Nlmk · RUS:NLMK
Nlmk — Q2 2021 Earnings Presentation
26 slides from Nlmk's earnings presentation, Jul 22, 2021
Slide 1: Q2'21 IFRS Results
1 Q2’21 IFRS Results 22 July 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: Agenda: Market review, operating highlights, strategy update
3 • Market review Grigory • Operating highlights Fedorishin CEO • Strategy update • Q2’21 Financials • Business divisions results
Slide 4: Tight markets keep raw material prices elevated
TIGHT MARKETS KEEP RAW MATERIAL PRICES ELEVATED 4 MANUFACTURING PMI STEEL DEMAND IN KEY REGIONS, Q2’21, QoQ Business activity remained strong in 65 Activity DM, stabilized in Russia and China expansion 60 14.0% 12% 11% 55 12.0% Positive steel demand dynamics across 9% 50 8% 10.0% geographies 45 8.0%
Slide 5: Q2'21 steel prices hit new record highs amid strong demand
Q2’21 STEEL PRICES HIT NEW RECORD HIGHS AMID STRONG DEMAND 5 In Q2’21 steel prices advanced qoq in key HRC PRICES IN KEY REGIONS AND RUSSIAN EXPORT SLAB PRICES, $/t regions supported by sustainable end-user Q1'21 Q2'21 % Q2’21 vs. Q1’21 demand 29% 42% 20% 31% 29% – In China, steel prices rose c.20%
Slide 6: Q2'21 sales increased due to growth in slab exports
Q2’21 SALES INCREASED DUE TO GROWTH IN SLAB EXPORTS 6 Steel output rose 5% qoq to 4.6 m t with POST-UPGRADE RAMP-UP IN STEEL OUTPUT HIGHER SALES AMID RECOVERY IN DEMAND equipment ramp up at NLMK following +5% +11% steelmaking operations modernization 4.4 4.6 4.4 4.3 3.9 3.9 Shipments were up 11% qoq
Slide 7: Strategy 2022 – results snapshot
STRATEGY 2022 – RESULTS SNAPSHOT 7 Effects of Strategy 2022 implementation STRATEGY 2022 EFFECTS IN H1’21, $ m pa totaled $112 m in H1’21 to 2020 base 120 44 100 Operational efficiency programs 80 contributed $68 m, almost evenly split 60 112 between Russia Flat, Russia Long and 40 68 Mining divisio
Slide 8: Investment projects – status update
INVESTMENT PROJECTS – STATUS UPDATE 8 Equipment assembly at new captive power plant was started – Capacity: 300 MW – CAPEX: $420 m CAPTIVE POWER PLANT AT LIPETSK HDGL #5 AT LIPETSK SITE – Effects: growth in captive power generation from 64% to 95%, CO2 emission reduction by 650 kt pa – To be commiss
Slide 9: Q3'21 outlook: markets
Q3’21 OUTLOOK 9 MARKETS The US: prices expected to stay elevated with market deficit to narrow due to imports and new capacity restarts towards 4Q’21 The EU: steel prices in 3Q’21 are expected to stay strong. We expect to see some pullback in August due to seasonal manufacturing deceleration and nor
Slide 10: Q2'21 Financials
10 • Market review Shamil • Operating highlights Kurmashov • Strategy update CFO • Q2’21 Financials • Business divisions results
Slide 11: Q2'21 financial highlights: three quarters of sequential growth
Q2’21 FINANCIAL HIGHLIGHTS: THREE QUARTERS OF SEQUENTIAL GROWTH 11 Revenue increased by 44% qoq to $4.1 bn due to FCF, EBITDA AND MARGIN DYNAMICS production and shipments volume growth combined with improved prices 1 50% 1 2,500 EBITDA surged 76% qoq to $2.1 bn on the back of widening 41% 37% price
Slide 12: Improved profitability in Q2'21 amid higher sales and spreads
IMPROVED PROFITABILITY IN Q2’21 AMID HIGHER SALES AND SPREADS 12 Russian Flat products: EBITDA expanded to $1,393 m EBITDA BY DIVISION, $ m – (+) Increased price spreads 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 2417.5 2412.0 2406.5 2401
Slide 13: Q2'21 further growth of FCF due to improved profitability
Q2’21 FURTHER GROWTH OF FCF DUE TO IMPROVED PROFITABILITY 13 Q2’21 FCF BRIDGE, $ m Working capital build-up amounted to $430 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 – (-) $290 m – receivables growth - higher p
Slide 14: Strong debt portfolio and liquidity position
STRONG DEBT PORTFOLIO AND LIQUIDITY POSITION 14 DEBT* MATURITY, $ m COST OF DEBT REMAINS LOW, % Total debt decreased by 3% qoq to $2.8 bn Working capital lines ECA lines Eurobonds – Scheduled repayment of working 4.9% capital lines 1,096 4.4% 4.2% Liability management transaction in May’21 diversifi
Slide 15: Business divisions results
15 • Market review • Operating highlights • Strategy update • Q2’21 Financials • Business divisions results
Slide 16: Q2'21: Russian Flat Products
Q2’21: RUSSIAN FLAT PRODUCTS 16 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Steel output increased by 7% qoq to 3.6 m t supported by equipment ramp-up after the +18% +51% completion of steelmaking production upgrade 3.19 3.53 at NLMK 4.00 3.50 3.00 0.91 Shipments increased by 18% qoq to 3.5 m t amid 3.
Slide 17: Q2'21: Russian Long Products
Q2’21: RUSSIAN LONG PRODUCTS 17 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments increased to 0.82 m t (+11% qoq) +11% +54% – (+) Strong seasonal demand in Russia 0.82 0.80 – (+) Higher exports ahead of the start of the 0.74 construction season 0.14 0.21 0.10 0.52 0.08 0.09 0.06 0.07 Revenue went
Slide 18: Q2'21: Mining
Q2’21: MINING 18 SHIPMENTS (m t) AND REVENUE ($ bn) Deliveries grew 8% qoq to 5.16 m t due to higher production amid investment projects +8% 80% +31% implementation as well as increased demand 0.69 4.79 5.16 from the Lipetsk site 540 % 520 % 500 % 480 % 0.52 460 % 60% 440 % 420 % 400 % Revenue incre
Slide 19: Q2'21: NLMK USA
Q2’21: NLMK USA 19 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments rose to 0.5 m t (+17% qoq) +17% +73% – (+) Higher sales of both HRC and HVA on 0.50 0.70 the back of strong demand 0.43 – (+) Increase in the supply of NLMK’s slabs 0.30 0.40 0.38 – (+) Recovery in utilization rates 0.29 0.26 Reve
Slide 20: Q2'21: NLMK Dansteel
Q2’21: NLMK DANSTEEL 20 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments declined by 7% qoq to 0.16 m t -7% +9% – (-) Order book optimization and high base effect of Q1’21 0.17 0.16 0.16 0.14 Revenue increased to $0.16 bn (+9% qoq) – (+) Increased prices 0.17 0.16 0.15 0.14 – (-) Declined shipment
Slide 21: Q2'21: NBH
Q2’21: NBH 21 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments decreased by 34% qoq to 0.33 m t due to the modernization of hot strip mill (HSM) at -34% -16% NLMK La Louvière (Strategy 2022 project) 0.50 0.42 HSM’s ramp-up is scheduled for early Q3’21 0.36 0.33 0.32 0.25 Revenue fell by 16% to $0.
Slide 22: Appendix
22 Appendix
Slide 23: Q2'21: NLMK output, shipments, slab cash costs
Q2’21: NLMK OUTPUT, SHIPMENTS, SLAB CASH COSTS 23 STEEL PRODUCTION, m t GROUP SHIPMENTS TO EXTERNAL CUSTOMERS BY SEGMENT, m t qoq: +15% qoq: +5% Q2'20 Q1'21 Q2'21 Q2'20 Q1'21 Q2'21 yoy: -15% yoy: +19% qoq: +7% 4.52 3.00 5.00 yoy: +13% 2.50 2.40 3.56 4.50 qoq: +11% 4.00 2.00 yoy: +38% qoq: +10% 3.50
Slide 24: Sales geography and product mix without NBH
SALES GEOGRAPHY AND PRODUCT MIX WITHOUT NBH 24 STEEL PRODUCT SALES BY REGION, m t SALES STRUCTURE BY PRODUCT, m t 5 4.35 4.33 5 4.35 4.33 3.91 5 3.91 5 Others 0.49 4 1.11 1.33 4 0.42 0.51 4 1.50 Commercial products M. East* 4 0.54 1.53 0.55 0.62 3 3 0.47 0.47 N.America Semi-finished 3 0.89 3 0.81 1.
Slide 25: Foreign assets performance
4,5 00 FOREIGN ASSETS PERFORMANCE 1,2 00 25 4,0 00 1,0 00 3,5 00 SLABS SALES FROM THE RUSSIAN FLAT PRODUCTS DIVISION, k t NBH ROLLED PRODUCTS SALES, k t QoQ 800 3,0 00 Total +18% QoQ 2,5 00 2,014 600 495 Total -34% NLMK Dansteel-10% Dansteel 6 468 8 172 1,571 2,0 00 1,514 53 74 CRC CRC -34% 126 507
Slide 26: Company IR contacts
COMPANY IR CONTACTS 26 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