7 December 2006
9M 2006 NLMK Group Consolidated Financial Results under US GAAP
OJSC Novolipetsk Steel (“NLMK”, “the Company”), the LSE listed leading Russian steel producer, today announced its consolidated US GAAP results for the first nine months ended 30 September, 2006.
Strong 9M 2006 financial results
- Sales revenues amounted to USD 4 358.5 million (+29.6% YoY)
- Cash flows from operating activities were USD 1 029.5 million
- EBITDA* amounted to USD 1 829.4 million (EBITDA margin 42%)
- Net profit was USD 1 684.7 million (+ 61.1% YoY)
- Cash and cash equivalents USD 1 342.4 million as of 30 September, 2006
M&A and investment activities. The Company continued to actively manage its asset portfolio following its M&A strategy and internal restructuring plan approved in Q1 2006:
- Acquisition of VIZ-Stal, the second-largest electrical steel manufacturer in Russia. VIZ-Stal is consolidated in NLMK’s financial statements since August 14, 2006.
- Disposal of iron ore producer, KMA Ruda, for USD 302.5 mln in September 2006. Proceeds from the disposal are to be invested in the development of the Company’s key iron ore asset, Stoilensky GOK.
Agreement to create a joint venture with Duferco Group. The joint venture includes one steel making plant and five steel rolling facilities with total finished steel output of 4.5 million tonnes in 2006 as well as a network of steel service centres. NLMK is to acquire its 50% interest in the joint venture for approximately USD 805 million in cash. Transaction is expected to close by the end of 2006.
Interim dividends. The EGM held on 29 September, 2006 approved a dividend payment in respect of the first six months of 2006 of RUR 1.5 per ordinary share (1 GDS = 10 ordinary shares) recommended by the Board of Directors. NLMK transferred funds for dividend payments on Global Depositary Shares (GDSs) to the depositary bank on 23 November 2006.
Corporate developments. In September 2006 the Board of Directors has approved the key parameters of the 2nd phase of the Technical Upgrade Program (2007 – 2011) with total planned investments of USD 4.4 bn over 5 years. Key strategic goal of the 2nd phase of the Program is balanced development of all business segments across the value chain.
The program entails in particular:
- Increasing annual crude steel production by 40% to 12.4 million tonnes
- Maintaining self-sufficiency in major raw materials to support the projected increase in steel production
- Increasing production of finished flat steel products pursuing strategic acquisition opportunities in the core markets and through modernization of existing production facilities
Key financials for nine months ended 30 September, 2006