Nlmk · RUS:NLMK
Nlmk — Q3 2015 Earnings Presentation
26 slides from Nlmk's earnings presentation, Nov 9, 2015
Slide 1: Q3 and 9M 2015 IFRS Consolidated Financial Results
Q3 AND 9M 2015 IFRS CONSOLIDATED FINANCIAL RESULTS 9 November 2015
Slide 2: Disclaimer
DISCLAIMER This document is confidential and has been prepared by NLMK (the “Company”) solely for use at the 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 document does no
Slide 3: Content
CONTENT 1. Key results 2. Financial highlights 3. Segment results 4. Annex 3
Slide 4: Global Steel Market
GLOBAL STEEL MARKET • 2015E GLOBAL STEEL DEMAND DOWN 1.7% STEEL DEMAND • EXPORTS FROM CHINA UP 27% YTD M tonnes Global China o YTD’15 demand in China down 5.4% 140 0 1,540 -27 1,513 140 0 o YTD’15 output in China down 1.7% 120 0 120 0 • STEEL PRICES COLLAPSED 37% YTD 100 0 100 0 800 800 o Driven by
Slide 5: Global Steel Market Landscape
GLOBAL STEEL MARKET LANDSCAPE Production* (Y-o-Y, %), consumption (Y-o-Y, %) and HRC price (YTD**, %) dynamics in 2015 EU-28 1.3 CIS Production ASU HRC NAFTA -0.4 -20 Production ASU HRC -7.1 -5.1 -10.9 Production ASU HRC -6.9 -2.7 -32 MIDDLE EAST 0.1 CHINA 4 25 Production ASU HRC LATIN AMERICA -20 P
Slide 6: NLMK Q3'15 Sales and Output Growth
NLMK Q3’15 SALES AND OUTPUT GROWTH • Q3’15 SALES: 4.1 MT, +3% QoQ (+15% YoY) SALES STRUCTURE o Improvement in product mix: finished steel sales M tonnes 4.01 4.12 up +7% qoq driven by a seasonal demand recovery in Russia 3.58 Semi- o Sales to Russian market up 14% qoq, share of Russian 1.36 finished
Slide 7: Q3'15 and YTD Financial Highlights
Q3’15 AND YTD FINANCIAL HIGHLIGHTS • 9M’15 HIGHLIGHTS FINANCIAL PERFORMANCE o Revenue: $6,371 m (-21% yoy) $M 3,000 30% o EBITDA: $1,628 m (-7% yoy) 2,500 25% o EBITDA margin: 26% (+4% p.p. yoy) 2,000 20% o Free cash flow*: $886 m (-6% yoy) 1,500 15% o Capex: $445 m (flat yoy) 1,000 10% 500 5% • Q3’
Slide 8: Strategy Update
STRATEGY UPDATE • LEADERSHIP IN OPERATIONAL EFFICIENCY GROWING NUMBER OF EFFICIENCY PROJECTS o Efficiency gains in 9M 2015: +$163 m 1,613 1,623 o Number of efficiency projects up to 1,623 1,460 1,310 o 9M’15 BOF crude steel output up 5% 1,011 o 9M’15 iron ore output up 3% 898 • WORLD CLASS RESOURCE
Slide 9: Q4'15 Outlook
Q4’15 OUTLOOK • MARKET o Global: world steel demand anticipated to decline by 1.7% at the end of 2015. Steel prices to remain under pressure mainly due to tide of exports from China and drop in raw materials prices. o Russia: seasonally slowing demand in construction sector and flood of cheap steel
Slide 10: Content
CONTENT 1. Key results 2. Financial highlights 3. Segment results 4. Annex 10
Slide 11: Transition from US GAAP to IFRS
TRANSITION FROM US GAAP TO IFRS • To comply with Russian federal laws NLMK is required to prepare financial statements under IFRS starting from December 31, 2015 • No material differences between IFRS and US GAAP financial statements H1 2015 H1 2015 $ mln Change Note IFRS US GAAP Revenue 4,355.7 4,3
Slide 12: Q3'15 Profitability
Q3’15 PROFITABILITY • EBITDA UP BY 6% QoQ TO $508M Q3’15 EBITDA BRIDGE BY SEGMENT o Driven by improved product mix, cost optimization program & $M ruble devaluation 77 27 -12 13 • RUSSIAN FLAT PRODUCTS: UPTICK IN PROFITABILITY o (+) Increase of sales volumes 508 o (+) Product mix improvement 403 o (
Slide 13: Q3'15 Cash Flow
Q3’15 CASH FLOW • GROWTH IN NET OPERATING CASH FLOW: $537 M Q3‘15 CASH FLOW BRIDGE, $M (+$154 m or +40% QoQ) EBITDA 508 o Net working capital release due to seasonally high sales Net working capital change 107 • CONSERVATIVE CAPEX Other non-cash operations* 31 o Q3’15 capex: $145 m (-15% qoq; -13% y
Slide 14: Debt Position
DEBT POSITION • NET DEBT REDUCTION 5% QoQ CHANGE IN DEBT IN Q3’15 o Net Debt: $1.07 bn (-5% qoq, -41% yoy) $ BN 2.52 2.44 o Total debt: $2.44 bn (-3% qoq, -26% yoy) 0.58 +0.02 -0.10 0.74 • STRONG LIQUIDITY MAINTAINED o Cash and equivalents*: $1.37 bn (-1% qoq, -8% yoy) 1.94 1.70 • NET DEBT / 12M EBI
Slide 15: Liquidity and Debt Maturity Profile
LIQUIDITY AND DEBT MATURITY PROFILE • STRONG LIQUIDITY POSITION OF $1.37 BN LIQUIDITY AND ST-DEBT PAYMENTS** • COMFORTABLE MATURITY PROFILE $M o ST debt $0.72 bn** incl. revolving credit lines for working capital financing, ruble bonds, short term part of ECA- Committed credit lines 1,124 backed fin
Slide 16: Content
CONTENT 1. Key results 2. Financial highlights 3. Segment results 4. Annex 16
Slide 17: Russian Flat Products
RUSSIAN FLAT PRODUCTS • SALES TO 3RD PARTIES UP BY 5% QoQ SALES & REVENUE FROM 3RD PARTIES o (+) Seasonal increase in demand for flat steel in Russia +5% +2% Other operations* 2.780 m t 2.931 m t $1.201 m $1.223 m Transformer • EXTERNAL REVENUE INCREASE BY 2% QoQ 3% 4% Dynamo 5% 7% 10% 10% o (+) Inc
Slide 18: Russian Long Products
RUSSIAN LONG PRODUCTS • SALES TO 3RD PARTIES DOWN BY 5% QoQ SALES & REVENUE FROM 3RD PARTIES o (-) Slowdown in construction & higher customers stocks -5% -18% o Full utilization rates of NLMK Kaluga 631 k t 602 k t $267 m $220 m 4% 1% 4% 1% o Urals assets output adjusted to lower regional demand 10%
Slide 19: Mining
MINING • SALES VOLUMES UP BY 1% QoQ SALES AND REVENUE o (+) Recognition of Q2’15 sales +1% -14% o (+) Sales to Lipetsk site increased by 9% qoq 4.320 m t 4.352 m t $166 m $143 m 8% 8% 25% Other • REVENUE DECREASED BY 14% QoQ 30% 30% 24% operations* o (+) Increase of sales volumes Iron ore sales to t
Slide 20: Foreign Rolled Products
FOREIGN ROLLED PRODUCTS • SEGMENT SALES DOWN BY 2% QoQ SALES & REVENUE FROM 3RD PARTIES o (-) NLMK Dansteel sales seasonally weaker -22% qoq -2% -6% o (+) NLMK USA sales volumes up by 3% qoq to 0.5 Mt driven by 601 k t 590 k t $382 m $359 m 6% 4% re-stocking / stable demand in US market 14% 15% Othe
Slide 21: Content
CONTENT 1. Key results 2. Financial highlights 3. Segment results 4. Annex 21
Slide 22: Sales Structure
SALES STRUCTURE • Q3’15: SALES GROWTH BY 3% QoQ TO 4.1MT SALES STRUCTURE BY PRODUCT o Finished products sales growth by +7% qoq driven by 3.58 4.01 M tonnes 4.12 Pig iron seasonal recovery on domestic market Slabs 0.86 Billets o Decrease of semi-finished sales by 5% qoq 1.23 1.10 HRC Thick plates o
Slide 23: Sales Geography
SALES GEOGRAPHY • 14% QoQ GROWTH IN SALES TO RUSSIA STEEL PRODUCT SALES BY REGION o Sales to Russia increased due to seasonally better demand and M tonnes 3.58 4.01 4.12 lower competition from imports 0.30 0.40 0.02 0.06 Others 0.13 0.62 0.16 • SALES TO GLOBAL MARKETS: 2.4 m t (-4% qoq) 0.70 0.77 SE
Slide 24: Foreign Assets Performance
FOREIGN ASSETS PERFORMANCE RUSSIAN FLAT PRODUCTS: SLAB SALES NBH ROLLED PRODUCT SALES K tonnes K tonnes 585.77 558 600 1,637 584.60 583.42 1,630 582.25 581.08 QoQ YoY 579.91 QoQ YoY 578.74 577.57 576.40 575.22 574.05 572.88 571.71 570.54 569.37 568.19 567.02 565.85 14 564.68 563.51 562.34 561.17 559
Slide 25: Cash Cost of Slab
CASH COST OF SLAB k rub/t $/t 15 500 12.5 12.4 12.0 12.3 11.6 12 400 11.0 10.8 10.8 10.7 10.7 396 388 348 9 300 310 308 295 238 6 225 200 197 197 3 100 RUB/$ exchange rate 29.39 31.09 31.85 35.96 35.00 36.19 47.42 62.19 52.65 62.98 0 0 2011 2012 2013 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Slab ca
Slide 26: www.nlmk.com
Sergey Takhiev NLMK Investor Relations Russia, 115054, Moscow 18, Bakhrushina str, bldg 1 www.nlmk.com t. +7 495 915 15 75 m.+7 985 760 55 74 st@nlmk.com