Novolipetsk Steel — 9M 2008 Earnings Presentation
28 slides from Novolipetsk Steel's earnings presentation, 2008
Slide 1: Novolipetsk Steel (NLMK) 9M 2008 Financial and Production Results
Novolipetsk N li t k Steel St l (NLMK) 9M 2008 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: Table of Contents
Table of Contents 1. 9M 2008 Performance 4 2. Segmental Performance 12 3. Key Financial Indicators 21 4. Appendices 24 3
Slide 4: Financial Highlights
Financial Highlights g g • Revenue: $9,640 million (+74% y‐o‐y) • Operating profit: $ 3,780 million (+73% y‐o‐y) • EBITDA1: $4,053 million (+65% y‐o‐y) • EBITDA margin: 42% • Net income: $2,759 $2 759 million (+66% y‐o‐y) y o y) • Net debt as at 30.09.2008: $587 million • EPS: $0.460 (+66% y‐o‐y) •
Slide 5: Steel Product Sales
Steel Product Sales Change in product mix, 9M 2008/9M 2007 • Growth in semi semi‐finished finished products Slabs and billets • Growth in HVA products Cold‐rolled o Cold rolled + 10% Transformer o Transformer + 9% Pig iron o Coated +6% Pre‐painted • 4% growth in hot‐rolled plates Galvanized Hot‐roll
Slide 6: Sales Revenue
НЛМК Sales Revenue Sales revenues by segment • Revenue by segment: o Steel segment: 81% o Long products segment: 12% • Domestic market is 41% of revenue • HVA products is 34% of revenue: o Cold rolled 12% o Coated steel 9% o Electrical steel 14% Sales revenues by products Sales revenues by region 6
Slide 7: Costs
НЛМК Costs • 9M 2008 slab cash cost on a consolidated basis is $329 • Iron ore accounts for 6% of consolidated production cost • Major cost items: coal, coal scrap, scrap labour and energy • 9M 2008 coking coal cost grew to 33%, as compared to 27% share in 9M 2007 Cash cost by product Consolidated p
Slide 8: Operating Profit & EBITDA
НЛМК Operating Profit & EBITDA Operating profit and EBITDA • Operating profit: o $3,780 million (+73% y‐o‐y) • EBITDA: o $4,053 million (+65% y‐o‐y) • Key segments contributing to operating profit: o Steel segment 74% o Mining segment 13% o Long product segment 9% Operating profit drivers Operating
Slide 9: Debt position
Debt position • Net debt position at Sept 30, $0.6 bn Short term debt payment* • Total debt position of $3 $3.3 3 bn including bn $ o ST debt (Q4 08 to Q4 09) $1.3 bn o LT debt $2.0 bn • C Currency off ttotal t l debt: d bt o RUR ‐ 40% o USD ‐ 53% o E Euro ‐ 7% • Interest rates o RUR: 10.5%‐16% Tota
Slide 10: Production cuts
Production cuts Crude steel quarterly production, Lipetsk site • Production cuts Q4 2008, Lipetsk site mt o Overhaul of BF #3 of 1,5 m tpa (17.10.08) o Idling of BF #2, 0,8 m tpa capacity (18.11.08) o Idling of BF #4 of 1,7 m tpa (14.11.08) • Projected reduction o In Q4 2008: 1,08 mt, 44.34% • U ili
Slide 11: Table of Contents
Table of Contents 1. 9M 2008 Performance 4 2. Segmental Performance 12 3. Key Financial Indicators 21 4. Appendices 24 11
Slide 12: Financial Performance by Segment
НЛМК Financial Performance by Segment Sales revenues from external customers • Sales revenue growth from external customers largely generated by steel and long 9M 2008 products segments Steel segment • Consolidation of newly acquired assets, Long products segment robust steel, iron ore and coke pric
Slide 13: Steel Segment
НЛМК Steel Segment Performance highlights • 7.1 million tonnes of steel production (+5% y‐o‐y) • 9M 2008 sales volumes reached 6.9 million tonnes (+3% y‐o‐y) • Steel segment revenue: $ 8,023 million (+58% y‐o‐y) • Operating profit: $ 2,791 million (+57% y‐o‐y) 9М 2008 9М 2007 9М 2008/9М 2007 Q3 2008
Slide 14: Steel Segment
Steel Segment Sales revenues and cost structure • Rising prices of NLMK’s products was a key driver for sales revenue growth • Sales S l revenue growth h y‐o‐y: o pig iron, slabs and billets +100% o cold‐rolled steel +57% o hot‐rolled steel +36% o coated steel +28% o transformer steel +26% • Raw mat
Slide 15: Long Products Segment
НЛМК Long Products Segment Performance highlights • Long product segment comprises performance of Maxi‐Group in December 2007 • In 9M 2008 Maxi‐Group produced 1.603 million tonnes of steel, 468,000 tonnes of billets and 1,071,000 tonnes of long products and metalware • Revenue of the segment reached
Slide 16: Mining Segment
НЛМК Mining Segment Performance highlights • Mining segment covers 100% of NLMK’s requirements in iron ore concentrate, flux and dolomite • The segments sales revenue growth was due to rising prices and an increase in iron ore sales to the main production site in Lipetsk 9M 2008 9M 2007 9M 2008/9M 2
Slide 17: Mining Segment
Mining Segment Sales revenues and cost structure • Sales revenue from external customers: o $51 million (0.5% of consolidated sales revenue) o Inter‐segmental sales revenue • 38% share of sales revenue from external customers is contributed by sinter ore sales • Sustainably low production costs – on
Slide 18: Coke-chemical Segment
Coke‐chemical Segment Performance highlights Altai‐Koks is the largest single‐site coke‐chemical producer in Russia • 2.3 fold increase of inter‐segmental sales • Rise in coke prices contributed to increase in revenue from external customers by 67% y‐o‐y • Profitability increase due to sharp increas
Slide 19: Coke-chemical Segment
Coke‐chemical Segment Sales revenues and cost structure • Coke sales contributed 92% to sales revenue from external customers • Export sales through Novex and Novexco • Altai‐Koks sources coking coal mostly from Kuznetsk Coal Basin • Coal accounts for 95% of production cost Sales revenues from exter
Slide 20: Table of Contents
Table of Contents 1. 9M 2008 Performance 4 2. Segmental Performance 12 3. Key Financial Indicators 21 4. Appendices 24 20
Slide 21: Key Financial Indicators
НЛМК Key Financial Indicators Net cash flow Cash and cash equivalents 30.09.2008 Exchange rate Financial activities Investment activities Operating activities 31.12.2007 $ million $ million Capex and depreciation & amortization Financial ratios 1 $ million 1EBITDA was normalized to its annual values
Slide 22: 9M 2008 EBITDA to Cash bridge
НЛМК 9M 2008 EBITDA to Cash bridge g Increase in cash Exchange rate Dividends Free cash flow Income tax Other financial operations3 Loan advances/(repayment) Free cash flow from operations Acquisition and construction of PPE Non‐cash operations2 Change in working capital4 EBITDA1 $ million 1 EBITDA
Slide 23: Table of Contents
Table of Contents 1. 9M 2008 Performance 4 2. Segmental Performance 12 3. Key Financial Indicators 21 4. Appendices 24 23
Slide 24: Consolidated Statement of Income
НЛМК Consolidated Statement of Income 9M 2008 9M 2007 9M 2008/9M 2007 Q3 2008 Q2 2008 Q3 2008/Q2 2008 (mln USD) +/‐ % +/- % Sales revenue 9,640 5,546 4,094 73.8% 3,756 3,530 226 6.4% Production cost (4,508) (2,525) (1,983) 78.5% (1,519) (1,794) 274 (15.3%) Depreciation and amortization (380) (297) (
Slide 25: Consolidated Balance Sheet
НЛМК Consolidated Balance Sheet as at 30.09.2008 as at 30.06.2008 as at 31.03.2008 as at 31.12.2007 as at 30.09.2007 as at 30.06.2007 as at 31.03.2007 as at 31.12.2006 (mln. USD) ASSETS Current assets 6,702 5,249 5,094 4,388 3,904 3,629 3,484 3,050 Cash and cash equivalents 2,735 1,325 1,181 1,155 1
Slide 26: Consolidated Cash Flow Statement
НЛМК Consolidated Cash Flow Statement 9M 2008 9M 2007 9M 2008/9M 2007 Q3 2008 Q2 2008 Q3 2008/Q2 2008 (mln. USD) +/‐ % +/- % Cash flow from operating activities Net income 2,759 1,657 1,102 66.5% 1,229 913 315 34.5% Adjustments to reconcile net income to net cash provided by operating activities 0 0
Slide 27: Segmental Information
Segmental Information 9M 2008 Intersegmental Steel Long products Mining Coke‐chemical All other Totals operations and Consolidated (million USD) balances Revenue from external customers 7 807 7,807 1 120 1,120 51 599 63 9 640 9,640 9 640 9,640 Intersegment revenue 216 519 749 398 4 1,887 (1,887) Gro
Slide 28: Investor relations
Novolipetsk p Steel (NLMK) ( ) Investor relations Russia, 115054, Moscow Bakhrushina str, str 18, 18 bldg 1 t. +7 495 915 15 75 f. +7 495 915 79 04 www.nlmksteel.com
Novolipetsk Steel (NLMK) — 9M 2008 Earnings Presentation on 6ix