Nlmk · RUS:NLMK
Nlmk — Q3 2019 Earnings Presentation
24 slides from Nlmk's earnings presentation, Oct 24, 2019
Slide 1: Q3 2019 IFRS Results
1 Q3 2019 IFRS Results 24 October 2019
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, operating highlights
3 • Market review Grigory • Operating Fedorishin highlights CEO • Q3’19 Financials • Business divisions results
Slide 4: Market Update
MARKET UPDATE 4 Business activity has been slowing so far this year – European PMI entered red zone in Feb’19, MANUFACTURING PMI STEEL DEMAND DYNAMICS IN KEY REGIONS, yoy Russia’s PMI turned negative in Jun’19 – The US growth has been decelerating over the 58 Activity expansion 9.0% 7.8% 2019E 2020E
Slide 5: Softening steel prices and narrowing margins
SOFTENING STEEL PRICES AND NARROWING MARGINS 5 HRC prices were lower qoq in Q3’19 in most regions HRC PRICES DOWN QOQ IN Q3’19 IN MOST GEOGRAPHIES; RUSSIAN RPICES REMAIN STABLE, $/t while Russian domestic prices were resilient %, qoq Q2'19 Q3'19 – Domestic prices in Russia were supported by -7% -5%
Slide 6: NLMK: slab shipments down in Q3'19 qoq, product mix improved
NLMK: SLAB SHIPMENTS DOWN IN Q3’19 QOQ, PRODUCT MIX IMPROVED 6 Sales declined 6% qoq to 4 m t mainly on RUSSIA’S SHARE IN TOTAL SALES INCREASED, m t HIGHER SHARE OF FINISHED PRODUCT SALES, m t lower slab shipments driven by ongoing maintenance works at NLMK Lipetsk 4.4 4.3 4.4 4.3 – Russia’s share i
Slide 7: Q4'19 Outlook
Q4’19 OUTLOOK 7 MARKETS Russia: demand and prices to show seasonal The EU: prices’ weakness to persist due to weakness in Q4’19 sluggish underlying demand China: local prices could be supported by USA: seasonally slow demand to restrain limited supply during heating season and significant steel pric
Slide 8: Q3'19 Financials
8 • Market review Shamil • Operating highlights Kurmashov • Q3’19 Financials CFO • Business divisions results
Slide 9: Q3'19 results impacted by ongoing maintenance and correction in steel prices
Q3’19 RESULTS IMPACTED BY ONGOING MAINTENANCE AND CORRECTION IN STEEL PRICES 9 Revenue was down 8% qoq on lower shipments and EBITDA WAS DOWN QOQ WHILE MARGIN REMAINED HIGH,$ m steel prices 32% 1,200 EBITDA declined 11% qoq 0 28% 26% 25% 1,000 – Revenue: $2,576 m (-8% qoq, -18% yoy) 24% 0 800 – EBIT
Slide 10: Q3'19 profitability suppressed by narrowing spreads for flat steel
Q3’19 PROFITABILITY SUPPRESSED BY NARROWING SPREADS FOR FLAT STEEL 10 Russian Flat products: EBITDA decreased 20% qoq on narrower EBITDA BY DIVISION, $ m spreads and lower slab sales, partially offset by operational efficiency measures 1,015 1200.0 1195.0 1190.0 1185.0 1180.0 1175.0 1170.0 1165.0 11
Slide 11: Working capital release in Q3'19 supported FCF
WORKING CAPITAL RELEASE IN Q3’19 SUPPORTED FCF 11 Net operating cash flow increased by 15% qoq Q3’19 FCF BRIDGE, $ m to $568m 0 100 200 300 400 500 600 700 800 EBITDA 654 Working capital release of $20 m: Net working capital change +20 – (+) $158 m decrease in accounts receivables Other non-cash ite
Slide 12: Strong debt portfolio and liquidity position
STRONG DEBT PORTFOLIO AND LIQUIDITY POSITION 12 Total debt down 4% qoq to $2.68 bn LIQUIDITY AND SHORT-TERM DEBT*, $ m DEBT* MATURITY, $ m – Scheduled repayment of $146 m of 7-year Eurobond with an annual Working capital lines Eurobonds ECA lines coupon rate of 4.95% 700 Available Net debt / 12M EBI
Slide 13: Business divisions results
13 • Market review • Operating highlights • Q3’19 Financials • Business divisions results
Slide 14: Q3'19: Russian Flat Products
Q3’19: RUSSIAN FLAT PRODUCTS 14 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments down 9% qoq amid ongoing overhauls at the blast furnace and basic oxygen furnace 3.06 -9% 1.92 -9% 2.78 1.74 – (-) Semi-finished products down 19% qoq 0.93 0.48 0.26 0.55 0.13 0.13 – (+) Share of finished steels incre
Slide 15: Q3'19: Russian Long Products
Q3’19: RUSSIAN LONG PRODUCTS 15 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments were down 3% qoq 0.72 -3% +4% – (-) Lower exports of billets due to softer margins 0.69 0.47 0.49 0.08 0.06 – (+) Increased share of finished steel (+2 p.p. qoq) 0.09 0.13 0.07 0.06 Revenue was up 4% qoq on higher scr
Slide 16: Q3'19: Mining
Q3’19: MINING 16 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) The mining segment’s sales increased 6% qoq +6% 4.78 +27% 0.41 490 % 45% – Deliveries of iron ore concentrate rose due to higher sales to the 3rd parties 4.51 0.32 0.03 470 % 0.36 0.11 450 % Revenue was up 27% qoq to $406 m due to 430 % 25% h
Slide 17: Q3'19: NLMK USA
Q3’19: NLMK USA 17 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments down 6% qoq 0.58 -6% 0.48 -18% – (-) Weaker demand in pipe manufacturing and 0.55 construction segments 0.39 0.31 0.22 0.29 0.18 Revenue fell 18% qoq due to lower prices – (-) Prices dropped 13% qoq – (-) Shipments declined 0.27 0
Slide 18: Q3'19: NLMK Dansteel
Q3’19: NLMK DANSTEEL 18 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments of thick plates fell 14% qoq on planned summer maintenance during seasonally -14% 0.13 -15% 0.14 weak quarter 0.12 0.11 Revenue decreased 15% qoq following lower 0.14 0.12 deliveries 0.12 0.11 – (-) Shipments declined 14% qoq
Slide 19: Q3'19: NBH
Q3’19: NBH 19 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Sales volumes decreased 13% qoq due to planned summer maintenance 0.62 -13% -18% 0.54 0.45 0.37 Revenue down 18% qoq due to lower sales and 0.45 lower prices 0.41 0.29 0.25 – (-) Shipments decreased 13% qoq – (-) Average prices dropped 5% qoq 0.
Slide 20: Appendix
20 Appendix
Slide 21: Q3'19: NLMK output, shipments, slab cash costs
Q3’19: NLMK OUTPUT, SHIPMENTS, SLAB CASH COSTS 21 STEEL PRODUCTION, m t GROUP SHIPMENTS TO EXTERNAL CUSTOMERS BY SEGMENT, m t qoq: +5% Q3 2018 Q2 2019 Q3 2019 yoy: 0% Q3 2018 Q2 2019 Q3 2019 qoq: -6% 2.23 2.50 yoy: -15% qoq: -5% 5.00 3.70 4.50 2.00 4.00 yoy: -15% 2.82 qoq: -3% qoq: -8% 3.50 qoq: -13
Slide 22: Sales geography and product mix without NBH
SALES GEOGRAPHY AND PRODUCT MIX WITHOUT NBH 22 STEEL PRODUCT SALES BY REGION, m t SALES STRUCTURE BY PRODUCT, m t 4.42 5 4.42 4.27 5 5 4.27 4.02 5 4.02 0.28 Others 0.70 4 0.41 0.42 1.54 4 1.47 Commercial products 0.55 1.42 4 0.63 M. East* 4 0.75 3 0.74 3 0.61 N.America Semi-finished 3 1.13 3 2 0.81
Slide 23: Foreign assets performance
3,5 00 FOREIGN ASSETS PERFORMANCE 1,4 00 23 1,2 00 3,0 00 SLABS SALES FROM THE RUSSIAN FLAT PRODUCTS DIVISION, k t NBH ROLLED PRODUCTS SALES, k t 1,0 00 2,5 00 NLMK Dansteel NLMK USA NBH To 3rd parties CRC Coated Plates & ingots HRC 2,0 00 QoQ 800 QoQ 1,585 1,510 Total -15% 13 618 Total -13% 126 6 5
Slide 24: Company IR contacts
COMPANY IR CONTACTS 24 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