Nlmk · RUS:NLMK
Nlmk — Q3 2012 Earnings Presentation
16 slides from Nlmk's earnings presentation, 2012
Slide 1: NLMK Q3 and 9M 2012 US GAAP Consolidated Results
NLMK Q3 AND 9M 2012 US GAAP CONSOLIDATED RESULTS OLEG BAGRIN, CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF MANAGEMENT BOARD GALINA AGLYAMOVA, CHIEF FINANCIAL OFFICER Moscow, 2012
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: International Markets
INTERNATIONAL MARKETS DEMAND STEELMAKING CAPACITIES UTILISTION 100% • Weaker demand on major markets 80% • Global run rates declined PRICES 60% • Raw materials prices under pressure from lower steel 40% capacity utilization 20% • Steel prices continued to decline across all regions 0% Jan-08 Mar-08
Slide 4: Russian Market
RUSSIAN MARKET DEMAND CRUDE STEEL PRODUCTION, STEEL USE AND PRICES • Stable on the back of economic growth. Apparent steel million t/month $/t 1,100 6.0 1,000 use increased by 5% in Q3 900 5.0 • Consumption by construction industry surpassed the peak 800 700 of 2008 4.0 600 500 PRICES 3.0 400 • Flat
Slide 5: Production
PRODUCTION STABLE OUTPUT IN Q3 2012 CRUDE STEEL PRODUCTION, QUARTERLY • Novolipetsk (Steel segment) 3.076 m t 4.5 million t 3,6 3,8 3,8 ~3,7 4.0 (-2% q-o-q) 3.5 3,2 3.0 • NLMK Long Steel 0.479 m t 2.5 (+3% q-o-q) 2.0 1.5 • Foreign rolled products segment 0.216 m t 1.0 (-13% q-o-q) 0.5 0.0 Q4 2011 Q1
Slide 6: Sales Geography
SALES GEOGRAPHY HIGHER SALES TO RUSSIAN MARKET REVENUE BY REGION $ million • +4% q-o-q beating absolute record level 3,257 3,002 3,053 3,094 300 (-7.8% q/q) $3,000 GROWTH OF INTERNATIONAL SALES 353 289 332 340 359 527 494 448 • Lower demand from European and USA markets $2,000 364 458 191 -7% q/q 40
Slide 7: Sales Structure
SALES STRUCTURE CHANGE IN SALES MIX SALES AND REVENUE BY PRODUCT 100% Revenue from other • Growth in slabs sales to 3rd parties 5% 9% operations* Pig iron 2% • … as European subsidiaries decreased utilization rates 80% 26% 15% Slabs Ordinary HRC due to seasonality and overall demand weakness product
Slide 8: Strategic Developments
STRATEGIC DEVELOPMENTS GROWTH IN CRUDE STEEL CAPACITY CAPEX • Blast Furnace #7 / BOF 3.4 m tpa project 100% $ million 2500 completed. Utilisation rates of the new capacities 80% 2000 are at maximum 76% 77% 60% 81% 82% 1500 • Improved steel quality, +30 new steel grades 87% 40% 1000 • Kaluga mini mil
Slide 9: Highlights
HIGHLIGHTS Q3 ‘12 FINANCIAL RESULTS REVENUE AND EBITDA MARGIN $3.4 $ billion 18% 20% • Revenue $3,002 m (-8% q-o-q), 18% $3.2 14% 16% 12% 16% • EBITDA $483 m (-19%), $3.0 14% 12% • EBITDA margin 16.1% (-2.2 p.p.), $2.8 10% $2.6 3.26 3.09 8% • Net profit: $167 million (-40%), $2.4 3.05 3.00 6% 4% • E
Slide 10: Production Costs
PRODUCTION COSTS PRODUCTION COSTS DOWN BY 5% COST OF GOODS SOLD $ million • Impacted by lower prices for raw materials $2,500 2,210 2,205 2,163 2,095 Prod. • Strict control over operating expenses and overheads $2,000 expenses -5% q/q • Lower consumption of pellets supplied by 3rd parties $1,500 • S
Slide 11: Profitability
PROFITABILITY EBITDA DYNAMICS EBITDA CHANGE BY SEGMENT • In Q3 overall EBITDA declined mainly due to $ million 600 weakening market environment -32 +11 +22 500 • A decline in steel prices outpaces the decline for raw -57 -57 materials negatively contributing to the company’s 400 596 483 profitabilit
Slide 12: Cash Flow
CASH FLOW SIGNIFICANT CASH GROWTH Q3’12 CASH BRIDGE • Over $1bn of cash inflow in Q3 $ million CHANGE IN CASH 1 034 OPERATING CASH FLOW INCREASED • $684 of cash from operation activities including FX rate change -21 o $483 m EBITDA and o $273 m from working capital changes Dividends -2 GROWTH IN CAS
Slide 13: Debt
DEBT DEBT POSITION CHANGE IN DEBT POSITION • Net debt $3.47 billion (-3%) $6 $ billion +0,9 +0,4 $5 • Net debt / 12M EBITDA 1.84 (down from 1.9) -0,2 $4 2.4 • Cash and equivalents1 $1.814 billion (+133%) 2.0 $3 • Gross debt $5.28 billion (+22%) $2 DEBT MANAGEMENT 2.9 $1 2.4 ST Debt LT Debt • In Q3 N
Slide 14: Maturity
MATURITY DEBT MATURITY LIQUID ASSETS AND ST DEBT MATURITY1 • Substantial liquidity cushion and portfolio of $3,500 $ Committed million credit lines instruments for debt restructuring $3,000 Cash and • Short-term debt $2.43 billion $2,500 1,070 equivalents 203 $2,000 o Settlement of RUR three year no
Slide 15: Outlook
OUTLOOK PRODUCTION OUTLOOK • Q4 2012: steel output to be at 3.7 m t, -2% q-o-q • 12M 2012: 15 m t, + 25% y-o-y FINANCIALS • Revenue will decline by 1-5% q-o-q mainly due to lower seasonal demand MARKET OUTLOOK • Steel prices hit the bottom in Q4 2012 • Lower seasonal activity for the overall steel s
Slide 16: 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 [email protected] www.nlmk.com 16