Nlmk · RUS:NLMK
Nlmk — FY2009 Earnings Presentation
27 slides from Nlmk's earnings presentation, 2010
Slide 1: Novolipetsk Steel (NLMK) FY'09 and Q4'09 Financial and Production Results
Novolipetsk Steel (NLMK) FY’09 andd Q4’09 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. Group Financial and Operating Performance 2. Segmental Performance 3. Key Financial Indicators 3
Slide 4: Key highlights
Key highlights Continuous improvement in operating performance 2009 Earnings per share Financial performance 2009 0.06 $/share 0.049 o Sales 10.6 m t, +1% y‐o‐y o Revenue: $ 6,140 m, ‐48% y‐o‐y 0.04 0.027 o EBITDA: $1,444 m, ‐68% y‐o‐y 0.02 o Net income: $215 m, ‐91% y‐o‐y 0.00 o Debt profile improv
Slide 5: Production highlights
Production highlights Global demand and new assets ensured record production level • Strong recovery to 10.6 m t, +1% yoy Crude steel production in 2008‐2009 3,500 35% o Lipetsk site – 8.5 m t ,000 3,000 30% o Beta Steel Corp. – 0.4 m t 2,500 25% o NLMK Long products – 1.7 m t 2,000 20% • Utilizatio
Slide 6: Sales: volumes and prices
Sales: volumes and prices Seasonal decrease in Q4 2009 sales offset by higher HVA share • Q4 2009: 2 787m t (‐12% q‐o‐q) HVA products sales share o Seasonal decrease in sales volumes 32% o Decline of construction activity Dynamo steel 30% Transformer • Growth in HVA products Plates 28% o Transformer
Slide 7: Revenue
Revenue Sequential revenue growth supported by diversified product mix • Seasonally weaker demand offset by Q4 steel sales and revenues1 by product mix o higher average selling prices in Q4 2009 due to Total 2.787 m t Total $1,815 m 3000 improved product mix Pig Iron 233 281 2500 Slabs and billets •
Slide 8: Production costs
Production costs V ti l integration Vertical i t ti and d high hi h utilization tili ti rate t d drove costt tto record d llow llevell • High level of capacity utilization Cash costs by product • Improvement in production efficiency 400 $ /t / quarterly 347 o Including reduction in fixed costs throu
Slide 9: Profitability
Profitability C ti Continuous iimprovementt iin profitability fit bilit • Quarterly EBITDA margin improved by 14 p.p YTD Operating profit and EBITDA • Q4’09 EBITDA +9% (q‐o‐q), margin of 29% 5,000 $ million illi 50% o Increase of average prices 39% o Strong control of costs 4,000 40% 29% o Profit gr
Slide 10: Debt position
Debt position Short‐term debt optimization • Total debt position of $2.495 bn including: Short term debt payment* o ST d debt b $0.556 $0 556 bn b 06 0.6 $ bn b 0.16 o LT debt $1.939 bn 0.6 ** 0.4 0.12 • Net debt $0.796 bn 0.16 • $1.699 bn of cash and short‐term investments 0.2 0.16 as of Dec 31, ‘0
Slide 11: Capex Program continues to drive growth
Capex Program continues to drive growth Key projects continued, timeline maintained • Continuing implementation of Growth Strategy Crude steel capacity growth, 2009‐2012 o Construction of Blast Furnace №7 m tpa EAF: 1.5 m tpa BF: 3 BF 3.4 4 m tpa Since 2012 • 60% investments done 16 Since mid‐2011 1
Slide 12: Investments
Investments Key goals Investments o Expand low cost crude steel production platform 2.4 $ bn o Develop HVA product portfolio 2.0 1.9 1.9 o Add new niche products 1.6 o Improve quality 12 1.2 1.1 o Increase exposure to key markets 0.8 1.0 0.6 o Further improve vertical integration 0.4 0.0 2006 2007 2
Slide 13: Coal supplies
Coal supplies … risk mitigation • Key risks o Growing coal prices put additional pressure on overall Coal price vs EBITDA per tonne cash cost 800 $/t 700 • Risks mitigated by 600 o Diversified suppliers’ base 500 o Integration into coke operations 400 300 o Option to develop own coal deposit 200 o D
Slide 14: Outlook
Outlook • Q1 2010 Outlook o Q1 2010 steel production at ~2.8 m t, flat q‐o‐q o Moderate impact on average selling prices due to lag in revenue recognition o EBITDA margin above 20% o Demand increase of niche products, incl. transformer and pre‐painted • FY2010 Outlook o Increase of crude steel produ
Slide 15: Table of Contents
Table of Contents 1. Group Financial and Operating Performance 2. Segmental Performance 3. Key Financial Indicators 15
Slide 16: Segments' impact
Segments’ impact Key factor – Steel segment sales growth • In Q4’09 Steel segment drove financial performance of the Group o Revenue +$105 m (q‐o‐q) Ch Changes iin revenue ffrom thi third d parties ti o Operating profit +$94 m Q4 2009 1,815 Steel segment +105 • Growth of intersegment sales due to Lo
Slide 17: Steel Segment
НЛМК Steel Segment Key growth driver • Q4 ‘09 declined driven by a seasonal softening Sales revenues from external customers by product in domestic demand 1,800 $ mln 1 597 1,597 Billets and long products 1,493 • Increase of HVA products sales 1,500 49 64 42 Dynamo steel 29 147 127 • Growth of 4Q fi
Slide 18: Long Products Segment
НЛМК Long Products Segment Seasonal correction in demand • Seasonal decrease of sales on domestic market Sales revenues from external customers by product due to slowdown in construction during winter 200 $ mln 182 period i d 11 158 • Negative financial results coming from (a) goodwill 150 32 12 Scr
Slide 19: Mining Segment
НЛМК Mining Segment Iron ore production in line with Parent plant utilization • Control over raw material supplies allow to hedge Sales revenues from external customers by product risks against rising raw material prices 15 $ mln 12 5 12.5 • Maximum utilization of captive iron‐ore in Q4 ‘09: Iron or
Slide 20: Coke-chemical Segment
Coke‐chemical Segment Increase of coke deliveries to Lipetsk site Sales revenues from external customers by product • Increase of coke and coal prices in Q4 2009 $ mln • Improvement in financial performance in Q4 2009: 60 53 46 o Revenue +25% (q‐o‐q) 50 o Operating profit +16% (q‐o‐q) 40 Coke • Doub
Slide 21: Table of Contents
Table of Contents 1. Group Financial and Operating Performance 2. Segmental Performance 3. Key Financial Indicators 21
Slide 22: Q4 2009 EBITDA to Cash Bridge
Q4 2009 EBITDA to Cash Bridge Increase in cash ‐395 Exchange rate +14 Dividends ‐1 Free cash flow ‐408 Other financial operations3 ‐45 45 Borrowings/ (repayments) ‐93 Acquisition and construction of PPE ‐413 Cash flow from operations 143 Income tax ‐50 Non‐cash operations2 ‐216 Change in working cap
Slide 23: Consolidated Statement of Income
НЛМК Consolidated Statement of Income Q4 2009 Q3 2009 Q4 2009/Q3 2009 2009 2008 2009/ 2008 (mln USD) +/‐ % +/- % Sales revenue 1 815 1 739 75 4% 6 140 11 699 (5 559) (48%) 0% Production cost (1 000) (1 003) 3 (0%) (3 672) (5 809) 2 137 (37%) Depreciation and amortization (129) (126) (3) 3% 0% (478)
Slide 24: Consolidated Balance Sheet
НЛМК Consolidated Balance Sheet as at as at as at as at as at as at as at as at as at as at 31.12.2009 30.09.2009 30.06.2009 31.03.2009 31.12.2008 30.09.2008 30.06.2008 31.03.2008 31.12.2007 31.12.2006 (mln. USD) ASSETS Current assets 3 877 3 854 4 161 4 271 5 346 6 702 5 249 5 094 4 388 3 050 Cash
Slide 25: Consolidated Cash Flow Statement
НЛМК Consolidated Cash Flow Statement Q4 2009 Q3 2009 Q4 2009/Q3 2009 2009 2008 2009/ 2008 (mln. USD) +/‐ % +/‐ % Cash flow from operating activities Net income 273 145 128 88,4% 98 2 277 (2 179) (95,7%) Adjustments to reconcile net income to net cash provided by operating activities Depreciation an
Slide 26: Segmental Information
Segmental Information Q4 2009 Intersegmental Steel Long products Mining Coke‐chemical All other Totals operations and Consolidated (million USD) balances Revenue from external customers 1 597 158 12 46 0,4 1 815 1 815 Intersegment revenue 24 86 124 125 0,0 3 586 (359) Gross profit 578 11 56 36 0,1 6
Slide 27: www.nlmk.com
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.nlmk.com
Novolipetsk Steel (NLMK) — FY2009 Earnings Presentation on 6ix