Nlmk · RUS:NLMK
Nlmk — Q4 2012 Earnings Presentation
28 slides from Nlmk's earnings presentation, Mar 26, 2013
Slide 1: Q4 and 12M 2012 US GAAP Consolidated Results
NLMK Q4 AND 12M 2012 US GAAP CONSOLIDATED RESULTS Moscow, 26 March 2013 1
Slide 2: Disclaimer
DISCLAIMER This document is confidential and has been prepared by NLMK (the “Company”) solely for use at the investor 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 documen
Slide 3: International Markets
INTERNATIONAL MARKETS 2012 OVERVIEW STEELMAKING CAPACITIES UTILISATION 100% - 2.6 p.p. – reduction in global • Demand markedly deteriorated in H2 2012 capacities run rate for Q4/Q3 90% • Provoking massive destocking in steel products 80% • Prices dropped and capacity utilization decreased 70% Q4 201
Slide 4: Russian Market
RUSSIAN MARKET 2012 OVERVIEW CRUDE STEEL OUTPUT, CONSUMPTION AND PRICES • Steel consumption went up by 5% m t/month seasonal decline in $/t 900 6,0 demand 800 • Construction market is the largest steel consuming sector – its 5,0 700 share in steel demand expanded by 4 p.p. 600 • NLMK became the larg
Slide 5: Production
PRODUCTION >95% - CAPACITY UTILISATION RATE CRUDE STEEL PRODUCTION BY SEGMENT mt 5 16 14,9 3,8 3,8 3.7 ~3.7 +25% - CRUDE STEEL PRODUCTION IN 2012 TO 14.9 MT 4 3,6 14 12 4 • Novolipetsk: 12.2 million t, +25% y/y 12 3 10 ~+25 % 3 • NLMK Long Products: 1.8 million t, +23% y/y 8 2 6 2 • Foreign Rolled P
Slide 6: Sales Geography
SALES GEOGRAPHY 12M 2012: +18% GROWTH IN SALES TO 15.2 MT REVENUE BY REGION • Driven by the launch of new steel capacity 14 $ million 4 • Intercompany slab sales were up +47% to 2.6 million t 11,728 12,157 12 3,094 3,257 3,002 2,803 1,07 1,31 3 0,30 • Growth in sales to growing Russian market 10 1,0
Slide 7: Sales Structure
SALES STRUCTURE 2012: +22% GROWTH IN FINISHED PRODUCTS SALES SALES AND REVENUE BY PRODUCT IN Q4 100% Revenue from other 1% 9% operations* • +20% - growth in high value added (HVA) to 5.4 million t 1% Pig iron 80% 34% Slabs 24% • - 3 p.p. – decline in share of semi-finished to 30% HRC 60% Q4 2012: DE
Slide 8: Investments in 2012
INVESTMENTS IN 2012 STEEL PRODUCTION GROWTH 5-YEAR CAPEX • BF#7 capacity of 3.4 m tpa fully ramped up and running $m 100% 2500 • Steel quality improvement, +30 new steel grades 80% 2000 87% 60% 76% 81% 82% 1500 QUALITY IMPROVEMENTS FOR THE NICHE PRODUCTS 77% • NLMK DanSteel rolling mill revamping 40
Slide 9: Investments: NLMK Kaluga
INVESTMENTS: NLMK KALUGA MODERN EAF BASED FACILITY WITH TOTAL CAPACITY OF RUSSIAN RE-BAR CONSUMPTION 1.5 MILLION T 2,5 million t/quarter 150% • 2012 re-bar consumption exceeded all-time record of 2008 record level of 2008 140% 2,0 • Construction sector offers strong demand for NLMK-Kaluga 130% produ
Slide 10: Key Highlights
KEY HIGHLIGHTS 12М 2012 FINANCIAL RESULTS REVENUE AND EBITDA MARGIN • Revenue $12,157 m (+4% y/y), $3,4 $ billion 18% 20% 16% 18% 14% • EBITDA $1,900 m (-16%), $3,2 14% 16% $3,0 • EBITDA margin 16% (-3,6 p.p.), 14% $2,8 12% • Operating cash flow : $1,825 m (+1%), 10% $2,6 3,26 3,09 8% • Capex: $1,45
Slide 11: Production Costs and Profit
PRODUCTION COSTS AND PROFIT PRODUCTION COSTS DOWN BY 5% COST OF GOODS SOLD $ million • Impacted by further reduction in raw materials prices $2 500 2 210 2 205 2 095 1 984 • Strict control over operating expenses and overheads $2 000 SLAB CASH COST AT NOVOLIPETSK WENT DOWN BY 6% TO $1 500 $361/T. $1
Slide 12: Cash Flow
CASH FLOW 12M 2012 12M 2012 CASH BRIDGE $ million • Positive impact of working capital release on cash flow from CHANGE IN CASH 154 operations (+ $ 311 million) • 2012 Capex fell 29% down to $1,453 million as key capital FX rate change -109 intensive projected completed Dividends -117 Q4 2012 FREE C
Slide 13: Debt
DEBT DEBT POSITION CHANGE IN DEBT POSITION • Net debt $3.57 billion (+3%) $7 $ billion • Cash and equivalents 1 $1.058 billion (-42%) $6 +0,5 $5 -1,2 +0,1 • Net debt / 12M EBITDA 1.88 $4 2,4 • Gross debt $4.63 billion (-12%) 1,8 $3 DEBT MANAGEMENT $2 • Settlement of current liabilities In Q4 $1 2,9
Slide 14: Maturity
MATURITY DEBT MATURITY LIQUID ASSETS AND ST DEBT MATURITY 1 • Substantial liquidity cushion and portfolio of instruments Committed credit $4 000 $ million for debt restructuring $3 500 lines • Short-term debt $1.82 billion $3 000 o Settlement of RUR notes in Q1 2013, $2 500 2 493 Cash and $2 000 equ
Slide 15: Outlook
OUTLOOK MARKET OVERVIEW • Steel prices somewhat improved in Q1 2013 amid restocking by traders and consumers, and raw materials prices growth PRODUCTION • In Q1 2013: 3.7 million t of steel (flat, q/q) • 12M 2013: 15.5 million t of steel (+4% y/y) FINANCIAL RESULTS • Q1 ‘13 Revenue may decline by ro
Slide 16: Segments
SEGMENTS 16
Slide 17: Segments Contribution – Q4 2012
SEGMENTS CONTRIBUTION – Q4 2012 STEEL SEGMENT SALES REVENUE FROM THIRD PARTIES • Revenue and profit decreased as prices went down $3 500 $ million $3 000 275 329 FOREIGN ROLLED PRODUCTS SEGMENT 314 $2 500 281 • Negative result on the back of decreased sales and lower 989 1 026 759 $2 000 692 prices
Slide 18: Steel Segment - Q4 2012 (1)
STEEL SEGMENT - Q4 2012 (1) STABLE SALES VOLUMES Q4 SALES AND REVENUE STRUCTURE 2 465 thousand t $1 703 million Revenue from other 100% 2% operations* • Growth of slabs shipments to domestic market (large 6% 1% Pig iron 90% diameter pipes producers) and external markets, pig iron 80% Slabs sales dec
Slide 19: Steel Segment - Q4 2012 (2)
STEEL SEGMENT - Q4 2012 (2) SLAB CASH COST REDUCTION CASH COST AND FX RATE DYNAMICS $/t 35 RUR/$ 34 • Raw materials prices went down 450 383 33 400 361 • Optimization measures at Lipetsk site 350 32 300 31 250 205 204 30 200 FX RATE 150 29 100 28 Average RUR/USD rate 50 27 decreased by 3% q/q • Aver
Slide 20: Long Products Segment – Q4 2012
LONG PRODUCTS SEGMENT– Q4 2012 SEASONAL DECLINE IN SALES AND REVENUE SALES AND REVENUE STRUCTURE IN Q4 2012 • Segment’ revenue decline by 11% occurred against a 401 000’ t 281 $ million 100% 2% Revenue from other seasonal decrease in sales volume and prices operations* 80% SEGMENT’S PROFITABILITY 8%
Slide 21: Mining Segment – Q4 2012
MINING SEGMENT– Q4 2012 IRON ORE CONCENTRATE SALES AND PRODUCTION COST SEGMENT’S REVENUE GROWTH • Growth of shipments to the Lipetsk Site 5,0 Mt 25 $/t 21 21 • Increase of concentrate supply to the third parties, incl. 4,0 20 export 1,22 3,0 0,74 15 STABLE HIGH PROFITABILITY 2,0 10 • Concentrate pro
Slide 22: Foreign Rolled Products Segment – Q4 2012
FOREIGN ROLLED PRODUCTS SEGMENT– Q4 2012 SALES VOLUMES DECREASE -11% SALES VOLUMES AND REVENUES NLMK USA • Lower steel prices 000’t mln $ million 000’t $ million 600 • Weak demand in Europe 383 • Reconstruction of rolling mill on NLMK Dansteel 407 357 414 Other 400 16 73 69 15 56 NEGATIVE FINANCIAL
Slide 23: Appendix
APPENDIX 23
Slide 24: Segmental Information
SEGMENTAL INFORMATION Q4 2012 Foreign Intersegmental Long Steel rolled Mining All other Totals operations and Consolidated (million USD) products products balances Revenue from external customers 1 703 692 281 127 0 2 803 2 803 Intersegment revenue 346 88 220 655 (655) Gross profit 376 (60) 56 220 0
Slide 25: Quarterly Data: Consolidated Statement of Income
QUARTERLY DATA: CONSOLIDATED STATEMENT OF INCOME Q4 2012 Q3 2012 Q4 2012/Q3 2012 12M 2012 12M 2011 12M 2012/12M 2011 (mln USD) +/- % +/- % Sales revenue 2 803 3 002 (199) (7%) 12 157 11 729 428 4% Production cost (1 984) (2 095) 111 (5%) (8 494) (7 780) (714) 9% Depreciation and amortization (199) (
Slide 26: Consolidated Cash Flow Statement
CONSOLIDATED CASH FLOW STATEMENT Q4 2012 Q3 2012 Q4 2012/Q3 2012 12M 2012 12M 2011 12M 2012/12M 2011 (mln. USD) +/ - % +/ - % Cash flow from operating activities Net income (5) 166 (172) (103%) 610 1 315 (705) (54%) Adjustments to reconcile net income to net cash provided by operating Depreciation a
Slide 27: Consolidated Balance Sheet
CONSOLIDATED BALANCE SHEET as at as at as at as at as at as at as at as at as at 31.12.2012 30.09.2012 30.06.2012 31.03.2012 31.12.2011 30.09.2011 30.06.2011 31.03.2011 31.12.2010 (mln. USD) ASSETS Current assets 5 469 6 287 5 230 5 714 5 504 5 644 4 811 4 438 4 105 Cash and cash equivalents 951 1 8
Slide 28: Investor relations
NLMK Investor relations Russia, 115054, Moscow Bakhrushina str, 18, bldg 1 t. +7 495 915 15 75 f. +7 495 915 79 04 ir@nlmk.com www.nlmk.ru