Nlmk · RUS:NLMK
Nlmk — Q3 2021 Earnings Presentation
25 slides from Nlmk's earnings presentation, Oct 21, 2021
Slide 1: Q3'21 IFRS Results
1 Q3’21 IFRS Results 21 October 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: Market review, operating highlights, strategy update
3 • Market review Grigory • Operating highlights Fedorishin CEO • Strategy update • Q3’21 Financials • Business divisions results
Slide 4: Raw material prices – roller coaster ride in Q3'21
RAW MATERIAL PRICES – ROLLER COASTER RIDE IN Q3’21 4 The pace of economic expansion in MANUFACTURING PMI STEEL DEMAND IN KEY REGIONS, Q3’21, QoQ developed markets decelerated in 65 Activity Sep’21. Manufacturing in emerging expansion 10% 6% 60 markets is close to stagnation 5% 55 0% 50 Steel demand
Slide 5: Mixed price trends in Q3'21 across developed and emerging markets
MIXED PRICE TRENDS IN Q3’21 ACROSS DEVELOPED AND EMERGING MARKETS 5 During Q3’21 regional steel prices exhibited HRC PRICES IN KEY REGIONS AND RUSSIAN EXPORT SLAB PRICES, $/t divergent trends on the back of government Q2'21 Q3'21 % Q3’21 vs. Q2’21 stimulus and policy restrictions 24% 8% 2% -9% -9% –
Slide 6: Lower sales in Q3'21 due to a one-off steel output loss
LOWER SALES IN Q3’21 DUE TO A ONE-OFF STEEL OUTPUT LOSS 6 Output decreased by 15% qoq to 3.9 m t ONE-OFF DECLINE IN STEEL OUTPUT AT THE LIPETSK SITE… … LED TO LOWER SEMIS SALES TO CAPTIVE ASSETS -15% -4% – (-) Incident in the oxygen supply 4.6 4.4 4.3 infrastructure of the steelmaking 3.9 3.9 4.1 pr
Slide 7: Strategy 2022 – results snapshot
STRATEGY 2022 – RESULTS SNAPSHOT 7 Effects of Strategy 2022 implementation STRATEGY 2022 EFFECTS IN 9M’21, $ m pa totaled $248 m in 9M’21 to 2020 base 300 250 Operational efficiency programs 200 129 contributed $119 m driven by Russian Flat, 248 150 Russian Long and Mining divisions 100 50 119 Inves
Slide 8: Q4'21 Outlook
Q4’21 OUTLOOK 8 MARKETS The US: prices are expected to moderate due to anticipated The EU: prices to soften amid sluggish demand from the increase in local supply as well as higher imports automotive sector due to ongoing deficit of semiconductors, while energy costs inflation could limit the downsi
Slide 9: Q3'21 Financials
9 • Market review Shamil • Operating highlights Kurmashov • Strategy update CFO • Q3’21 Financials • Business divisions results
Slide 10: Q3'21 financial highlights: four quarters of sequential growth
Q3’21 FINANCIAL HIGHLIGHTS: FOUR QUARTERS OF SEQUENTIAL GROWTH 10 Revenue increased by 10% qoq to $4.6 bn due to higher FCF, EBITDA AND MARGIN DYNAMICS steel prices 1 EBITDA rose 11% qoq to $2.3 bn on the back of widening 50% 50% 1 2,500 price spreads 41% 37% 2,287 2,000 0 EBITDA margin stood at 50%
Slide 11: EBITDA 11% higher QoQ amid price spreads expansion
EBITDA 11% HIGHER QOQ AMID PRICE SPREADS EXPANSION 11 Russian Flat products: EBITDA softened to $1,154 m EBITDA BY DIVISION, $ m – (-) Decrease in shipments – one-off steel production loss 2,287 2500.0 2494.5 2489.0 2483.5 2478.0 2472.5 2467.0 2461.5 2456.0 2450.5 2445.0 2439.5 2434.0 2428.5 2423.0
Slide 12: Q3'21 further growth of FCF following solid profitability
Q3’21 FURTHER GROWTH OF FCF FOLLOWING SOLID PROFITABILITY 12 Working capital build-up amounted to $451 m Q3’21 FCF BRIDGE, $ m 0 100 200 300 400 500 600 700 800 900 1,0 00 1,1 00 1,2 00 1,3 00 1,4 00 1,5 00 1,6 00 1,7 00 1,8 00 1,9 00 2,0 00 2,1 00 2,2 00 2,3 00 2,4 00 2,5 00 – (-) $223 m – increase
Slide 13: Strong debt portfolio and liquidity position
STRONG DEBT PORTFOLIO AND LIQUIDITY POSITION 13 DEBT* MATURITY, $ m COST OF DEBT REMAINS LOW, % Total debt increased by 20% qoq to $3.4 bn Working capital lines ECA lines Eurobonds Net debt / 12M EBITDA stood at 0.43x 4.9% 1,083 4.4% – Net debt up 40% qoq to $2.7 bn 4.2% 852 – Liquidity was at the $
Slide 14: Business divisions results
14 • Market review • Operating highlights • Strategy update • Q3’21 Financials • Business divisions results
Slide 15: Q3'21: Russian Flat Products
Q3’21: RUSSIAN FLAT PRODUCTS 15 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Steel output decreased by 19% qoq to 2.9 m t due to the incident in the steelmaking infrastructure -15% -6% at NLMK Lipetsk 3.19 2.99 4.00 3.53 Shipments decreased by 15% qoq to 3.0 m t 3.50 2.98 0.91 0.57 3.00 1.14 0.62 0.56 0
Slide 16: Q3'21: Russian Long Products
Q3’21: RUSSIAN LONG PRODUCTS 16 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments decreased to 0.75 m t (-9% qoq) -9% -9% – (-) Export tariffs introduction starting Aug 1, 2021 0.82 0.80 0.78 – (-) Construction activity slowdown 0.75 0.14 0.21 0.18 Revenue went down by 9% qoq to $0.78 bn 0.09 0.08
Slide 17: Q3'21: Mining
Q3’21: MINING 17 SHIPMENTS (m t) AND REVENUE ($ bn) Deliveries decreased by 6% qoq to 4.9 m t due to the incident in the steelmaking infrastructure -6% 100 % +14% at NLMK 5.16 0.78 540 % 4.85 Production, however, rose by 1% qoq to 5.1 m t. 520 % 0.69 80% 500 % 480 % 460 % Higher iron ore requirement
Slide 18: Q3'21: NLMK USA
Q3’21: NLMK USA 18 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments rose to 0.59 m t (+17% qoq) +17% +49% – (+) Strong domestic demand across the board 0.59 1.04 – (+) Government support of infrastructure projects 0.50 Revenue grew by 49% qoq to $1.04 bn 0.33 0.70 0.54 0.30 – (+) Increased prices
Slide 19: Q3'21: NLMK Dansteel
Q3’21: NLMK DANSTEEL 19 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments declined by 20% qoq to 0.13 m t -20% +8% – (-) Scheduled equipment maintenance 0.16 0.16 0.17 – (-) Seasonal demand slowdown 0.13 Revenue increased to $0.17 bn (+8% qoq) – (+) Increased prices 0.16 0.16 0.15 0.13 – (-) Lower
Slide 20: Q3'21: NBH
Q3’21: NBH 20 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments grew by 16% qoq to 0.38 m t following the completion of the first stage of hot strip mill +16% -16% (HSM) upgrade at NLMK La Louvière (Strategy 2022 project) 0.45 0.38 0.355 0.33 Revenue grew by 26% to $0.45 bn 0.27 0.16 0.16 0.25 – (+
Slide 21: Appendix
21 Appendix
Slide 22: Q3'21: NLMK output, shipments, slab cash costs
Q3’21: NLMK OUTPUT, SHIPMENTS, SLAB CASH COSTS 22 STEEL PRODUCTION, m t GROUP SHIPMENTS TO EXTERNAL CUSTOMERS BY SEGMENT, m t Q3'20 Q2'21 Q3'21 qoq: +2% Q3'20 Q2'21 Q3'21 qoq: -15% yoy: -15% yoy: +1% 3.50 qoq: -19% 3.87 5.00 yoy: +0% 2.45 3.00 4.50 qoq: -9% 4.00 2.50 2.88 qoq: +8% 3.50 qoq: +4% yoy:
Slide 23: Sales geography and product mix without NBH
SALES GEOGRAPHY AND PRODUCT MIX WITHOUT NBH 23 STEEL PRODUCT SALES BY REGION, m t SALES STRUCTURE BY PRODUCT, m t 4.44 5 4.44 4.33 5 5 4.33 4.15 5 4.15 Others 1.00 0.49 0.46 4 1.53 4 0.51 1.50 Commercial products 0.41 1.62 4 M. East* 4 0.58 0.62 0.71 3 3 0.56 N.America 3 Semi-finished 0.89 3 0.48 0.
Slide 24: Foreign assets performance
FOREIGN ASSETS PERFORMANCE 1,0 00 24 3,0 00 900 2,5 00 SLABS SALES FROM THE RUSSIAN FLAT PRODUCTS DIVISION, k t NBH ROLLED PRODUCTS SALES, k t 800 2,014 700 QoQ 172 2,0 00 600 QoQ Total -32% 5 461 1,314 507 1,363 Total +16% 500 2 384 1,5 00 102 123 NLMK Dansteel-28% Dansteel 74 5 330 CRC CRC -53% 40
Slide 25: Company IR contacts
COMPANY IR CONTACTS 25 Dmitriy Kolomytsyn, CFA Director, Corporate Finance, IR Ekaterina Kokareva, CFA Head of 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