Nlmk · RUS:NLMK
Nlmk — Q2 2012 Earnings Presentation
29 slides from Nlmk's earnings presentation, Aug 9, 2012
Slide 1: Q2 and 6M 2012 US GAAP Consolidated Results
NLMK Q2 AND 6M 2012 US GAAP CONSOLIDATED RESULTS Moscow, August 9, 2012
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: Highlights
HIGHLIGHTS Q2 ‘12 FINANCIAL RESULTS EPS 0,05 $/share • Revenue $3,257 m (+5% q-o-q) 0,05 0,04 0,04 • EBITDA $596 m (+38%), 0,03 0,03 0,03 • EBITDA margin 18.3% (+4.3 п.п.) 0,02 • EPS 0,046$ (+61%), net profit margin of 8.5% (+2.9 p.p.) 0,01 • Operating cash flow: $304 m (-39%) 0,00 • Capex: $453 m (
Slide 4: Production
PRODUCTION Q2’12 OUTPUT UP 6% Q/Q CRUDE STEEL PRODUCTION, QUARTERLY • Novolipetsk (Steel segment) 3,130 m t (+6% qoq) 4 million t 3.6 3.8 ~3.8 3,5 3.2 • NLMK Long Steel 0.465 m t (+10% qoq) 3 2.9 • NLMK USA 0.181 m t (-8% qoq) 2,5 2 1,5 CAPACITY UTILIZATION OF 96% 1 0,5 • Lipetsk plant (Steel segmen
Slide 5: Markets
MARKETS DEMAND IN Q2’12 GLOBAL STEEL RUN RATE AND STEEL STOCK LEVELS 85% • Steel consumption in Russia grew 7% qoq 1,2 Index, Jan 2011 = 1 • Demand in the global markets remained weak 1,1 80% 1 75% PRICING ENVIRONMENT 0,9 70% Run rate (RHS) • In Russia prices impacted by weaker RUB/US$ FX rate 0,8 G
Slide 6: Sales Geography
SALES GEOGRAPHY DOMESTIC SALES REVENUE BY REGION $ million • Domestic sales share up 4 pp to 32% 353 3 000 253 337 168 • Revenue from domestic sales up 10% to $1.2 bn 266 353 359 332 361 527 494 458 2 000 364 269 191 878 273 EXPORT SALES 698 740 634 1 000 • Decline in US sales as competition intensi
Slide 7: Sales Structure
SALES STRUCTURE GROWTH IN VALUE ADDED GRADES Q2 ‘12 REVENUE AND SALES BY PRODUCT • Significant growth of construction steel driven by 100% 4% 2% Pig iron seasonally strong demand in Russia 90% 22% 14% Slabs 80% HRC • Growth in electrical steel sales from better demand in 70% 22% Plates domestic and
Slide 8: Production Costs
PRODUCTION COSTS • Change in input mix (growth in pellets consumption COST OF GOODS SOLD DYNAMICS 2600 $ million and imported coal) was impacting costs 2 367 2400 2 210 2 205 • Lower RUB FX rate (c. 75% of costs) and growth in own 2200 2 163 feedstock mitigated costs’ growth 2000 1800 • Decline in s
Slide 9: Profitability
PROFITABILITY Q2’12 EBITDA GREW + 38% Q/Q SEGMENTS CONTRIBUTION TO EBITDA: Q1 VS Q2’12 • Improved product mix and stable production costs 700 $ million +30 650 +152 +21 PROFITABILITY BY SEGMENT +5 600 550 596 • Steel: Growth in domestic sales supported better 500 -44 product mix 450 400 432 • Long:
Slide 10: Cash Flow
CASH FLOW OPERATING CASH FLOW Q2’12 CASH BRIDGE • Decreased due to seasonal stocks build $ million CHANGE IN CASH • Change in product mix -157 FINANCING CASH FLOW FX rate change +31 • Net cash inflow of $110 m Dividends o as the company used its credit lines to repay short -113 term debt and for cor
Slide 11: Debt
DEBT DEBT POSITION CHANGE IN DEBT PORTFOLIO • Gross debt $4.34 bn (-3%) $6 $ billion 0,4 -0,1 -0,4 • Cash and equivalents1 $0.78 bn (-17%) $5 • Net debt / 12M EBITDA 1,90 $4 1,8 2,0 $3 • Balanced debt and cash position $2 RATINGS 2,7 ST Debt LT Debt 2,4 $1 • Investment grade from three rating agenci
Slide 12: Maturity
MATURITY DEBT MATURITY SHORT TERM DEBT MATURITY PROFILE 1 • Short term debt $1.97 bn 2,5 $ billion • Short term part of PXF, SIF obligations, 0.5 2,0 2.375 • Payment of RUB three year notes 1,5 0.8 • Long term debt $2.372 bn 1,0 • RUB three year notes, long term part of PXF, 0.7 0,5 and ECA faciliti
Slide 13: Segments
SEGMENTS 13
Slide 14: Steel Segment (1)
STEEL SEGMENT (1) HIGHER PROFITABILITY FOR THE SEGMENT Q2 SALES AND REVENUE STRUCTURE • EBITDA margin +14% or 6 p.p. up q-o-q, due to 000’t 2 220 $ 1 816 Pig iron 100% million 6% 3% • Improved product mix 90% Slabs 24% • Growth in domestic sales 80% 38% HRC 70% CRC • Lower COGS 60% 17% HDG 50% 15% 2
Slide 15: Steel Segment (2)
STEEL SEGMENT (2) PRODUCTION EXPENSES -5% Q/Q CASH COST AND FOREX RATE DYNAMICS 35 • RUR/US$ FX rate marked decline in production costs, as 450 $/t 411 RUR/$ 395 34 c. 90% costs RUB related 400 33 350 294 32 • Slab cash cost (+4%), on pellets consumption and 300 262 31 250 imported coal increase, an
Slide 16: Long Products Segment (1)
LONG PRODUCTS SEGMENT (1) REVENUE +20% SALES STRUCTURE AND REVENUE IN Q2 2012 • Increase in domestic demand and high capacity utilization ‘000 t 497 $ million 500 28 after start of EAF 77 400 329 Scrap PROFITABILITY + 5 P.P. 300 10 Metalware • Increased sales, better product mix and lower specific 5
Slide 17: Long Products Segment (2)
LONG PRODUCTS SEGMENT (2) PRODUCTION COSTS + 42% CASH COST AND FOREX RATE DYNAMICS • Soared sales to 3-rd parties $/t 35 RUR/$ 500 444 453 34 • Seasonal growth of internal operations (scrap supplies 33 400 32 to Lipetsk site) 300 31 • Billets costs up 2% to $453/t on FX rate and scrap prices 30 200
Slide 18: Mining Segment
MINING SEGMENT DYNAMICS OF IRON ORE CONCENTRATE SALES AND SEGMENT’S REVENUE PRODUCTION COST • Growth driven by higher sales incl. third party sales. This 5,0 million t 25 $/t 21 22 was partially offset by the decline in iron ore price 4,0 20 PRODUCTION COST 0,90 0,48 3,0 15 • Cash costs insignifican
Slide 19: Foreign Rolled Products Segment (1)
FOREIGN ROLLED PRODUCTS SEGMENT (1) PROFITABILITY OF THE SEGMENT SALES STRUCTURE AND REVENUE OF NLMK USA • EBITDA margin about 0% in Q1 and Q2 due to: 600 ‘000 t mln $ million ‘000 t $ million 485 • Active sales strategy on the volatile Europe 387 433 374 102 Others market 400 2 82 19 128 90 • Sligh
Slide 20: Foreign Rolled Products Segment (2)
FOREIGN ROLLED PRODUCTS SEGMENT (2) PRODUCTION COSTS EURO EXCHANGE RATE DYNAMICS • COGS up 4% due to 1,36 $/EUR 1,34 • Marginal slab price increase for EU 1,32 • US$/EUR exchange rate decrease for EU 1,30 1,28 operations 1,26 1,24 • Softer scrap prices for N. American assets 1,22 • N.American assets
Slide 21: Capex & Outlook
CAPEX & OUTLOOK 21
Slide 22: Capex
CAPEX GROWTH IN CRUDE STEEL CAPACITY CAPEX • Blast Furnace #7 / BOF3,4 m tpa project completed. 100% $ million 2500 Utilisation rates are increasing. 80% 2000 • Improved steel quality, +30 new steel grades 76% 74% 60% 81% 82% 1500 • Kaluga mini mill (1,5 m tpa of long steel) expected to 87% 40% 1000
Slide 23: Outlook
OUTLOOK PRODUCTION • Q3 2012 steel output to remain flat at 3.8 m t • 12M 2012: 15 m t, + 25% yoy FINANCIALS • Q3 Revenue down by 5-10% qoq on lower market prices • EBITDA margin to stay at 16-18% as costs are also down • Results will depend on the input material prices and FX rate movements MARKET
Slide 24: Appendices
APPENDICES 24
Slide 25: Segmental Information
SEGMENTAL INFORMATION Q2 2012 Intersegmental Foreign rolled Steel Long products Mining All other Totals operations and Consolidated (million USD) products balances Revenue from external customers 1 816 1 026 329 86 0 3 257 3 257 Intersegment revenue 462 162 274 899 (899) Gross profit 1 168 35 124 51
Slide 26: Quarterly Data: Consolidated Statement of Income
QUARTERLY DATA: CONSOLIDATED STATEMENT OF INCOME Q2 2012 Q1 2012 Q2 2012/Q1 2012 6M 2012 6M 2011 6M 2012/6M 2011 (mln USD) +/- % +/- % Sales revenue 3 257 3 094 163 5% 6 351 5 341 1 010 19% Production cost (2 205) (2 210) 5 (0%) (4 415) (3 250) (1 164) 36% Depreciation and amortization (171) (177) 6
Slide 27: Consolidated Cash Flow Statement
CONSOLIDATED CASH FLOW STATEMENT Q2 2012 Q1 2012 Q2 2012/Q1 2012 6M 2012 6M 2011 6M 2012/6M 2011 (mln. USD) +/ - % +/ - % Cash flow from operating activities Net income 276 174 102 59% 449 972 (523) (54%) Adjustments to reconcile net income to net cash provided by operating Depreciation and amortiza
Slide 28: Consolidated Balance Sheet
CONSOLIDATED BALANCE SHEET as at as at as at as at as at as at as at as at 30.06.2012 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 5 230 5 714 5 504 5 644 4 811 4 438 4 105 3 877 Cash and cash equivalents 769 926 797 830 911 977 748 1
Slide 29: 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.com