Q3 2015 and 9m 2015 NLMK Group consolidated financial results under IFRS
Q3 EBITDA increased by 6% qoq to $508 million; EBITDA margin grew to 25%. Free cash flow increased by 100% qoq to $372 million. Net profit for the period increased by 153% qoq to $410 million
9M 2015 highlights:
• Group sales increased by 7% yoy to 12.1 m t
• Revenue was $6.371 billion (-21% yoy) due to lower steel prices
• EBITDA decreased by 7% yoy to $1.628 billion
• Effect from operation efficiency programmes totaled $163 million
• EBITDA margin expanded to 26% (+4 p.p. yoy)
• Capex totalled $445 million (flat yoy)
• Free cash flow decreased by 6% yoy to $886 billion
• Net debt declined by 41% yoy to $1.071 billion
• Net debt/12M EBITDA was 0.5х
• Net profit increased by 32% yoy to $891 million
Q3 2015 highlights:
• Sales increased by 3% qoq to 4.1 m t (+15% yoy)
• Revenue totalled $2,016 million (-6% qoq and -23% yoy)
• EBITDA increased by 6% qoq to $508 million (-25% yoy)
• EBITDA margin was 25% (+3 p.p. qoq and -1 p.p. yoy)
• Capex decreased to $145 million (-15% qoq and -13% yoy)
• Free cash flow doubled qoq to $372 million (+75% yoy)
• Net profit increased to $410 million (+153% qoq and +27% yoy)
• In Q4 2015 on the back of seasonally slowdown in steel demand and weak prices, we anticipate decline in operating and financial results in comparison with Q3 2015.
Comment from NLMK Group CFO Grigory Fedorishin:
“Key factors behind the slump in steel product prices included the decrease in raw material prices and an unprecedented spike in steel exports from China on the back of a significant fall in global demand for steel.
“Supported by the seasonal uptick in buyer activity from key consumers and the slump in steel imports, the situation in the Russian steel product market remained favourable, enabling NLMK to grow its domestic sales by 14% qoq.
“As a result, Q3 sales achieved a record 4.1 m t (+3% qoq); with capacities at the Group’s key assets running at 100%. Despite the slump in prices and lower revenue, EBITDA grew by 6% to $508 million; EBITDA margin increased from 22% to 25%. This became possible due to an improved product mix in favour of HVA products, lower raw material prices, and ongoing cost optimization programmes.
“Gains from these programmes totalled $163 million from the beginning of the year, including $61 million in Q3 2015.
“Higher profitability and release of working capital in the amount of $107 million allowed us to increase free cash flow by 100% qoq to $372 million.
“Net debt at the end of Q3 2015 decreased to $1.07 billion (-5% qoq); Net debt to EBITDA was 0.5х, one of the lowest ratios in the sector.
“NLMK continues to optimize its debt portfolio. In July and November NLMK issued ruble bonds for a total of 10 billion rubles and closed a 4-year USD 400 million loan facility. We have completed another step of NBH debt restructuring. As a result, NLMK guarantees for NBH liabilities decreased by 35% qoq to $336 million.
“NLMK’s Extraordinary General Meeting of Shareholders held in September approved dividend payments for Q2 2015 in the amount of $84 million. which corresponds to an annual dividend yield of 5.4%. In line with the dividend policy that presupposes quarterly dividend payments, NLMK’s Board of Directors will review management’s dividend recommendations for Q3 2015 on 18 November 2015.
“As required by Russian law, starting from 9M 2015 statements NLMK has transitioned to consolidated financial reporting based on International Financial Reporting Standards (IFRS). This transition to new reporting standards had no substantial impact on the Company’s financial performance.”
NLMK is pleased to invite the investment community to a conference call with the management of NLMK:
Monday, 9 November 2015
· 9:00 am – USA (New York)
· 2:00 pm – UK (London)
· 5:00 pm – Russia (Moscow)
To join the conference call, please, dial:
+1212 444 0895 (local access) // 1877 280 2342 (toll free)
United Kingdom Number:
+44(0)20 3427 1901 (local access) // 0800 279 5004 (toll free)
+7495 705 9450 (local access) // 8 800 500 9311 (toll free)
Conference ID: 6382417
* We recommend that participants start dialing in 5-10 minutes in advance to avoid waiting.
It is recommended that participants download the presentation in advance on NLMK’s website www.nlmk.com