Nlmk · RUS:NLMK
Nlmk — Q4 2021 Earnings Presentation
27 slides from Nlmk's earnings presentation, Feb 3, 2022
Slide 1: Q4'21 IFRS Results
1 Q4’21 IFRS Results 03 February 2022
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: Agenda: Market review, operating highlights, strategy update
3 • Market review Grigory • Operating highlights Fedorishin CEO • Strategy update • Q4’21 Financials • Business divisions results
Slide 4: Increased volatility in raw material prices
INCREASED VOLATILITY IN RAW MATERIAL PRICES 4 In Q4’21 business activity in developing STEEL DEMAND IN KEY REGIONS, Q4’21, QoQ STEEL DEMAND IN KEY REGIONS, 2021, YoY and developed markets was expanding, 16% 25% however in the latter at a slightly slower 20% 30% 18% 25% rate towards the end of the ye
Slide 5: Global steel prices are normalizing but are above mid-cycle
GLOBAL STEEL PRICES ARE NORMALIZING BUT ARE ABOVE MID-CYCLE 5 Steel prices levelled off during Q4’21, HRC PRICES IN KEY REGIONS AND RUSSIAN EXPORT SLAB PRICES, $/t albeit remaining twice as high vs 5Y Q3'21 Q4'21 5Y-average % Q4’21 vs. Q3’21 averages in developed markets and 30-40% -4% -16% -10% -10
Slide 6: Sales grew with the Lipetsk site output recovery
SALES GREW WITH THE LIPETSK SITE OUTPUT RECOVERY 6 OUTPUT INCREASED DRIVEN BY THE LIPETSK SITE SALES TO EXTERNAL & INTERNAL CUSTOMERS GREW Output increased by 16% qoq to 4.5 m t mt mt – (+) Completion of repair works in the +16% +8% steelmaking operations oxygen supply 4.5 4.5 infrastructure at the
Slide 7: Strategy 2022 – Results snapshot
STRATEGY 2022 – RESULTS SNAPSHOT 7 STRATEGY 2022 EFFECTS IN 2021, $ m pa Effects of Strategy 2022 implementation totaled $340 m in 2021 to 2020 base 370 320 Contributions from the operational efficiency 161 270 programs reached $179 m, well above our 340 220 annual target of $100 m 170 – Coal charge
Slide 8: Markets and results outlook Q1'22
Q1’22 OUTLOOK 8 MARKETS The US: prices will continue to decline steadily in line with The EU: the general downward trend in prices will continue; global benchmarks, spurred by ramp-up of new capacities yet the potential for a bounce is possible amid expected introduced in late 2021 and scheduled lau
Slide 9: Agenda: Q4'21 Financials
9 • Market review Shamil • Operating highlights Kurmashov • Strategy update CFO • Q4’21 Financials • Business divisions results
Slide 10: Q4'21 financial highlights: earnings eased in line with market conditions
Q4’21 FINANCIAL HIGHLIGHTS: EARNINGS EASED IN LINE WITH MARKET CONDITIONS 10 Revenue increased by 2% qoq to $4.6 bn due to sales FCF, EBITDA AND MARGIN DYNAMICS volume growth 50% 50% 1 EBITDA declined by 23% qoq to $1.8 bn driven by lower 41% 37% 38% 2,500 price spreads and introduction of temporary
Slide 11: Group EBITDA totaled $1.8 bn in Q4'21
GROUP EBITDA TOTALED $1.8 BN IN Q4’21 11 EBITDA BY Q4’20 EBITDA MARGIN Russian Flat products: EBITDA softened to $662 m DIVISION, $ m Q3’21 BY DIVISION, % Q4’21 – (-) Price spreads weakening 466 +26% – (-) Export duties accrual Russian Flat Products 1,154 +39% – (+) Increase in sales volume 662 +20%
Slide 12: Q4'21 FCF softened amid EBITDA normalization
Q4’21 FCF SOFTENED AMID EBITDA NORMALIZATION 12 Q4’21 FCF BRIDGE, $ m Working capital build-up amounted to $259 m: 0 100 200 300 400 500 600 700 800 900 1,0 00 1,1 00 1,2 00 1,3 00 1,4 00 1,5 00 1,6 00 1,7 00 1,8 00 1,9 00 – (-) $504 – inventories growth EBITDA 1,758 ◦ (-) Increased cost of stocks d
Slide 13: Strong debt portfolio
STRONG DEBT PORTFOLIO 13 DEBT* MATURITY, $ m COST OF DEBT REMAINS LOW, % Total debt increased by 2% qoq to $3.5 bn Working capital lines ECA lines Eurobonds Net debt / 12M EBITDA stood at 0.40x 1,479 4.4% – Net debt was up 7% qoq to $2.9 bn 4.2% 1,066 – Liquidity was at the $0.5 bn level 3.8% 3.4% 3
Slide 14: Agenda: Business divisions results
14 • Market review • Operating highlights • Strategy update • Q4’21 Financials • Business divisions results
Slide 15: Q4'21: Russian Flat Products
Q4’21: RUSSIAN FLAT PRODUCTS 15 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Steel output increased by 26% qoq to 3.6 m t as capacity utilization at NLMK Lipetsk grew +23% +9% following repair works completion in August 3.27 4.00 3.67 2.99 3.50 2.98 0.57 0.92 3.00 1.15 Shipments increased by 23% qoq to
Slide 16: Q4'21: Russian Long Products
Q4’21: RUSSIAN LONG PRODUCTS 16 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments remained flat qoq at 0.75 m t 0% -4% – (-) Decrease in billet productions amid low profitability in the context of export duties 0.78 0.75 0.75 0.75 – (+) Improved finished long products sales due to 0.18 0.18 0.09 0.
Slide 17: Q4'21: Mining
Q4’21: MINING 17 SHIPMENTS (m t) AND REVENUE ($ bn) Shipments grew by 3% qoq to 5.0 m t driven by higher output at NLMK Lipetsk +3% 100 % -33% Revenue decreased by 33% qoq to $0.52 bn due 540 % 520 % 500 % 4.85 4.97 80% 0.78 to lower iron ore prices 480 % 460 % 440 % 420 % 400 % 380 % 0.52 360 % 60%
Slide 18: Q4'21: NLMK USA
Q4’21: NLMK USA 18 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments decreased to 0.5 m t (-11% qoq) -11% +5% – (-) Decline in consumer activity amid expectations 0.59 1.04 1.09 of lower prices going forward 0.52 Revenue improved by 5% qoq to $1.1 bn 0.33 0.54 0.51 0.27 – (+) Higher sales prices EB
Slide 19: Q4'21: NLMK Dansteel
Q4’21: NLMK DANSTEEL 19 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments dropped by 5% qoq to 0.12 m t -5% +1% – (-) Increase in orders of premium products with longer lead times 0.17 0.17 0.13 0.12 Revenue increased to $0.17 bn (+1% qoq) – (+) Higher sales prices 0.16 0.16 – (-) Lower shipments 0
Slide 20: Q4'21: NBH
Q4’21: NBH 20 STEEL SHIPMENTS (m t) AND REVENUE ($ bn) Shipments grew by 18% qoq to 0.5 m t as the hot strip mill (HSM) at NLMK La Louvière continued its +18% +25% ramp-up after upgrade completion (Strategy 2022 558 project) 0.45 447 0.38 Revenue grew by 25% to $0.56 bn 377 0.30 296 0.25 – (+) Incre
Slide 21: Appendix
21 Appendix
Slide 22: Q4'21: NLMK output, shipments, slab cash costs
Q4’21: NLMK OUTPUT, SHIPMENTS, SLAB CASH COSTS 22 STEEL PRODUCTION, m t GROUP SHIPMENTS TO EXTERNAL CUSTOMERS BY SEGMENT, m t qoq: +5% qoq: +16% Q4'20 Q3'21 Q4'21 yoy: +6% Q4'20 Q3'21 Q4'21 yoy: +16% qoq: +26% 4.50 2.58 3.00 5.00 yoy: +22% 2.50 3.61 4.50 qoq: 0% 4.00 2.00 qoq: -10% 3.50 3.00 qoq: -1
Slide 23: Sales geography and product mix without NBH
SALES GEOGRAPHY AND PRODUCT MIX WITHOUT NBH 23 STEEL PRODUCT SALES BY REGION, m t SALES STRUCTURE BY PRODUCT, m t 4.46 5 4.46 5 5 4.22 4.15 5 4.22 4.15 0.42 Others 0.55 0.46 4 0.53 4 1.47 1.73 Commercial products 0.57 0.41 1.62 4 M. East* 4 0.53 0.71 3 0.60 3 0.88 N.America Semi-finished 3 3 0.85 0.
Slide 24: Foreign assets performance
FOREIGN ASSETS PERFORMANCE 1,2 00 24 3,0 00 1,0 00 2,5 00 SLABS SALES FROM THE RUSSIAN FLAT PRODUCTS DIVISION, k t NBH ROLLED PRODUCTS SALES, k t 800 QoQ 1,742 2,0 00 QoQ 185 Total +28% 10 549 1,363 Total +18% 600 1,229 451 1,5 00 123 371 NLMK Dansteel+50% Dansteel 65 4 146 173 2 384 45 CRC CRC +54%
Slide 25: 2021 product mix improved amid better performance of foreign divisions
2021 PRODUCT MIX IMPROVED AMID BETTER PERFORMANCE OF FOREIN DIVISIONS 25 Group shipments softened by 4% yoy SHARE OF RUSSIAN MARKET SALES IMPROVED FINISHED PRODUCTS SALES MOVED HIGHER to 16.8 m t mt -4% mt -4% – (-) Recovery of intersegmental slab sales 17.1 17.5 16.8 17.1 17.5 16.8 – (-) Normalizat
Slide 26: 2021: EBITDA and FCF
2021: EBITDA AND FCF 26 9.0 2021 FCF BRIDGE, $ m EBITDA BY DIVISION, $ m 7.3 0 100 200 300 400 500 600 700 800 900 1,0 00 1,1 00 1,2 00 1,3 00 1,4 00 1,5 00 1,6 00 1,7 00 1,8 00 1,9 00 2,0 00 2,1 00 2,2 00 2,3 00 2,4 00 2,5 00 2,6 00 2,7 00 2,8 00 2,9 00 3,0 00 3,1 00 3,2 00 3,3 00 3,4 00 3,5 00 3,6
Slide 27: Company IR contacts
COMPANY IR CONTACTS 27 Dmitriy Kolomytsyn, CFA Director, Corporate Finance, IR Ekaterina Kokareva, CFA Head of IR 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