NLMK Group (MICEX and LSE: NLMK) is pleased to announce a 64% sequential growth in free cash flow in Q3 2017, to $533 m, and a 7% growth in EBITDA to $648 m.
Group revenue in Q3 totalled $2.55 bn (flat qoq), driven by higher sales (+1% qoq) and 100% steelmaking capacity utilization rates (+2 p.p. qoq).
Comment from NLMK Group acting CFO Sergey Karataev:
“Q3 sales in our home markets hit an all-time high of 2.88 m t, ensuring high steelmaking capacity utilization rates.
“The Group posted solid financials. The widening of spreads between prices for steel products and raw materials, Strategy 2017 projects, including operational efficiency programmes, were the key drivers for EBITDA growth to $648 m (+7% qoq). EBITDA margin was 25% (+1 p.p. qoq).
“Q3 Strategy 2017 project gains were $105 m vs. $106 m in the previous quarter. 9M structural effect from Strategy 2017 execution was $269 m, or 103% of the 2017 target, including $84 m from operational efficiency programmes.
“Execution of investment projects planned as part of Strategy 2017 continues. Expansion of Stoilensky’s beneficiation capacities, construction of a briquetting plant at NLMK Lipetsk, and a number of other projects will have a positive impact on the 2018 financials.
“Growth of operating cash flow, conservative capex, and efficient working capital management have enabled a 64% qoq increase in free cash flow to an all-time high of $533 m.
“In Q3, NLMK successfully bought back Eurobonds due in 2018 and 2019 for a total of $317 m with a coupon rate of 4.45% and 4.95%, respectively, using proceeds from a new 7-year Eurobond placement for a total of $500 m with a coupon rate of 4.0%.
“Net debt/EBITDA ratio decreased to 0.3х.”