.53 1.11 1.33 4 4 1.47 Commercial products M. East* 4 0.75 0.83 0.55 3 3 0.47 N.America Semi-finished 3 1.13 1.03 1.75
Slide 26: Foreign Assets Performance
3,5 00 FOREIGN ASSETS PERFORMANCE 1,4 00 26 1,2 00 3,0 00 SLABS SALES FROM THE RUSSIAN FLAT PRODUCTS DIVISION, k t NBH ROLLED PRODUCTS SALES, k t 1,0 00 2,5 00 2,0 00 QoQ 800 QoQ 1,608 1,571 13 618 10 605 Total -23% 1,454 235 126 Total -2% 224 79 77 6 468 600 CRCCRC -37% 1,5 00 472 Dansteel & NLMK D
Slide 27: Company IR Contacts
COMPANY IR CONTACTS 27 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