Nlmk · RUS:NLMK
Nlmk — Q1 2012 Earnings Presentation
27 slides from Nlmk's earnings presentation, Oct 21, 2012
Slide 1: Financial and Production results Q1 2012
NLMK Financial and Production results Q1 2012 US GAAP Consolidated Financial Statements
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: Key Highlights
KEY HIGHLIGHTS FINANCIAL PERFORMANCE EARNINGS PER SHARE o Revenue $3,094 m (+1% q-o-q) 0,12 $/share 0,098 o Operating profit $255 m (+5% q-o-q) 0,10 o EBITDA*: $432 m (+17% q-o-q); 0,08 0,065 o EBITDA margin 14% 0,06 0,038 o Net profit: $173 m (+13% q-o-q) 0,04 0,029 0,026 o Operating cash flow : $5
Slide 4: Production
PRODUCTION Q1 2012 STEEL PRODUCTION GROWTH CRUDE STEEL PRODUCTION o NLMK Group steel output: 3.635 m t (+15% q-o-q) mt 3.635 ~3.800 4 000 3.172 o Novolipetsk: 2.950 m t (+9%) 2.906 2.996 2.895 262 3 500 196 164 160 423 o Long Products division: 0.423 m t (+54%) 3 000 217 276 2 500 472 277 o Foreign
Slide 5: Market
MARKET GRADUAL RECOVERY IN GLOBAL PRODUCTION GLOBAL STEEL MARKET DOMESTIC MARKET DEMAND GROWTH DRIVEN BY NCREASED Q1 2012/ Q4 2011 1,05 SEASONAL ACTIVITY IN CONSTRUCTION AND 1,2 Global steel production: +7% March/January INFRASTRUCTURE 1,00 1 NLMK GROUP INCREASED SALES BY 9% 0,95 MARKET STEEL PRICES
Slide 6: Sales by Region
SALES BY REGION CONSISTENT GROWTH OF SALES: +9% Q-O-Q REVENUE BY REGIONS, Q1 2012 o The wide geographic spread of sales allowed to take Russia advantage of growing demand in key markets… 8% 12% Europe o … and to offset the seasonal demand slowdown on the 34% domestic market North America 9% FOREIGN
Slide 7: Sales Structure
SALES STRUCTURE FINISHED PRODUCT SALES INCREASED +9% Q-O-Q REVENUE BY PRODUCT, Q1 2012 SELLING PRICES DROPPED ON 5% Q-O-Q Others 3% 7% o Falling prices reflect the weak market conditions in the previous 2% Metalware 16% 7% quarter, taking into account the production and supply cycle in 2% Long produ
Slide 8: Production Costs
PRODUCTION COSTS KEY FACTORS CASH COST BY PRODUCTS o Slabs (converter steel, Lipetsk) $395/t (-2,5%), partly $600 $/t 527 531 498 reflecting the negative dynamics on the raw materials $500 480 444 406 405 405 395 market $400 361 299 298 o NLMK Long Products billet $444/t (-11%) due to increased $300
Slide 9: Profitability Summary
PROFITABILITY SUMMARY STEEL AND MINING SEGMETS TRADITIONALLY GENERATE SEGMENTS’ CONTRIBUTION TO EBITDA IN Q1 2012 A MAJOR PART OF EBITDA $500 o Q1 saw a slight deterioration of profitability on the back $m 30 217 of a decrease in steel and iron ore prices q-o-q $400 LONG PRODUCTS AND FOREIGN ROLLED
Slide 10: Debt Position
DEBT POSITION TOTAL DEBT LEVEL $4.47 BN CHANGES IN DEBT PORTFOLIO $5 $ bn +0.1 +0.3 LIQUID ASSETS 1 $0.937 BN $4 1.3 -0.3 1.8 $3 NET DEBT / 12M EBITDA 1.69 $2 3.1 2.7 $1 ST debt LT debt $0 BALANCED STRUCTURE OF THE DEBT AND CASH FUNDS 31 Dec 11 Borrowings Repayment and Exchange rate 31 Mar 12 loan s
Slide 11: Debt Maturity
DEBT MATURITY DEBT MATURITY SCHEDULE ST DEBT MATURITY1 o ST debt $1.8 bn $2,0 $ bn incl. ST part of PXF, SIF external debt and 3 issues of $1,6 0.5 1.90 ruble bonds $1,2 o LT debt $2.69 bn 0.8 $0,8 incl 3 issues of bonds, LT part of PXF and ECA $0,4 0.3 .. as well as SIF’s LT debt 0.3 $0,0 3М 2012 C
Slide 12: Investments
INVESTMENTS INCREASE OF STEEL PRODUCTION INVESTMENT DYNAMICS 100% 2500 o Construction of BF-7 with a capacity of 3.4 m t of pig iron/year is completed. New capacity utilization is 80% 2000 growing 60% 76% 81% 74% 1500 82% o Quality improvement, +30 new grades of steel 87% 40% 1000 o Construction of
Slide 13: Expansion of Iron Ore Production (2012-14)
EXPANSION OF IRON ORE PRODUCTION (2012-14) PELLETIZING PLANT IRON ORE PRODUCTION CAPACITIES Iron ore concentrate Iron ore pellets o Location: Stoilensky (Stary Oskol) 20 7 m t/y m t/y 6 o Capacity: +6 mtpy (2014) 15 4 5 2 o Goal: maintain 100% self-sufficiency in low cost iron ore 4 10 3 6 BENEFICIA
Slide 14: Long Products (2012-13)
LONG PRODUCTS (2012-13) KALUGA MINI-MILL (EAF) CONSTRUCTION STEEL AND LONG PRODUCT CAPACITY o Capacity: 1.55 mtpy of steel 5 m t /y 3,8 o Total investments: c. $1.2 bn o Extended product mix for construction 3 2,2 PROJECT ADVANTAGES 100% o Lower cash coast: (1) closeness to raw material sources 2 fi
Slide 15: Outlook
OUTLOOK PRODUCTION o In Q2 2012 crude steel production will amount to ~ 3.8 m t (+5% q-o-q) o 12M 2012 crude steel production can exceed 15 m t FINANCIAL INDICATORS o Revenue in Q2 will increase by 10% o Q2 2012 EBITDA margin will be in the range of 17%-19% INVESTMENTS o In 2012 total Capex will be
Slide 16: Appendix: Segment Performance
APPENDIX SEGMENT PERFORMANCE 16
Slide 17: Segments Results
SEGMENTS RESULTS COST OF SALES GROWTH AS A RESULT OF INCREASED SALES REVENUE FROM 3rd PARTIES PRODUCTION VOLUMES PARTIALLY OFFSET BY LOWER $3 500 92 36 1 PURCHASED RAW MATERIAL PRICES IN THE $3 000 36 299 259 275 336 PRODUCTION COST STRUCTURE $2 500 255 978 906 989 OPERATING PROFIT INCREASED DRIVEN
Slide 18: Steel Segment
STEEL SEGMENT НЛМК GROWTH OF NEW CAPACITY UTILIZATION SALES REVENUE FROM 3rd PARTIES BY PRODUCT PREDETERMINED PRODUCTION INCREASE 2 000 1 886 1 795 Pig iron $ mln 95 Slabs 213 DECREASE OF REVENUE FROM EXTERNAL CUSTOMERS HRC 1 500 503 484 DRIVEN BY SALES PRICE REDUCTION CRC Galvanized NEGATIVE TREND
Slide 19: Foreign Rolled Products Segment
FOREIGN ROLLED PRODUCTS SEGMENT INCREASED DEMAND BOOSTED STEEL PRODUCTS SALES REVENUE FROM 3rd PARTIES BY PRODUCT 1 200 SALES VOLUME GROWTH AND STEEL OUTPUT $ mln 989 Semi-finished 906 INCREASE 15 1 Plate 270 INDICATORS DIFFER SIGNIFICALLY FROM Q1 2011 800 247 HRC RESULTS AS THE 7 SIF COMPANIES JOIN
Slide 20: Long Products Segment
LONG PRODUCTS SEGMENT НЛМК INCREASE IN REVENUE TO EXTERNAL CUSTOMERS BY SALES REVENUE FROM 3rd PARTIES BY PRODUCT 6% DUE TO SALES VOLUME GROWTH TO EXTERNAL CUSTOMERS 300 $ mln 259 275 7 13 47 STEEL PRODUCTION GROWTH IN Q1 2012 DUE TO EAF 35 Scrap RE-LAUNCH 200 Metalware INCREASE OF SEGMENT PROFITABI
Slide 21: Mining Segment
MINING SEGMENT НЛМК SALES REVENUE FROM 3rd PARTIES BY PRODUCT IRON ORE CONCENTRATE PRODUCTION INCREASED Q1 2012 AGAINST Q1 2011 DUE TO CAPACITY EXPANSION $ mln SALES VOLUME DECREASED TO THE PREVIOUS PERIOD 5 Iron ore concentrate IS DUE TO SEASONAL FACTOR Sinter ore 3 REDUCTION OF SALES REVENUE FROM
Slide 22: Segmental Information
SEGMENTAL INFORMATION 1Q 2012 Intersegmental Foreign rolled Steel Long products Mining All other Totals operations and Consolidated (million USD) products balances Revenue from external customers 1 795 989 275 36 3 094 3 094 Intersegment revenue 423 73 281 776 (776) Gross profit 378 17 54 228 (0) 67
Slide 23: Consolidated Statement of Income
CONSOLIDATED STATEMENT OF INCOME Q1 2012 Q4 2011 Q1 2012/Q4 2011 Q1 2012 Q1 2011 Q1 2012/Q1 2011 (mln USD) +/- % +/- % Sales revenue 3 094 3 053 41 1% 3 094 2 359 735 31% 0% Production cost (2 210) (2 163) (47) 2% (2 210) (1 466) (744) 51% Depreciation and amortization (177) (129) (48) 38% 0% (177)
Slide 24: Consolidated Balance Sheet
CONSOLIDATED BALANCE SHEET as at as at as at as at as at as at as at 31.03.2012 31.12.2011 30.09.2011 30.06.2011 31.03.2011 31.12.2010 31.12.2009 (mln. USD) ASSETS Current assets 5 714 5 504 5 644 4 811 4 438 4 105 3 877 Cash and cash equivalents 926 797 830 911 977 748 1 247 Short-term investments
Slide 25: Consolidated Cash Flow Statement
CONSOLIDATED CASH FLOW STATEMENT Q1 2012 Q4 2011 Q1 2012/Q4 2011 Q1 2012 Q1 2011 Q1 2012/Q1 2011 (mln. USD) +/ - % +/ - % Cash flow from operating activities Net income 174 124 50 41% 174 381 (207) (54%) Adjustments to reconcile net income to net cash provided by operating Depreciation and amortizat
Slide 26: Q1 2012 Cash Flow Bridge
Q1 2012 CASH FLOW BRIDGE CHANGE IN CASH 129 Effect of exchange rate changes -68 Dividends -0,13 FREE CASH FLOW 196 Other financial operations1 +229 Net borrowings -178 Acquisition and construction of PPE -358 CASH FLOW FROM OPERATIONS 502 Income tax -77 Other and non-cash operations2 -5 Change in wo
Slide 27: Investor relations contact
NLMK Investor relations Russia, 115054, Moscow Bakhrushina str, 18, bldg 1 t. +7 495 915 15 75 f. +7 495 915 79 04 www.nlmk.com