NLMK · RUS:NLMK
NLMK — Q1 2020 Earnings Presentation
26 slides from NLMK's earnings presentation, Apr 30, 2020
Slide 1: Q1 2020 IFRS Results
1 Q1 2020 IFRS Results 30 April 2020
Slide 2: Disclaimer
DISCLAIMER 2 This document is confidential and has been prepared by NLMK (the the industry in which the Company operates. By their nature, forwarding- “Company”) solely for use at the presentation of the Company and may looking statements involve risks and uncertainties because they relate to not be
Slide 3: Market review and operating highlights
3 • Market review Grigory • Operating Fedorishin highlights CEO • Q1’20 Financials • Business divisions results
Slide 4: Response to Covid-19
RESPONSE TO COVID-19 4 Our priorities: 5,000 people >2,000 people – Health and safety of our working remotely staying at home (60+) employees – Maintaining flawless production A wide set of precautionary > 50,000 people Working schedules and measures implemented transportation routes Regular distrib
Slide 5: Spreads to raw materials have dropped significantly
SPREADS TO RAW MATERIALS HAVE DROPPED SIGNIFICANTLY 5 Steel prices were higher qoq in Q1’20, on STEEL PRICES IN KEY REGIONS, $/t average, despite the Covid-19 outbreak in the Q1'20 27-Apr-20 % Q1’20 vs 27-Apr-20 second half of the quarter: -20% -6% -13% -14% -21% – Between Jan and mid-Mar, prices we
Slide 6: Utilization status
UTILIZATION STATUS 6 Russian assets CAPACITY UTILIZATION, % – NLMK Lipetsk site operates April 2019 April 2020 at 100% utilization 100% 100% 97% – Flat products volumes are currently 80% 75% 84% 84% being booked for June 65% – Long products - shortage of scrap 60% and construction restrictions in 40
Slide 7: Preliminary demand expectations in Russia in Q2'20
PRELIMINARY DEMAND EXPECTATIONS IN RUSSIA IN Q2’20 7 Construction demand varies from region to region % of NLMK Q2’20 overall sector sales in Russia demand outlook* – Moscow and the Moscow region suspended activities for 2.5 weeks in April causing almost twofold drop in demand in April Construction
Slide 8: Capital allocation
CAPITAL ALLOCATION 8 Capex plan c. 20% lower than originally REVISED CAPEX PROGRAM, $ bn DIVIDENDS AND FCF PAYOUT, $ m guided: projects postponed + FX Dividends FCF FCF payout devaluation 1.2 74% 75% Positive free cash flow remains 0.9 - 0.95 1000 80% 900 70% a priority 800 60% 700 0.42 H2’20 50% Bo
Slide 9: Q2'20 Outlook
Q2’20 OUTLOOK 9 MARKETS The EU and the US: steel demand is expected to show double- Russia: the outbreak and containment measures have started to digit decline qoq with economic activity starting to revive affect domestic economy and businesses almost a month later towards the end of Q2’20. Reduced
Slide 10: Q1'20 Financials
10 • Market review Shamil • Operating highlights Kurmashov • Q1’20 Financials CFO • Business divisions results
Slide 11: Sales in Q1'20 rebounded following increase in steel production
SALES IN Q1’20 REBOUNDED FOLLOWING INCREASE IN STEEL PRODUCTION 11 Shipments were up 8% qoq to 4.5 m t SHIPMENTS INCREASED ON EXPORTS OF SEMIS SALES OF FINISHED PRODUCTS REMAINED STABLE mainly on higher semis sales to export markets 4.6 4.5 4.6 4.2 4.5 4.2 +8% – Main driver was Russia Flat division
Slide 12: Q1'20 results were stronger due to higher shipments
Q1’20 RESULTS WERE STRONGER DUE TO HIGHER SHIPMENTS 12 Revenue increased by 6% qoq due to higher steel FCF, EBITDA AND MARGIN DYNAMICS shipments 1,000 EBITDA improved strongly by 24% qoq 0 26% 25% 900 24% 24% 800 – Revenue: $2,457 m (+6% qoq, -14% yoy) 0 21% 700 0 600 – EBITDA: $594 m (+24% qoq, -15
Slide 13: Q1'20 profitability improved on spreads and sales volume growth
Q1’20 PROFITABILITY IMPROVED ON SPREADS AND SALES VOLUME GROWTH 13 Russian Flat products: EBITDA rose 43% qoq due to wider EBITDA BY DIVISION, $ m spreads and elevated sales – (+) Spreads improved due to higher steel prices while 1200.0 1195.0 1190.0 1185.0 1180.0 1175.0 1170.0 1165.0 1160.0 1155.0
Slide 14: FCF in Q1'20 remained flat qoq
FCF IN Q1’20 REMAINED FLAT QOQ 14 Net operating cash flow decreased by 13% qoq Q1’20 FCF BRIDGE, $ m to $617 m 0 100 200 300 400 500 600 700 800 EBITDA 594 Working capital release amounted to $85 m – (-) $44 m: increase in accounts receivables driven by Net working capital change +85 higher sales –
Slide 15: Business divisions results
15 • Market review • Operating highlights • Q1’20 Financials • Business divisions results
Slide 16: Q1'20: Russian Flat Products
Q1’20: RUSSIAN FLAT PRODUCTS 16 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments increased by 8% qoq due to higher semis sales after 1st stage overhauls completion +8% 3,47 +6% 4.00 3.50 3,23 1,69 1,79 – (+) Semi-finished products sales to 3rd parties 0.97 0.85 0.41 3.00 grew by 10% qoq 0.34 0.09
Slide 17: Q1'20: Russian Long Products
Q1’20: RUSSIAN LONG PRODUCTS 17 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments decreased by 16% qoq -16% 0,39 -19% – (-) Long product sales were down by 20% qoq 0,67 due to high basis of previous quarter with 0,32 0.07 stock sales 0.07 0,57 0.04 0.06 – (+) Billet sales started on improved margin
Slide 18: Q1'20: Mining
Q1’20: MINING 18 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) The mining segment’s sales were almost flat at 4.6 m t (+1% qoq) +1% -3% 490 % 4.60 0.32 4.56 0.31 – Concentrate sales to 3rd parties amounted to 470 % 75 k t with no sales of pellets to 3rd parties 450 % 0.12 – Pellet sales to 3rd parties am
Slide 19: Q1'20: NLMK USA
Q1’20: NLMK USA 19 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments grew by 14% qoq +14% +17% – (-) Uptick in demand in service centers, 0.54 automotive and construction segments in 0.47 0.38 0.32 January-February 0.28 0.24 0.17 0.13 Revenue increased by 17% qoq on the back of shipments growth and
Slide 20: Q1'20: NLMK Dansteel
Q1’20: NLMK DANSTEEL 20 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments of plates grew by 28% qoq following the uptick in demand from wind energy, +28% 0.16 +18% 0.13 shipbuilding and infrastructure projects 0.11 0.13 Revenue increased by 18% qoq 0.16 0.12 – (+) Shipments spiked +28% qoq 0.13 0.1
Slide 21: Q1'20: NBH
Q1’20: NBH 21 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments increased by 17% qoq due to uptick in demand and restocking of the consumers +17% 0.60 +9% 0.52 0.38 Revenue up by 9% qoq following bigger 0.45 0.35 shipments 0.39 0.23 0.25 – (+) Shipments grew by 17% qoq – (-) Average sales prices de
Slide 22: Appendix
22 Appendix
Slide 23: Q1'20: NLMK output, shipments, slab cash costs
Q1’20: NLMK OUTPUT, SHIPMENTS, SLAB CASH COSTS 23 STEEL PRODUCTION, m t GROUP SHIPMENTS TO EXTERNAL CUSTOMERS BY SEGMENT, m t qoq: +5% qoq: +11% Q1 2019 Q4 2019 Q1 2020 yoy: -6% Q1 2019 Q4 2019 Q1 2020 yoy: +1% 3.00 qoq: +12% 2.50 4.50 4.17 yoy: +2% 2.50 3.32 4.00 2.00 3.50 qoq: -16% qoq: +17% qoq:
Slide 24: Sales geography and product mix without NBH
SALES GEOGRAPHY AND PRODUCT MIX WITHOUT NBH 24 STEEL PRODUCT SALES BY REGION, m t SALES STRUCTURE BY PRODUCT, m t 4.51 4.61 4.51 4.61 5 5 4.17 5 4.17 0.36 5 0.81 Others 0.30 1.54 1.40 4 0.53 4 0.56 Commercial products 0.71 1.51 4 M. East* 4 0.83 0.73 3 0.65 3 N.America Semi-finished 3 1.03 1.75 3 0.
Slide 25: Foreign assets performance
4,0 00 FOREIGN ASSETS PERFORMANCE 1,4 00 25 3,5 00 1,2 00 SLABS SALES FROM THE RUSSIAN FLAT PRODUCTS DIVISION, k t NBH ROLLED PRODUCTS SALES, k t 3,0 00 1,0 00 2,5 00 QoQ 800 QoQ 1,711 10 605 Total +17% 1,608 2,0 00 Total +19% 294 12 513 10 518 1,345 77 600 235 CRCCRC -1% Dansteel & 1,5 00 328 NLMK
Slide 26: Company IR contacts
COMPANY IR CONTACTS 26 Dmitriy Kolomytsyn, CFA Director, IR, Capital Markets Address 40, Bolshaya Ordynka Str., Bldg. 3 Moscow, 119017, Russia IR E-mail Address [email protected] Phone Number Office: +7 495 504 05 04 nlmkonair nlmk_group nlmk group