Nlmk · RUS:NLMK
Nlmk — FY2011 Earnings Presentation
35 slides from Nlmk's earnings presentation, Oct 21, 2012
Slide 1: Q4 and 12M Financial and Production results US GAAP
NLMK Q4 and 12M Financial and Production results US GAAP Consolidated Financial Statements
Slide 2: Disclaimer
DISCLAIMER This document is confidential and has been prepared by NLMK (the “Company”) solely for use at the investor 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 documen
Slide 3: Key Highlights
KEY HIGHLIGHTS 2011: FINANCIAL PERFORMANCE EARNINGS PER SHARE 0,12 o Revenue: $11,729 m (+40% y-o-y) $/share 0,098 0,10 0,086 o EBITDA: $2,282 m (-3%); EBITDA margin 19.5% 0,077 0,08 o Net income: $1,358 m (+8%) 0,065 0,06 o Operating cash flow: $1,805 m (+26%) 0,038 0,04 0,026 0,025 o H1 2011 divid
Slide 4: Production
PRODUCTION 2011 CRUDE STEEL OUTPUT TOTALLED 12 M Т, +4% Y-O-Y CRUDE STEEL PRODUCTION 16,0 mt 15,0 11.6 12.0 Q4 STEEL PRODUCTION GROWTH 14,0 10.7 10.5 0,7 12,0 0,6 o NLMK Group steel output: 3.2 m t (+10% q-o-q) 0,1 0,4 10,0 1,7 1,5 o Novolipetsk: 2.7 m t (+12%) 1,9 1,8 8,0 o Long Products division:
Slide 5: 2011 Sales
2011 SALES RECORD SALES IN 2011 FOLLOWING THE EXPANSION OF THE GROUP SALES AND REVENUE BY REGION IN 2011 o Annual sales volumes increased Revenue – Sales – outer 8% inner circle o The share of finished steel sales increased while semis’ circle 10% 9% share was lower 9% 33% Russia o Higher volumes of
Slide 6: 2011 Market
2011 MARKET STABLE GROWTH OF THE GLOBAL STEEL MARKET IN H1 2011 GLOBAL STEEL MARKET H2 2011 1,1 SWITCHED TO A SHARP DECLINE IN DEMAND IN H2 1,2 Global steel production: -11%* EU steel stock: - 12%* 1,0 o Mainly factored by the EU financial and economical crisis 1 NLMK HAS LAUNCHED ITS NEW BF#7 IN LI
Slide 7: Q4 2011 Sales
Q4 2011 SALES SUSTAINABLE SALES GROWTH IN Q4 2011 STRENGTHENING MARKET POSITION – SUSTAINABLE GROWTH IN SALES VOLUMES DURING THE YEAR o Stronger market share in a tough period of the end of 2011 4,0 mt 3.55 3.39 3,5 3.14 SEASONAL PRODUCT PORTFOLIO CHANGE 2.77 3,0 + 5% 2,5 + 8% q-o- q-o-q o Share of
Slide 8: Production Costs
PRODUCTION COSTS 2011 CASH COST BY PRODUCTS o Cash cost of steel production increased 25% as a results of $600 531 higher prices for coking coal, pellets and scrap globally $/t 504 527 498 Q4 2011 $500 480 401 406 405 405 396 o A non-significant increase in ruble denominated prices for $400 361 318
Slide 9: Profitability Summary
PROFITABILITY SUMMARY A SHARP REDUCTION IN STEEL PRICES IN H2 2011 SEGMENTS CONTRIBUTION TO EBITDA IN 2011 $2 500 FOREX RATE IMPACTED SALES REVENUE AND $m PRODUCTION COSTS $2 000 -14 1 039 34 CONSOLIDATION OF ROLLING ASSETS IN THE PERIOD OF $1 500 THE WEAK MARKET IN H2 2011 - 186 2 282 $1 000 1 408
Slide 10: Working Capital
WORKING CAPITAL INVENTORIES INCREASED 40% AS A RESULT OF INVENTORIES o Consolidation of rolling assets $3 $ bn o Higher production volumes +0.1 +1.2 o Annual prices inflation $2 2,8 MANAGEMENT IS WORKING ON MEASURES TO OPTIMISE $1 1,6 WORKING CAPITAL AND TO RELEASE THE CASH AVAILABLE $0 31 DEC 10 SI
Slide 11: Debt Position
DEBT POSITION TOTAL DEBT LEVEL $4.38 BN CHANGES IN DEBT PORTFOLIO $5 $ bn LIQUID ASSETS 1 $1.02 BN $4 1,3 1,3 2,0 $3 1,7 0,6 NET DEBT / 12M EBITDA 1.47 $2 ST debt LT debt 3,0 $1 2,1 BALANCED STRUCTURE OF THE DEBT AND CASH FUNDS $0 01 Jan 11 SIF Debt Funds raised 31 Dec 11 consolidation settlements I
Slide 12: Debt Maturity
DEBT MATURITY DEBT MATURITY SCHEDULE ST DEBT MATURITY1 o ST debt: $1.3 billion $1,5 $ bn incl. ST part of PXF, SIF external debt and 2 issues $1,2 1,4 of ruble bonds 0,7 $0,9 o LT debt: $3.07 billion $0,6 0,2 incl 4 issues of bonds, LT part of PXF and ECA $0,3 0,2 .. as well as SIF’s LT debt 0,2 $0,
Slide 13: Investments
INVESTMENTS STEEL CAPACITY GROWTH INVESTMENTS DYNAMICS $2 500 $ m o 40% increase in capacity to 17.3 mtpy 2 048 $2 000 o Quality improvement, +30 new grades of steel 1 463 $1 500 INCREASE IN FINISHED PRODUCT CAPACITY $1 000 o Rolling capacity growth 522 607 519 $500 399 o HVA grades capacity increas
Slide 14: Outlook
OUTLOOK Q1 2012 o Crude steel production 3.6 m t (+14% q-o-q) o EBITDA margin is expected to grow to around 15% FY 2012 OUTLOOK o Execution of the development program as planned and further optimization of foreign rolling operations o Progressive improvement in financial results o Crude steel produc
Slide 15: Appendix: Investment Program
APPENDIX INVESTMENT PROGRAM 15
Slide 16: BF Production (2011)
BF PRODUCTION (2011) BLAST FURNACE PIG IRON PRODUCTION CAPACITY (LIPETSK) o Capacity: 3.4 mtpy Установка 14 mln t BF #7 hot testing«печь-ковш» 12.7 o Status: launched (hot testing) n September 2011 12 in Q3 2011 9,4 10 CONSTRUCTION OF COGENERATION PLANT 8 o Capacity: 150 MW 6 4 o Partially financed
Slide 17: Steelmaking (2011)
STEELMAKING (2011) NEW BOF SLAB PRODUCTION CAPACITY (LIPETSK)9 o Launch date: 2011, Lipetsk site Mt o Goal: processing of BF# 7 pig iron output 50% - o With the new BOF Novolipetsk total steelmaking capacity processed Wide in- slab CCM will be 12.4 mtpy house 50% - sold to LADLE FURNACES AND VACUUM
Slide 18: Expansion of Rolling Capacities (2011)
EXPANSION OF ROLLING CAPACITIES (2011) EXPANSION OF HRC PRODUCTION FLAT STEEL PRODUCTION GROWTH o Location: Lipetsk site Установка Completed o Upgrading of the existing Mill 2000 «печь-ковш» Completed o Capacity growth: +400,000 tonnes by 2014 EXPANSION OF PLATE PRODUCTION (NLMK EUROPE PLATE) o Loca
Slide 19: Transformer Steel (2011-2012)
TRANSFORMER STEEL (2011-2012) PRODUCTION UPGRADES AT NOVOLIPETSK TRANSFORMER STEEL PRODUCTION CAPACITIES o Status: 80% complete Установка High-permeability transformer 400 350 ‘000 t steel «печь-ковш» Possible further o Capacity: about 64,000 t pa of high-permeability 64.0 300 expansion of transform
Slide 20: Long Products (2012-13)
LONG PRODUCTS (2012-13) KALUGA MINI-MILL (EAF) STEEL AND LONG PRODUCT CAPACITY 5 mt Установка o Location: Kaluga region 3.8 «печь-ковш» o Capacity: 1.55 mtpy of steel 3 2.2 o Total investments: c. $1.2 bn 100% o Extended product mix for construction 2 finished 80% product finished o Launch date: 201
Slide 21: Expansion of Iron Ore Production (2011-2014)
EXPANSION OF IRON ORE PRODUCTION (2011-2014) OPEN PIT EXPANSION IRON ORE PRODUCTION CAPACITIES Concentrate Pellets o Location: Stoilensky (Stary Oskol) 20 mt 7 mt o +30% growth in iron ore extraction 4 6 15 2 5 o Goal: maintain 100% self-sufficiency in low cost iron ore 4 10 3 6 PELLETIZING PLANT 12
Slide 22: Appendix: Segment Performance
APPENDIX SEGMENT PERFORMANCE 22
Slide 23: Segment Performance
SEGMENT PERFORMANCE HIGHER PRODUCTION COSTS AND TURNOVER CONSOLIDATED PRODUCTION COSTS, 12М 2011 o Increased prices for raw materials and utilities Iron ore 6% Coke and coal 11% o Introduction of new production facilities and higher Scrap sales 17% 22% Ferroalloys Other raw materials o Consolidation
Slide 24: Steel Segment
STEEL SEGMENT НЛМК HIGHER PRODUCTION VOLUMES FOLLOWING THE NEW SALES REVENUE FROM 3rd PARTIES BY PRODUCT CAPACITIES LAUNCH 9 000 $m 8 043 Pig iron 8 000 461 Slabs 7 000 6 703 HRC SALES VOLUMES REDUCED Y-O-Y AS SLABS DIRECTED TO 2 107 237 6 000 1 927 CRC FOREIGN ROLLING OPERATIONS WERE EXCLUDED FROM
Slide 25: Foreign Rolled Products Segment
FOREIGN ROLLED PRODUCTS SEGMENT* IN JULY 2011 SIF ASSETS WERE CONSOLIDATED INTO THE SALES REVENUE FROM 3rd PARTIES BY PRODUCT GROUP 2 500 2 382 $m 31 Semi-finished NEWLY ACQUIRED ASSETS TOGETHER WITH NLMK INDIANA 2 000 708 AND NLMK DANSTEEL WERE COMBINED IN THE FOREIGN Plate ROLLED PRODUCTS SEGMENT
Slide 26: Long Products Segment
LONG PRODUCTS SEGMENT НЛМК HIGHER SALES AND REVENUES WERE SUPPORTED BY SALES REVENUE FROM 3rd PARTIES BY PRODUCT IMPROVED DEMAND FROM THE DOMESTIC 1 200 $m 1 154 CONSTRUCTION INDUSTRY IN 2011 50 1 000 865 193 CRUDE STEEL OUTPUT WAS LOWER DUE TO REPAIR OF THE 58 Scrap 800 EAF IN H2 2011 153 Metallwar
Slide 27: Mining Segment
MINING SEGMENT НЛМК IRON ORE CONCENTRATE PRODUCTION INCREASED IN SALES REVENUE FROM 3rd PARTIES BY PRODUCT 2011 FOLLOWING THE EXPANSION OF MINING AND 160 143 BENEFICIATION FACILITIES $m IO concentrate 120 THE REVENUE FROM 3RD PARTIES INCREASED AS A RESULT 64 Sinter ore OF GROWING SALES OF CONCENTRAT
Slide 28: Segmental Information
SEGMENTAL INFORMATION 12M 2011 Intersegmental Foreign rolled Steel Mining Long products All other Totals operations and Consolidated (million USD) products balances Revenue from external customers 8 043 2 382 1 154 149 1 11 729 11 729 Intersegment revenue 985 3 640 1 291 2 919 (2 919) Gross profit 2
Slide 29: Consolidated Statement of Income
CONSOLIDATED STATEMENT OF INCOME Q4 2011 Q3 2011 Q4 2011/Q3 2011 12M 2011 12M 2010 12M 2011/12M 2010 (mln USD) +/- % +/- % Sales revenue 3 053 3 334 (281) (8%) 11 729 8 351 3 378 40% Production cost (2 163) (2 367) 205 (9%) (7 780) (4 933) (2 847) 58% Depreciation and amortization (129) (201) 73 (36
Slide 30: Consolidated Balance Sheet
CONSOLIDATED BALANCE SHEET as at as at as at as at as at as at as at as at as at 31.12.2011 30.09.2011 30.06.2011 31.03.2011 31.12.2010 30.09.2010 30.06.2010 31.03.2010 31.12.2009 (mln. USD) ASSETS Current assets 5 504 5 644 4 811 4 438 4 105 4 372 4 150 4 091 3 877 Cash and cash equivalents 797 830
Slide 31: Consolidated Cash Flow Statement
CONSOLIDATED CASH FLOW STATEMENT Q4 2011 Q3 2011 Q4 2011/Q3 2011 12M 2011 12M 2010 12M 2011/12M 2010 (mln. USD) +/ - % +/ - % Cash flow from operating activities Net income 124 220 (97) (44%) 1 315 1 224 91 7% Adjustments to reconcile net income to net cash provided by operating Depreciation and amo
Slide 32: 2011 Cash Flow Bridge
2011 CASH FLOW BRIDGE CHANGE IN CASH 49 Effect of exchange rate changes +65 Dividends -516 FREE CASH FLOW 501 Other financial operations1 +460 Net borrowings +284 Acquisition and construction of PPE -2 048 1 805 CASH FLOW FROM OPERATIONS Income tax -421 Other and non-cash operations2 +81 Change in w
Slide 33: Appendix: Q4 2011 Sales and Revenue Structure
APPENDIX Q4 2011 SALES AND REVENUE STRUCTURE 33
Slide 34: Sales and Revenue Structure in Q4 2011
SALES AND REVENUE STRUCTURE IN Q4 2011 Q4 2011 PRODUCT PORTFOLIO : SALES Q4 2011 PRODUCT PORTFOLIO: REVENUE Metallware Other sales Long products Metallware 1% 8% Dynamo steel 7% 8% Long products 13% 2% 1% 2% Dynamo steel 4% Transformer steel 7% 17% Transformer steel 2% Pre-painted 10% 5% Pre-painted
Slide 35: Investor relations
NLMK Investor relations Russia, 115054, Moscow Bakhrushina str, 18, bldg 1 t. +7 495 915 15 75 f. +7 495 915 79 04 www.nlmk.com