Slide 1: Q3'20 IFRS Results
1 Q3’20 IFRS Results 21 October 2020
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 and operating highlights
3 • Market review Grigory • Operating Fedorishin highlights CEO • Q3’20 Financials • Business divisions results
Slide 4: Market overview
MARKET OVERVIEW 4 The sentiment turned positive in MANUFACTURING PMI STEEL DEMAND IN KEY REGIONS, Q3’20, QOQ Q3’20 with policy stimulus as well as 60 Activity expansion pent-up demand driving economic 14.0% 15-20% 55 activity recovery in our main markets 12.0% 50 10.0% Steel demand and production in
Slide 5: Prices rebounded by the end of Q3'20
PRICES REBOUNDED BY THE END OF Q3’20 5 Flat steel prices in Q3’20 improved qoq across HRC PRICES IN KEY REGIONS AND RUSSIAN EXPORT SLAB PRICES, $/t key regions, reflecting uneven pace of recovery Q3'20 16-Oct-20 % 16-Oct-20 vs. Q3’20 due to Covid-19 pandemic 32% 16% 2% 7% 8% – In China, prices were
Slide 6: Utilization rates dynamics
UTILIZATION RATES DYNAMICS 6 CAPACITY UTILIZATION, % Russian assets – NLMK Lipetsk site continues to Q2'20 Q3'20 Sept'20 run at 100% utilization 100% 100% 100% – Long products – capacity 92% 96% 85% utilization rates recovered owing 72% 76% 64% to the delayed demand effect and traditional constructi
Slide 7: Q3'20 sales were supported by demand recovery in Russia
Q3’20 SALES WERE SUPPORTED BY DEMAND RECOVERY IN RUSSIA 7 Shipments increased by 2% qoq to SALES TO THE RUSSIAN MARKET RECOVERED SHARE OF FINISHED PRODUCTS INCREASED 4.4 m t mainly due to uptick in long +2% +2% steel sales 4.4 4.4 4.4 4.4 4.0 4.0 – Sales in Russia grew by 26% qoq 0.9 1.5 1.4 – Finis
Slide 8: Strategy 2022 – results snapshot
STRATEGY 2022 – RESULTS SNAPSHOT 8 Total effect from Strategy 2022 STRATEGY 2022 EFFECTS, $ m pa implementation amounted to $170 m during 9M’20 190 170 Contributions from the operational 150 46 efficiency programs have already exceeded our annual target of $100 m 170 130 124 110 Investment projects
Slide 9: Q4'20 outlook
Q4’20 OUTLOOK 9 MARKETS USA: although demand in Q4’20 is seasonally lower, the current Russia: seasonal slowdown coupled with possible albeit mild speed of capacities’ ramp up and demand recovery could support restrictions due to COVID-19 to weigh on consumption and prices prices into year-end in No
Slide 10: Q3'20 Financials
10 • Market review Shamil • Operating highlights Kurmashov • Q3’20 Financials CFO • Business divisions results
Slide 11: Q3'20 – strong results despite market volatility
Q3’20 – STRONG RESULTS DESPITE MARKET VOLATILITY 11 Revenue recovered by 3% qoq due to higher deliveries and FCF, EBITDA AND MARGIN DYNAMICS improved sales mix 1,000 EBITDA stood at $579 m (-1% qoq): widening spreads and 0 27% 26% 900 ruble depreciation partially offset negative impact of an 25% 24%
Slide 12: Q3'20 profitability remained strong
Q3’20 PROFITABILITY REMAINED STRONG 12 Russian Flat products: EBITDA was $306 m (+1% qoq) EBITDA BY DIVISION, $ m – (-) Lower shipments amid the start of the second phase of 1200.0 1195.0 1190.0 1185.0 1180.0 1175.0 1170.0 1165.0 1160.0 1155.0 1150.0 1145.0 1140.0 1135.0 1130.0 1125.0 1120.0 1115.0
Slide 13: Q3'20 FCF reflects increased capex
Q3’20 FCF REFLECTS INCREASED CAPEX 13 Net operating cash flow rose by 8% qoq to $591 m Q3’20 FCF BRIDGE, $ m due to working capital release 0 100 200 300 400 500 600 700 800 EBITDA 579 Working capital release amounted to $98 m – (-) $37 m: increase in receivables due to Net working capital change +9
Slide 14: Strong debt portfolio and liquidity position
STRONG DEBT PORTFOLIO AND LIQUIDITY POSITION 14 Total debt down 5% qoq to $3.2 bn LIQUIDITY AND SHORT-TERM DEBT, $ m DEBT* MATURITY, $ m following scheduled repayment of working capital lines Working capital lines ECA lines Eurobonds Net debt / 12M EBITDA stood at 0.87x 1,486 Available – Net debt ro
Slide 15: Business divisions results
15 • Market review • Operating highlights • Q3’20 Financials • Business divisions results
Slide 16: Q3'20: Russian flat products
Q3’20: RUSSIAN FLAT PRODUCTS 16 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Deliveries fell by 4% qoq amid the final stage of overhauls at the hot-end operations in Lipetsk -4% -1% – (-) Semis sales contracted by 12% qoq 3.43 3.28 1,62 1,60 4.00 3.50 0.60 0.41 0.24 0.18 – (+) Finished steel sales grew
Slide 17: Q3'20: Russian long products
Q3’20: RUSSIAN LONG PRODUCTS 17 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments surged by 35% qoq supported by noticeable demand rebound in Russia +35% +39% – (+) Active destocking due to the shift in seasonal 0.80 0,45 demand from the construction sector 0.09 0,33 0.12 0.59 0.07 0.03 – (+) Low b
Slide 18: Q3'20: Mining
Q3’20: MINING 18 SHIPMENTS (m t) AND REVENUE ($ bn) Deliveries fell by 16% qoq to 4.1 m t, due to the incident at the conveyor gallery at SGOK (Sep 7) -16% -2% 4.88 0.34 0.33 – Iron ore sales to 3rd parties were down to 0.45 4.11 480 % 0.16 m t 0.02 460 % 440 % 420 % 0.16 0.03 400 % 0.02 380 % 360 %
Slide 19: Q3'20: NLMK USA
Q3’20: NLMK USA 19 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments went up 11% qoq to 0.37 m t following gradual recovery on the US market +11% -6% – (+) Completion of planned routine repairs at 0.37 0.24 0.33 0.22 NLMK Indiana 0.08 0.14 0.21 0.09 – (+) Higher sales of HRC products – (-) Low capa
Slide 20: Q3'20: NLMK Dansteel
Q3’20: NLMK DANSTEEL 20 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments decreased by 21% qoq to 0.1 m t on lower demand due to the COVID-19 pandemic -21% -16% 0.12 0.10 0.08 0.10 Revenue was down 16% qoq to $0.08 bn – (-) Sales decreased qoq 0.12 0.09 0.10 0.08 – (+) Plate prices increased 4% qoq
Slide 21: Q3'20: NBH
Q3’20: NBH 21 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments stood at 0.5 m t (flat qoq) -1% -3% 0.47 0.46 0.31 0.30 Revenue was down 3% qoq due to lower average sales prices 0.32 0.33 0.18 0.19 EBITDA was -$32 m compared to -$14 m 0.14 0.13 0.12 0.11 in Q2’20 due to lower prices for finished pr
Slide 22: Appendix
22 Appendix
Slide 23: Q3'20: NLMK output, shipments, slab cash costs
Q3’20: NLMK OUTPUT, SHIPMENTS, SLAB CASH COSTS 23 STEEL PRODUCTION, m t GROUP SHIPMENTS TO EXTERNAL CUSTOMERS BY SEGMENT, m t qoq: +1% Q3'19 Q2'20 Q3'20 Q3'19 Q2'20 Q3'20 qoq: +0% yoy: +29% yoy: +3% qoq: -9% 3.50 4.50 3.82 yoy: +2% 3.00 2.87 4.00 2.86 2.50 3.50 qoq: +35% qoq: +29% qoq: +2% qoq: -1%
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 4.44 4.44 5 4.35 4.35 5 4.02 5 4.02 5 Others 1.00 4 0.42 1.11 1.33 1.53 4 Commercial products 1.42 4 0.63 M. East* 4 3 0.55 0.58 3 0.61 0.56 0.47 N.America Semi-finished 3 3 0.67 0.48 1.
Slide 25: Foreign assets performance
3,5 00 FOREIGN ASSETS PERFORMANCE 1,2 00 25 3,0 00 1,0 00 SLABS SALES FROM THE RUSSIAN FLAT PRODUCTS DIVISION, k t NBH ROLLED PRODUCTS SALES, k t 2,5 00 800 2,0 00 QoQ QoQ 1,571 600 6 537 Total -1% 1,290 126 1,314 Total -16% 6 468 5 461 80 CRC 1,5 00 119 102 53 CRC -12% 472 Dansteel & 74 NLMK Danste
Slide 26: Company IR contacts
COMPANY IR CONTACTS 26 Dmitriy Kolomytsyn, CFA Director, Corporate Finance, 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