Novolipetsk Steel — Q1 2011 Earnings Presentation
28 slides from Novolipetsk Steel's earnings presentation, 2011
Slide 1: Novolipetsk Steel (NLMK) Q1 2011 Financial and Production Results
Novolipetsk Steel (NLMK) Q1 2011 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 Q1 2011 FINANCIAL PERFORMANCE EARNINGS PER SHARE 0,10 $/share o Revenue: $2,359 bn (+4% q-o-q) 0,086 0,077 0,08 o Production cost $1,466 bn (-1% q-o-q) 0,065 0,06 o EBITDA $585 mln, (+19% q-o-q) 0,04 o EBITDA margin 25%, +3 p.p. q-o-q 0,022 0,025 0,02 o Net income $392 mln, (+164%) 0,
Slide 4: Production
PRODUCTION INSIGNIFICANT PRODUCTION DECREASE IN Q1 2011 DUE CRUDE STEEL PRODUCTION TO SEASONAL FACTOR 3 500 ‘000 tonnes 137 113 3 000 150 157 164 o NLMK Group steel output: 2.9 m t, -3% 501 492 2 500 254 454 448 o Lipetsk site – 2.3 m t 2 000 o Long Products Division– 0.4 m t 1 500 2 312 2 268 2 323
Slide 5: Sales and Revenue in Q1 2011
SALES AND REVENUE IN Q1 2011 IMPROVED SALES STRUCTURE SALES AND REVENUE BY REGIONS Q1 2011 o HVA products share growth up to 32% (+3p.p.) Revenue – Sales – outer 6% inner ring INCREASED SALES TO DOMESTIC MARKET ring 13% 7% 9% Russia o 43% domestic market share in revenue 35% 43% Europe OUTLOOK 16% A
Slide 6: Key Drivers
KEY DRIVERS STEEL PRICES GROWTH (+11% Q-O-Q) DOMESTIC MARKET SALES o Driven by improvement in market environment and seasonal 3500 NLMK quarterly sales share to the domestic market demand recovery 3000 2500 o Cost push dynamics in the global steel market on the back of 2000 the rising raw materials
Slide 7: Production Costs
PRODUCTION COSTS STEEL PRODUCTION COSTS INCREASE AMID GROWTH OF CASH COSTS OF PRODUCTS GLOBAL PRICES ON: 600 $ /t 480 o Scrap (+24% q-o-q) 500 431 395 386 408 400 361 o Coking coal (+5% q-o-q) 325 330 330 286 268 300 226 239 o Pellets (+20% q-o-q) 213 200 165 ONE-OFF FACTORS 100 18 18 18 19 22 0 o G
Slide 8: Debt Position
DEBT POSITION SHORT TERM DEBT PAYMENT1 TOTAL DEBT $2.63 BILLION: o ST debt $0.55 billion $ billion 0,6 o LT debt $2.07 billion 0.17 0.62 3 RUB bond issues 0,4 0.15 EBRD loan LT part of PXF 0,2 0.16 $1.24 BILLION OF LIQUID FUNDS2 0.14 0 Q2 11 Q3 11 Q4 11 Q1 12 NET DEBT/ LTM EBITDA 0.54 Q2 11 - Q1 12
Slide 9: Investments
INVESTMENTS CRUDE STEEL CAPACITY GROWTH INVESTMENTS DYNAMICS* 600 $ million o 40% increase in capacity to 17.4 m t per annum (2012) 480 500 378 399 400 371 o Quality improvement +30 new grades of steel 300 234 INCREASE IN FINISHED STEEL CAPACITY 200 o Rolling capacity growth 100 o HVA grades capacit
Slide 10: Q1 2011 Cash Flow Bridge
Q1 2011 CASH FLOW BRIDGE CHANGE IN CASH +229 Effect of exchange rate changes +11 Dividends -0,1 FREE CASH FLOW 218 Other financial operations3 +183 Net borrowings -108 Acquisition and construction of PPE -399 CASH FLOW FROM OPERATIONS 542 Income tax -107 Other and non-cash operations2 +30 Change in
Slide 11: Outlook
OUTLOOK NLMK GROUP Q2 2011 OUTLOOK o Steel production will growth to ~ 3 m t o Sales volume growth on 5-10% o Further increase of HVA share in sales o Working capital increase against growing volumes and prices growth o EBITDA margin is expected to be at 25-30% o Stabilization of steel prices on key
Slide 12: Appendix: Investment Program and Segments Results
APPENDIX INVESTMENT PROGRAM AND SEGMENTS RESULTS 12
Slide 13: BF Production (2011)
BF PRODUCTION (2011) BLAST FURNACE PIG IRON PRODUCTION CAPACITY (LIPETSK) million t Установка o Location: Lipetsk 14 >12,4 BF #7 launch in «печь-ковш» 12 mid-2011 o Capacity: 3.4 m t pa 9,4 10 o Goal: expand steel output at the main site 8 6 CONSTRUCTION OF POWER PLANT 4 o Capacity: 150 MW 2 o Parti
Slide 14: Steelmaking (2011)
STEELMAKING (2011) NEW CONVERTER o Launch date: 2011, Lipetsk site o Goal: processing of BF# 7 pig iron output Ladle Furnace o After launch of the new converter Novolipetsk total steelmaking capacities will be 12.4 m t pa LADLE FURNACES and VACUUM DEGASSER o Capacity: 12.4 m t pa (or 100% of crude s
Slide 15: Expansion of Rolling Capacities (2011)
EXPANSION OF ROLLING CAPACITIES (2011) EXPANSION OF HRC PRODUCTION FLAT STEEL PRODUCTION GROWTH Установка o Location: Lipetsk site 60% Completed «печь-ковш» Completed o Upgrading of the existing Mill 2000 50% o Capacity growth: +400,000 tonnes by 2014 40% 30% 55% EXPANSION OF PLATE PRODUCTION 20% 40
Slide 16: High Grade Transformer Steel (2011-2012)
HIGH GRADE TRANSFORMER STEEL (2011-2012) PRODUCTION UPGRADES AT NOVOLIPETSK TRANSFORMER STEEL PRODUCTION CAPACITIES Установка High-permeability transformer o Status: 80% complete 400 350 .000 t «печь-ковш» steel production Possible further o Capacity: about 60,000 t pa of high-permeability 300 60 ex
Slide 17: Long Products (2012-13)
LONG PRODUCTS (2012-13) KALUGA MINI-MILL (EAF) STEEL AND FINISHED PRODUCT CAPACITY Установка o Location: Kaluga region million t «печь-ковш» o Capacity: 1.55 m t pa o Total investments: c. $1.2 bn 100% finished products o Extended product mix for construction 80% finished o Launch date: 2012 (1st st
Slide 18: Expansion of Iron Ore Production (2011)
EXPANSION OF IRON ORE PRODUCTION (2011) OPEN PIT EXPANSION IRON ORE CONCENTRATE PRODUCTION CAPACITIES o Location: Stoilensky (Stary Oskol) o +30% growth in iron ore raw extraction o Goal: maintain 100% self-sufficiency in low cost iron ore PELLETIZING PLANT o Location: Stoilensky (Stary Oskol) o Cap
Slide 19: Segmental Performance
SEGMENTAL PERFORMANCE STEEL SEGMENT DROVE GROUP FINANCIALS IN Q1 2011 CONSOLIDATED PRODUCTION COST, Q1 2011 o Revenue from third parties $2,009 mln (85% of consolidated Iron ore revenue) Coke and coal o Operating profit $224 mln (48% of the Group operating profit ) 13% 5% Scrap 24% Ferroalloys 10% Q
Slide 20: Steel Segment
STEEL SEGMENT НЛМК INSIGNIFICANT SEASONAL CRUDE STEEL PRODUCTION SALES REVENUE FROM 3rd PARTIES BY PRODUCT DECREASE 1 920 2 009 Long products and billets 2 000 $ mln 13 69 88 42 Dynamo steel 81 207 118 97 135 Transformer steel OPERATING PROFIT MARGIN INCREASE 150 99 Pre-painted 248 Galvanised 1 000
Slide 21: Long Products Segment
LONG PRODUCTS SEGMENT НЛМК SEGMENT’S REVENUE INCREASING DUE TO SALES REVENUE FROM 3rd PARTIES BY PRODUCT CONSTRUCTION SECTOR DEMAND IMPROVEMENT 300 $ mln 260 236 7 13 42 PROFIT-MAKING QUARTER IN COMPARISON WITH 33 Scrap 200 LOSS-MAKING PREVIOUS QUARTERS Metallware Long products 100 183 208 Billets O
Slide 22: Mining Segment
MINING SEGMENT НЛМК SEASONAL DECREASE OF PRODUCTION AND SALES SALES REVENUE FROM 3rd PARTIES BY PRODUCT 25 $ mln 21 20 Iron ore concentrate IMPROVING SEGMENT’S FINANCIAL INDICATORS DUE 20 0.1 Sinter ore TO IRON ORE PRICES RISE 15 12 12 Limestone 10 0.1 Dolomit 67% - OPERATING PROFIT MARGIN 1 2 2 5 O
Slide 23: Coke-Chemical Segment
COKE-CHEMICAL SEGMENT STABLE PRODUCTION AND SALES VOLUMES SALES REVENUE FROM 3rd PARTIES BY PRODUCT $ mln 100 89 70 Coke COKE AND COKING COAL INCREASING PRICES 75 50 77 Chemical products OPERATING PROFIT MARGIN - 17% 60 25 Other operations 3 2 9 9 0 Q4 2010 Q1 2011 (‘000 tonnes) Q1 2011 Q4 2010 Chan
Slide 24: Segmental Information
SEGMENTAL INFORMATION Q1 2011 Intersegmental Steel Long products Mining Coke-chemical All other Totals operations and Consolidated (million USD) balances Revenue from external customers 2 009 260 20 70 2 359 2 359 Intersegment revenue 49 111 274 237 671 (671) Gross profit 442 61 210 72 (0) 785 (16)
Slide 25: Consolidated Statement of Income
CONSOLIDATED STATEMENT OF INCOME Q1 2011 Q4 2010* Q1 2011/Q4 2010 Q1 2011 Q1 2010 Q1 2011/Q1 2010 (mln USD) +/- % +/- % Sales revenue 2 359 2 266 93 4% 2 359 1 697 661 39% 0% Production cost (1 466) (1 476) 10 (1%) (1 466) (1 050) (415) 40% Depreciation and amortization (124) (112) (12) 10% 0% (124)
Slide 26: Consolidated Balance Sheet
CONSOLIDATED BALANCE SHEET as at as at as at as at as at as at as at 31.03.2011 31.12.2010 30.09.2010 30.06.2010 31.03.2010 31.12.2009 31.12.2008 (mln. USD) ASSETS Current assets 4 438 4 105 4 372 4 150 4 091 3 877 5 346 Cash and cash equivalents 977 748 780 953 1 157 1 247 2 160 Short-term investme
Slide 27: Consolidated Cash Flow Statement
CONSOLIDATED CASH FLOW STATEMENT Q1 2011 Q4 2010* Q1 2011/Q4 2010 Q1 2011 Q1 2010 Q1 2011/Q1 2010 (mln. USD) +/- % +/- % Cash flow from operating activities Net income 381 142 239 168% 381 108 273 253% Adjustments to reconcile net income to net cash provided by operating activities Depreciation and
Slide 28: Investor Relations Contact
Novolipetsk Steel (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
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