1NLMKMoscow, 17 May 2013Q1 2013US GAAP CONSOLIDATED RESULTS
This document is confidential and has been prepared by NLMK (the “Company”) solely for use at the investor presentation of...
INTERNATIONAL MARKETDEMAND AND SUPPLY• Restocking from low levels in late 2012• Subsequent spike in steel supply / utiliza...
RUSSIAN MARKET0%10%20%30%40%50%60%2,02,53,03,54,0Jan-11Mar-11May-11Jul-11Sep-11Nov-11Jan-12Mar-12May-12Jul-12Sep-12Nov-12J...
Global average0%20%40%60%80%100%120%Q108Q208Q308Q408Q109Q209Q309Q409Q110Q210Q310Q410Q111Q211Q311Q411Q112Q212Q312Q412Q113No...
76%10%14%0%20%40%60%80%100%Sales by industryPipe & tubeMachine buildingConstructionSALES GEOGRAPHYHIGH SALES IN RUSSIA• Sa...
3% 6%4%6%7%8%13%11%4%6%2%2%9%8%23%20%34%21%1%1%11%Sales Revenue0%20%40%60%80%100% Revenue from otheroperations*Pig ironSla...
NLMK: MANAGEMENT GAINS PROGRAMBUSINESS PROCESS IMPROVEMENT PROGRAMME• Novolipetsk• Altai-KoksOPTIMIZATION OF COKE CHEMICAL...
19361115146220201453100005001000150020002008 2009 2010 2011 2012 2013П31%69%Столбец1DevelopmentMaintenance capex2013 INVES...
INVESTMENTS: STOILENSKYSTOILENSKY• One of the most efficient iron ore concentrate producers inthe world• Cash cost of iron...
INVESTMENTS: NLMK KALUGARUSSIAN REBAR MARKET• Consumption growth in Russia: +82% against Q1‘10• Import growth: +59% agains...
KEY HIGHLIGHTSFINANCIAL RESULTS• Revenue: $2,856 m (+2% qoq)• EBITDA: $318 m (-18%)• EBITDA margin: 11% (-2.8 p.p.)• Net p...
26939230-177299-154261-18-22-18318CASH FLOWPOSITIVE FREE CASH FLOW• Working capital at a stable level despite the growth i...
DEBT LEVERAGELOWER NET DEBT• Net deb: $3.45 bn (-3% qoq)• Cash and equivalents1: $1.49 bn (+41%)• Net debt / 12M EBITDA: 1...
1 3267321 0141 823$0$500$1 000$1 500$2 0002013 2014 2015 2016 and onwardPXF RUB bonds ECA EBRD NLMK Europe Bank loans Euro...
OUTLOOK - Q2 201316MARKET OVERVIEW• In export markets, demand growth driven by restocking in early 2013 was replaced by a ...
SEGMENTS17
SEGMENTS CONTRIBUTION – Q1 2013STEEL SEGMENT• Lower profitability due to higher prices for input ironore and lower prices ...
1,79 1,82 1,841,70 1,660,42 0,460,30 0,35 0,358%14% 13%10%4%0%2%4%6%8%10%12%14%16%18%-0,20,30,81,31,82,3Q1 2012 Q2 2012 Q3...
STEEL SEGMENT (2)29303031313232Oct-12Nov-12Dec-12Jan-13Feb-13Mar-1320COST OF SALES STRUCTURE28%18%6%5%5%4%5%1%9%12%7%Iron ...
LONG PRODUCTS SEGMENTSALES AND REVENUE INCREASED• Sales went up by 7%• Revenue from third parties increased by 3%• Interse...
MINING SEGMENTSEGMENT REVENUE INCREASED• Higher prices for iron ore• Lower sales volumeso Lower demand from Novolipetsk th...
598928888 89171413 1113494125 89224 182163138191818174864544053510200400600Sales Revenue Sales RevenueSemi-finishedThick p...
24ATTACHMENTS
251 as at 31.03.20132 as at 31.12.2012SEGMENTAL INFORMATIONQ1 2013(million USD)Revenue from external customers 1 659 816 2...
QUARTERLY DATA:CONSOLIDATED STATEMENT OF INCOME26Q1 2013 Q4 2012 Q1 2013 Q1 2012(mln USD) + / - % + / - %Sales revenue 2 8...
27CONSOLIDATED CASH FLOW STATEMENTQ1 2013, Q1 2012 are official reporting periods. Q4 2012 figures are derived by computat...
28CONSOLIDATED BALANCE SHEETas at31.03.2013as at31.12.2012as at30.09.2012as at30.06.2012as at31.03.2012as at31.12.2011(mln...
www.nlmk.comNLMKInvestor relationsRussia, 115054, MoscowBakhrushina str, 18, bldg 1t. +7 495 915 15 75f. +7 495 915 79 04i...
Upcoming SlideShare
Loading in …5
×

Nlmk q1 2013 presentation (slides for analysts with segmental information)

815 views

Published on

NLMK Financial presentation fo Q1 2013 results

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
815
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
3
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Nlmk q1 2013 presentation (slides for analysts with segmental information)

  1. 1. 1NLMKMoscow, 17 May 2013Q1 2013US GAAP CONSOLIDATED RESULTS
  2. 2. 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 bereproduced, retransmitted or further distributed to any other person or published, in whole or in part, for any other purpose.This document does not constitute or form part of any advertisement of securities, any offer or invitation to sell or issue or any solicitation of any offer to purchaseor subscribe for, any shares in the Company or Global Depositary Shares (GDSs), nor shall it or any part of it nor the fact of its presentation or distribution form thebasis of, or be relied on in connection with, any contract or investment decision.No reliance may be placed for any purpose whatsoever on the information contained in this document or on assumptions made as to its completeness. Norepresentation or warranty, express or implied, is given by the Company, its subsidiaries or any of their respective advisers, officers, employees or agents, as to theaccuracy of the information or opinions or for any loss howsoever arising, directly or indirectly, from any use of this presentation or its contents.This document is for distribution only in the United Kingdom and the presentation is being made only in the United Kingdom to persons having professionalexperience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the“Order”) or high net worth entities, and other persons to whom it may otherwise lawfully be communicated, falling within Article 49(2) of the Order (all suchpersons together being referred to as “relevant persons”). Any person who is not a relevant person should not act or rely on this presentation or any of itscontents.The distribution of this document in other jurisdictions may be restricted by law and any person into whose possession this document comes should informthemselves about, and observe, any such restrictions.This document may include forward-looking statements. These forward-looking statements include matters that are not historical facts or statements regardingthe Company’s intentions, beliefs or current expectations concerning, among other things, the Company’s results of operations, financial condition, liquidity,prospects, growth, strategies, and the industry in which the Company operates. By their nature, forwarding-looking statements involve risks and uncertaintiesbecause they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions you that forward-looking statementsare not guarantees of future performance and that the Company’s actual results of operations, financial condition and liquidity and the development of theindustry in which the Company operates may differ materially from those made in or suggested by the forward-looking statements contained in this document. Inaddition, even if the Company’s results of operations, financial condition and liquidity and the development of the industry in which the Company operates areconsistent with the forward-looking statements contained in this document, those results or developments may not be indicative of results or developments infuture periods. The Company does not undertake any obligation to review or confirm analysts’ expectations or estimates or to update any forward-lookingstatements to reflect events that occur or circumstances that arise after the date of this presentation.By attending this presentation you agree to be bound by the foregoing terms.DISCLAIMER2
  3. 3. INTERNATIONAL MARKETDEMAND AND SUPPLY• Restocking from low levels in late 2012• Subsequent spike in steel supply / utilization rates (+4 p.p.)PRICES• Divergent regional price dynamics for steel productso Europe: price growth in Q1’13o USA: stable levels in Q1 and a weakening in Q2 amid the increasedsupply and lower scrap priceso Price growth in S.E. Asia gave way to a weakening on the back ofsteel stock growth and lower raw material prices• Growth in global iron ore prices in Q16080100120140160180$200$300$400$500$600$700$800$900Jan-12Feb-12Mar-12Apr-12May-12Jun-12Jul-12Aug-12Sep-12Oct-12Nov-12Dec-12Jan-13Feb-13Mar-13Apr-13HRC, USA HRC, EU HRC, China Iron ore, China (CFR), rhsPRICES$/t Quarterly global price dynamicsadjusted forproduction / sales cycleSource: Steel Business Briefing0,60,70,80,911,11,21,3Jan-11Mar-11May-11Jul-11Sep-11Nov-11Jan-12Mar-12May-12Jul-12Sep-12Nov-12Jan-13Mar-13Inventory in GermanyInventory in ChinaInventory in USAIndex, January 2011=1STEEL INVENTORIESSources: CRU, Bloomberg (China statistic, Metals Service Center Inst.)Quarterly inventory changeChina: +31%Germany: -0%USA: +6.3%355%65%75%85%Jan-11Mar-11May-11Jul-11Sep-11Nov-11Jan-12Mar-12May-12Jul-12Sep-12Nov-12Jan-13Mar-13Global average China North America EU (27)STEELMAKING CAPACITY UTILIZATIONSource: World Steel Association+ ~ 4 p.p. – increase in global capacity runrates for Q1’13/Q4’12
  4. 4. RUSSIAN MARKET0%10%20%30%40%50%60%2,02,53,03,54,0Jan-11Mar-11May-11Jul-11Sep-11Nov-11Jan-12Mar-12May-12Jul-12Sep-12Nov-12Jan-13Mar-13Apparent steel use Import share in steel use in the RFSTEEL CONSUMPTIONmt/monthSource: Metal ExpertDEMAND• Seasonal slowdown in activity from construction and aweakening in machine building• Imports still represent significant share in supplyo + 40% yoy in long product imports (for Q1’13)PRICES• Softening in steel priceso Weak conditions in the domestic marketo Intensified competition in the Russian market due to fadingconsumption in external marketsSeasonal growthin demandImport share in consumption –over 16%Q1’13 STEEL DEMAND STRUCTURE NLMK SHARE IN RUSSIAN PRODUCTION68%7%11%14% Construction and infrastructureSteel constructions and shapingMachine building, incl. automotivePipe & tube420%29%16%47%22%36%100%~70%20% 20%SteelproductionHVAsteelHRCCRCGalvanizedPre-paintedTransformerDynamoRebarMetalwareProduction data for Q1’13. Share in production. HVA – high value addedSources: WSA, Metal Expert, NLMK data
  5. 5. Global average0%20%40%60%80%100%120%Q108Q208Q308Q408Q109Q209Q309Q409Q110Q210Q310Q410Q111Q211Q311Q411Q112Q212Q312Q412Q113Novolipetsk3,63,8 3,8 3,7 3,701234Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013Steel Segment Long Products Segment Foreign Rolled Products SegmentPRODUCTIONCAPACITY UTILIZATION RATE: ~94%• Novolipetsk: 97% (flat)• NLMK Long Products: 83% (+2 p.p.)• NLMK USA: 88% (-2 p.p)Q1’13 STEEL PRODUCTION GROWTHNLMK Group: 3.7 mt, +1%, including:• Novolipetsk: 3.0 mt (flat)• NLMK Long Products: 0.5 mt, +3%• Foreign Rolled Products: 0.2 mt, +2%5STEEL PRODUCTIONmtSTEELMAKING CAPACITY UTILIZATION90%81%97%94%88%83%97%94%70%80%90%100%NLMK USA NLMK Russia Long Novolipetsk NLMK GroupQ4 2012 Q1 2013NLMK: STEELMAKING CAPACITY UTILIZATION
  6. 6. 76%10%14%0%20%40%60%80%100%Sales by industryPipe & tubeMachine buildingConstructionSALES GEOGRAPHYHIGH SALES IN RUSSIA• Sales in Russia: +0% qoq and +20% yoy• Higher long product sales: +8% qoq and +8% yoy• Flat steel: -12% qoq (seasonal factor) and +0% yoy• Increase in slab sales to pipe & tube manufacturers to 0.15 mt3% QOQ GROWTH IN SALES IN EXPORT MARKETS• Export sales: +3% to 2.44 mt• Europe: +9% to 0.65 mt driven by restocking• North America: +7% to 0.48 mt• Higher deliveries to the Middle East and S.E.Asia supported bystable demand61,10 1,32 1,320,83 0,60 0,650,38 0,30 0,360,630,450,480,630,51 0,520,300,50 0,430123Q1 2012 Q4 2012 Q1 2013Other regions S.E.AsiaNorth America Middle East, incl. TurkeyEU RussiaSALES BY REGION3,872mt 3,678REVENUE BY REGION1,02 1,09 1,060,70 0,58 0,570,27 0,24 0,220,460,30 0,370,360,23 0,280,290,38 0,350123Q1 2012 Q4 2012 Q1 2013Other regions S.E.AsiaNorth America Middle East, incl. TurkeyEU Russia3,094$ m2,8033,7612,856NLMK SALES IN RUSSIA BY INDUSTRY and BY PRODUCT32%56%12%0%20%40%60%80%100%Sales by productSemi-finisheproductsFlat steelLong steel
  7. 7. 3% 6%4%6%7%8%13%11%4%6%2%2%9%8%23%20%34%21%1%1%11%Sales Revenue0%20%40%60%80%100% Revenue from otheroperations*Pig ironSlabsHRCLong productsMetalwarePlateCRCGalvanizedPre-paintedElectrical steel1,03 0,84 0,901,401,22 1,330,330,330,361,111,28 1,1701234Q1 2012 Q4 2012 Q1 2013Semis Long steel HVA steel Flat steelSALES STRUCTURE7SALES BY PRODUCTmtSALES AND REVENUE BY PRODUCT IN Q1’13HVAproducts*Note: Revenue from other operations include revenues from sales of iron ore,coke, scrap and others-9%-8%-1%5%7%7%8%13%27%38%-20% -10% 0% 10% 20% 30% 40%SlabsNGO steelCRCMetalwareHRCGalvanizedLongsPre-paintedGO steelPlatesQ1/Q4 CHANGE IN SALES BY PRODUCTQ1’13: +2% INCREASE IN FINISHED PRODUCT SALES• Share of finished products: 69% (+4 p.p. qoq), including 51%of HVA steel• Growth in HVA products sales: +9% qoq• Growth in thick plate sales – rolling capacity upgradescompleted at NLMK DanSteel• Lower semi-finished product sales: -9% qoq3,8723,678 3,761
  8. 8. NLMK: MANAGEMENT GAINS PROGRAMBUSINESS PROCESS IMPROVEMENT PROGRAMME• Novolipetsk• Altai-KoksOPTIMIZATION OF COKE CHEMICAL, SINTERING, BOFOPERATIONS• Maximum use of equipment potential• Minimizing raw material, fuel, material and energyconsumption• Optimizing fuel and raw material balance structure• Reducing environmental footprint, including wastemanagementSIGNIFICANT ECONOMIC POTENTIAL• Costs cut by ~RUB2 bn/y (~$63 m) due to programmedmeasures in 2013 alone, target savings of over $100 m/y8LOWER PRODUCTION EXPENSESREDUCED RAW MATERIAL CONSUMPTIONFOLLOWING OPTIMIZATION MEASURES100% 100% 100%96,5%97,6%93,0%80%85%90%95%100%105%Coal Pellets Scrap*Before optimization AfterLower specific raw material consumption, 100% - Dec’12 level31727,48,824,601020304050607080CokechemicaloperationsSinteringoperationsBFoperationsBOFoperationsTotal$ m Target savings of over $100 m* Reduced consumption of purchased scrap
  9. 9. 19361115146220201453100005001000150020002008 2009 2010 2011 2012 2013П31%69%Столбец1DevelopmentMaintenance capex2013 INVESTMENTS9CAPEX DYNAMICS$ mCAPEX PROGRAMME• Lower capital intensity• Focus on efficiency enhancement and niche products• Balanced approach to assessing new projects• Flexibility under various market scenariosLONG PRODUCTS DIVISION DEVELOPMENT• NLMK Kaluga Mini Mill (EAF+ rolling mill) of 1.5 mt/y• Development of scrap collecting facilitiesSTRENGTHENING VERTICAL INTEGRATION• Pelletizing Plant construction projects launched at Stoilensky• Coke chemical projects (PCI, etc.) to reduce energy costsQUALITY IMPROVEMENT AND NICHE PRODUCTS• Mastering the revamped rolling mill at NLMK DanSteel• Niche product development at NLMK Clabecq• Continued GO steel development programmed atNovolipetsk and at VIZ-SteelMAINTENANCE CAPEX PER TONNE OF STEEL4524173024 20010203040502008 2009 2010 2011 2012 2013F$ /t
  10. 10. INVESTMENTS: STOILENSKYSTOILENSKY• One of the most efficient iron ore concentrate producers inthe world• Cash cost of iron ore concentrate: $23/tPROJECT TO ACHIEVE 100% SELF-SUFFICIENCY IN IRON ORECONCENTRATE• Mine and infrastructure expansion• Beneficiation capacity expansion (+4 mt/y)• Pelletizing Plant construction (6 mt/y of pellets). Expectedlaunch: 2015-2016• Novolipetsk annual pellet consumption: ~6 mt1085%100%0%20%40%60%80%100%2012 2016 (captive pellet production)~125% in iron oreconcentrate supplies0% in pellet suppliesGROWTH IN GROUP IRON ORE SELF-SUFFICIENCY100% in iron oreconcentrate supplies100% in pelletsupplies~602468102012 20161214>18024681012141618202010 2011 2016CAPACITY GROWTHmt/y+ over 6 mt+ 6 mtIron ore concentrate Pelletsmt/y0
  11. 11. INVESTMENTS: NLMK KALUGARUSSIAN REBAR MARKET• Consumption growth in Russia: +82% against Q1‘10• Import growth: +59% against Q1‘12, x3 against Q1’10• Regional demand/supply imbalanceMODERN 1.5 MT/Y EAF CAPACITIES• Product mix in demand from construction: rebar and sections• Favorable location: 90 km from Moscow – consumption cluster(Central district)• Total investments c. $1.2 billion (80% by 2013)• Cost advantage (logistics, modern production, scrap collectionnetwork)11LONG STEEL PRODUCTION/CONSUMPTION BY REGIONSources: Metal Expert. Data for 201238080010000200400600800100012002013 2014 2015NLMK KALUGA PRODUCTION PLAN46%21%8% 9% 8% 6%1% 0%17%12%31%18%11%7%2% 1%0%10%20%30%40%50%UralsSiberiaCentralPrivolzhskyNorth-WestSouthFarEastNorthCaucasianShare in long product productionShare in long product consumptionlong product deficit –app. 3.8 mt/y0%5%10%15%20%25%30%0,00,51,01,52,0Q12008Q22008Q32008Q42008Q12009Q22009Q32009Q42009Q12010Q22010Q32010Q42010Q12011Q22011Q32011Q42011Q12012Q22012Q32012Q412Russian production Import Import share, rhsREBAR MARKET, CONSUMPTION IN RUSSIASource: Metal Expertmt/qRecord level of 2008Import,share in %23%‘000t/y
  12. 12. KEY HIGHLIGHTSFINANCIAL RESULTS• Revenue: $2,856 m (+2% qoq)• EBITDA: $318 m (-18%)• EBITDA margin: 11% (-2.8 p.p.)• Net profit: $38 m• Operating cash flow: $261 m (-22%)• Capex: $154 m (-48%)• Net debt: $3,453 m (-3%)• Net debt/EBITDA: 1.93OPERATING RESULTS• Steel output: 3,696 mt (+1%), steelmaking capacityutilization - 94%• Sales: 3,761 mt (+2%)• Revenue/t: $759 (-0.4%)• Cash cost per t at Novolipetsk: $3643,093,263,002,80 2,8614%18%16%14%11%0%2%4%6%8%10%12%14%16%18%20%$2,0$2,2$2,4$2,6$2,8$3,0$3,2$3,4Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013Revenue EBITDA margin, rhsREVENUE AND EBITDA MARGIN$ bn122003004005006003 123 236 342 454 546 632Q1 13 Q4 12Cumulative BOF capacities, mt/yNLMKNovolipetskGLOBAL STEEL PRODUCTION COSTS$/tSource: World Steel Dynamics.
  13. 13. 26939230-177299-154261-18-22-18318CASH FLOWPOSITIVE FREE CASH FLOW• Working capital at a stable level despite the growth insales from a low Q4’12 base• Q1 capex fell by 48% qoq to $154 m, due to seasonalfactors and the completion of a number of projectsв• Net inflow on credits and loans of $299 m – Eurobondissue and RUB bond and credit settlement• Placement of special deposits for refinancing in 2013• Positive free cash flow for shareholders13OPERATING CASH FLOW AND CAPEX5023046843332613584533472961540200400600800Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013Operating cash flow Capex$ m$ mQ1’13 CASH FLOWEBITDAWorking capital changeOther and non cash operationsIncome taxOPERATING CASH FLOWPurchase of property plant andequipmentNet loansDeposit placement (including forrefinancing) and other financialoperationsFREE CASH FLOW TO THE FIRMFX rate changeCHANGE IN CASH
  14. 14. DEBT LEVERAGELOWER NET DEBT• Net deb: $3.45 bn (-3% qoq)• Cash and equivalents1: $1.49 bn (+41%)• Net debt / 12M EBITDA: 1.93• Gross debt: $4.94 bn (+7%)DEBT PORTFOLIO OPTIMIZATION• Eurobond issue for a total of $800 m• RUB bond settlement for $325 m• Average debt maturity extended to 3.3 yearsINVESTMENT GRADE RATINGS• Investment grade rating (S&P, Moody’s, Fitch)• Rating confirmed in Q1’13 by two agencies141. Cash and equivalents and ST deposits2. As of the end of the quarter3,02,52,7 3,13,32,02,22,42,62,83,03,23,4Q12012Q22012Q32012Q42012Q12013MATURITY AND NET DEBT/EBITDAWeighted averagematurityYears tomaturity1,691,901,841,881,931,51,61,71,81,92,0Q12012Q22012Q32012Q42012Q12013Net debt/EBITDA22,83,51,8+0.9 -0.61,5$0$1$2$3$4$5$631 Dec 12 Debt raising Debt settlement andmanagement31 Mar 13ST debt LT debt$ bnCHANGE IN DEBT POSITIONNET DEBT CHANGE3,57-0.26 +0.153,452,002,252,502,753,003,253,503,7531 Dec 12 Operating cash flow Capex 31 March 13$ bn4.944.63
  15. 15. 1 3267321 0141 823$0$500$1 000$1 500$2 0002013 2014 2015 2016 and onwardPXF RUB bonds ECA EBRD NLMK Europe Bank loans Eurobonds (USD)1491 14842 358553369443 120$0$1 000$2 000$3 000$4 000$5 000Liquid assets Q213 Q313 Q413 Q114SETTLEMENT OF FINANCIAL LIABILITIESMATURITY SCHEDULE• Substantial liquidity cushion• ST debt: $1.48 bno PXF and ECA financing: $0.3 bno Exchange bond put option for RUB 10 bn• LT debt: $3.46 bno Eurobondso RUB bondso Long term part of ECA and liabilities of European assetsLIQUID ASSETS AND ST DEBT MATURITY1TOTAL DEBT MATURITY2$ mINTEREST EXPENSES6762 65 68640%5%10%15%20%25%30%35%010203040506070Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013Interest expenses, lhs Interest expenses to EBITDA, rhs1. The ST maturity payments include interests accrued and bond coupon payments2. Maturity payments do not include interest$ m Committed credit linesCash and equivalents$ m15
  16. 16. OUTLOOK - Q2 201316MARKET OVERVIEW• In export markets, demand growth driven by restocking in early 2013 was replaced by a downward trend• Capacity utilization in some regions remains high, aggravating the demand/supply imbalance amid weak marketconditions• The downward trend for steel prices in the market is outpacing the decrease in raw material prices• In export markets (USA, Europe) prices are expected to remain volatile, namely for semi-finished productsSTEEL PRODUCTION• NLMK Group’s steel production in Q2’13 is expected to be in line with Q1’13FINANCIAL RESULTS• In Q2, revenue is expected to grow 2-3% qoq, supported by the seasonal recovery in demand in Russia and thecorresponding price growth for rolled steel in the region, as well as the lag in the recognition of export sales• These factors, coupled with stable costs, are expected to increase the Company’s profitability qoq.
  17. 17. SEGMENTS17
  18. 18. SEGMENTS CONTRIBUTION – Q1 2013STEEL SEGMENT• Lower profitability due to higher prices for input ironore and lower prices for steel productsFOREIGN ROLLED PRODUCTS SEGMENT• Lower negative financial results following thecompletion of NLMK DanSteel reconstruction andincreased demand in the EULONG PRODUCTS SEGMENT• Lower long product prices not supported by acorresponding decline in scrap prices were the keyfactor behind the marginal profitability declineMINING SEGMENT• High level of profitability maintained83-26 2021526318$0$50$100$150$200$250$300$350SteelSegmentForeignRolledProductsSegmentLongProductsSegmentMiningSegmentOtherfactorsQ12013181 5607062911076811 9841 626775280876432 125- 1 000 2 000 3 000Steel SegmentForeign Rolled Products SegmentLong Products SegmentMining SegmentIntercompany operaionsConsolidated production expensesQ1 2013 Q4 2012PRODUCTION COSTS BY SEGMENTS$ mSEGMENT CONTRIBUTION TO Q1 EBITDA$ m1 795 1 816 1 836 1 703 1 659989 1 026 759692 816275 329314281 288$0$500$1 000$1 500$2 000$2 500$3 000$3 500Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013Steel Segment Foreign Rolled Products SegmentLong Products Segment Mining SegmentOthersSALES REVENUE FROM THIRD PARTIES$ m
  19. 19. 1,79 1,82 1,841,70 1,660,42 0,460,30 0,35 0,358%14% 13%10%4%0%2%4%6%8%10%12%14%16%18%-0,20,30,81,31,82,3Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013Revenue from third parties, lhsRevenue from intercompany sales, lhsEBITDA maring, rhsSTEEL SEGMENTSTABLE SALES VOLUMES• Higher slab sales to the domestic market• Sales of value added products increasedLOWER PROFITABILITY• Spread between steel and raw materials narrowed• Seasonally lower demand from consuming industries• Higher railway tariffs• Time lag in export revenue recognition. Part of Q4’12export operations was reflected in the results.1,62 1,47 1,64 1,54 1,470,740,750,82 0,93 0,900,00,51,01,52,02,5Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013Domestic sales Export sales$ bnREVENUE AND EBITDA MARGIN3% 6%3%3%6%9%5%7%14%13%21%17%47% 34%2%1%0%8%0%10%20%30%40%50%60%70%80%90%100%Sales RevenueOther revenue*Pig ironSlabHRCCRCGalvanizedPre-paintedDynamoTransformerValue addedproductsSALES AND REVENUE STRUCTURE IN Q1’132,371,000 t $1,659 mtSALES TO THE DOMESTIC AND EXPORT MARKETSmt* Revenue from the Segments sales of other productsOrdinarygrades19
  20. 20. STEEL SEGMENT (2)29303031313232Oct-12Nov-12Dec-12Jan-13Feb-13Mar-1320COST OF SALES STRUCTURE28%18%6%5%5%4%5%1%9%12%7%Iron oreCoke and coking coalScrapFerroalloysOther raw materialsElectricityNatural gasOther energy resourcesPersonnelOther expenses incl change in inventoryDepreciation59 5135 3119 2120 2129 3437 3459 73104 99-50100150200250300350400Q4 2012 Q1 2013Coke and coking coalIron oreScrapOther materialsElectricityNatural gasPersonnelOther expenses$361/tSLAB CASH COST STRUCTURE*CONSOLIDATED SLAB COSTS AND FX RATERUB/$27%20%9%9%6%6%9%14%$364/t$/tStronger RUBto US dollarby 2%* - Consolidated cost of slab produced at NovolipetskSTABLE SLAB PRODUCTION COSTS (+1% QOQ)• Pellet prices increased• Higher railway tariffs• Positive effect of the optimization programmeNEGATIVE IMPACT OF THE FX RATE• RUB appreciation against USD: +2% on average• 90% of the Segment’s expenses are nominated in RUB395411383361 364200250300350400450Q1 12 Q2 12 Q3 12 Q4 12 Q1 13$/tSlab cash cost* RUB/USD rate
  21. 21. LONG PRODUCTS SEGMENTSALES AND REVENUE INCREASED• Sales went up by 7%• Revenue from third parties increased by 3%• Intersegmental revenue declined by 33% due to lowerscrap consumption by the Steel Segment6% EBITDA MARGIN• Long products/scrap spread narrowedSTABLE PRODUCTION COSTS• Production costs per tonne of steel declined by 1% to $452due to higher utilization rates and lower fixed costs16% 19%84% 79%2%0%20%40%60%80%100%Sales RevenueOther revenue*Long productsMetalwareValue addedgrades430,000 t $288 mRevenuefromordinaryproducts275329314281 2887316212288598%10% 14%8%6%-25%-20%-15%-10%-5%0%5%10%15%20%25%070140210280350Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013Revenue from third parties (LHS)Revenue from intercompany sales (LHS)EBITDA margin (RHS)REVENUE AND EBITDA MARGIN$ millionQ1 SALES AND REVENUE STRUCTURE21COST OF SALES STRUCTURE67%3%2%8%8%5%7%ScrapFerroalloysOther materialsElectricityPersonnel costsOther expensesDepreciation* Revenue from other products sales
  22. 22. MINING SEGMENTSEGMENT REVENUE INCREASED• Higher prices for iron ore• Lower sales volumeso Lower demand from Novolipetsk that has been usingaccumulated inventorieso High level of sales to third parties in Q4 2012 driven bydestockingSTRONGER PROFIT AND MARGIN• Profitability increased 4 p.p. to 64%• Iron ore concentrate cash cost was at $22.5/t (+$1.4/t qoq)due to stronger ruble and personnel costs indexation222,86 2,573,002,620,630,741,220,770,01,02,03,04,05,0Q2 2012 Q3 2012 Q4 2012 Q1 2013Sales to third parties Sales to NLMKIRON ORE CONCENTRATE SALESm tCOST OF SALES STRUCTURE3686 9312792281 274222 22024569%69%60% 60%64%50%60%70%80%90%100%0100200300400Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013Revenue from third parties, lhsRevenue from intersegmental sales, lhsEBITDA margin, rhs$ mREVENUE AND EBITDA MARGIN7%26%2%6%24%19%17%Raw and materialsEnergyNatural gasOther energyLabor costsOther costsDepreciation
  23. 23. 598928888 89171413 1113494125 89224 182163138191818174864544053510200400600Sales Revenue Sales RevenueSemi-finishedThick platesHRCCRCPre-paintedOther revenue274184 2281511169210482826773591865473362 407 3570200400600Sales Revenue Sales RevenueOther revenuePre-paintedCRCHRCFOREIGN ROLLED PRODUCTS SEGMENTSALES INCREASED BY 18%• Stronger demand in the United States• Increased utilization rates with improved demand inEurope• Reconstruction of NLMK DanSteel capacities completedRECOVERY IN FINANCIALS• Growth of revenue and reduction of negative EBITDA to$26 m with increased sales volumes and stable prices000’t $ m989 1 026759 692817-10 -5 -62 -72 -26-20002004006008001 0001 200Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013EBITDA Revenue from third parties$ mNLMK EUROPE SALES AND REVENUESEGMENT REVENUE AND EBITDA000’t $ m$ mlnNLMK USA SALES AND REVENUEQ4 ‘12Q1 ‘13$ m000’t 000’t $ mQ4 ‘12Q1 ‘1323
  24. 24. 24ATTACHMENTS
  25. 25. 251 as at 31.03.20132 as at 31.12.2012SEGMENTAL INFORMATIONQ1 2013(million USD)Revenue from external customers 1 659 816 288 92 0,3 2 856 2 856Intersegment revenue 346 1 59 245 650 (650)Gross profit 260 (6) 46 232 0,1 531 (8) 524Operating income/(loss) (36) (74) (2) 197 (0,4) 84 26 111as % of net sales (2%) (9%) (1%) 58% 4%Income / (loss) from continuing operationsbefore minority interest(39) (91) (36) 164 0,03 (2) 37 35as % of net sales (2%) (11%) (10%) 49% 1%Segment assets including goodwill113 987 3 753 2 791 2 408 56 22 995 (4 485) 18 510Q4 2012(million USD)Revenue from external customers 1 703 692 281 127 0,2 2 803 2 803Intersegment revenue 346 88 220 655 (655)Gross profit 376 (60) 56 220 0,2 594 26 620Operating income/(loss) 84 (118) 10 188 (1) 163 28 191as % of net sales 4% (17%) 3% 54% 7%Income / (loss) from continuing operationsbefore minority interest108 (197) 20 136 0,1 67 (71) (5)as % of net sales 5% (28%) 5% 39% (0%)Segment assets including goodwill214 714 3 861 2 822 2 270 55 23 722 (5 265) 18 458TotalsIntersegmentaloperations andbalancesConsolidatedSteelForeignrolledproductsLongproductsMining All other TotalsIntersegmentaloperations andbalancesConsolidatedSteelForeignrolledproductsLongproductsMining All other
  26. 26. QUARTERLY DATA:CONSOLIDATED STATEMENT OF INCOME26Q1 2013 Q4 2012 Q1 2013 Q1 2012(mln USD) + / - % + / - %Sales revenue 2 856 2 803 53 2% 2 856 3 094 (239) (8%)Production cost (2 125) (1 984) (140) 7% (2 125) (2 210) 85 (4%)Depreciation and amortization (207) (199) (9) 4% (207) (177) (30) 17%Gross profit 524 620 (96) (16%) 524 708 (184) (26%)General and administrative expenses (120) (113) (6) 6% (120) (136) 16 (12%)Selling expenses (257) (273) 16 (6%) (257) (280) 23 (8%)Taxes other than income tax (36) (43) 7 (15%) (36) (36) 0 (1%)Operating income 111 191 (80) (42%) 111 255 (144) (57%)Gain / (loss) on disposals of property, plant and equipment (2) (0) (1) (2) (0) (1)Gains / (losses) on investments (1) (3) 2 (72%) (1) 0 (1) 0%Interest income 10 10 (0) (1%) 10 6 4 58%Interest expense (31) (31) (0) 1% (31) (0) (30)Foreign currency exchange loss, net (27) 14 (41) (27) 21 (47) 0%Other expense, net (8) (105) 97 (92%) (8) (31) 23 (73%)Income from continuing operations before income tax 53 76 (23) (30%) 53 251 (198) (79%)Income tax (18) (81) 64 (78%) (18) (77) 59 (77%)Equity in net earnings/(losses) of associate 0 (0) 0 0 0 (0) (11%)Net income 35 (5) 41 (773%) 35 174 (138) (80%)Less: Net loss / (income) attributable to the non-controlling interest 2 (16) 19 2 (1) 3 0%0%Net (loss) / income attributable to OJSC Novolipetsk Steel stockholders 38 (22) 60 38 173 (135) (78%)EBITDA 318 390 (71) (18%) 318 432 (114) (26%)Q1 2013/Q4 2012 Q1 2013/Q1 2012Q1 2013, Q1 2012 are official reporting periods. Q4 2012 figures are derived by computational method.
  27. 27. 27CONSOLIDATED CASH FLOW STATEMENTQ1 2013, Q1 2012 are official reporting periods. Q4 2012 figures are derived by computational method.Q1 2013 Q4 2012 Q1 2013 Q1 2012(mln. USD) + / - % + / - %Cash flow from operating activitiesNet income 35 (5) 41 (773%) 35 174 (138) (80%)Adjustments to reconcile net income to net cash provided by operatingDepreciation and amortization 207 199 9 4% 207 177 30 17%Loss on disposals of property, plant and equipment 2 0 1 213% 2 0 1(Gain)/loss on investments 1 3 (2) (72%) 1 (0) 131 68 (38) (55%) 31 31Equity in net earnings of associate (0) 0 (0) (0) (0) 0 (11%)Defferd income tax (benefit)/expense (40) 23 (63) (40) (5) (34)Loss / (income) on forward contracts (6) (1) (5) 384% (6) (6)Other movements 49 6 43 49 5 44Changes in operating assets and liabilitiesIncrease in accounts receivables (102) 92 (194) (102) (58) (44) 76%Increase in inventories 75 42 33 79% 75 195 (120) (62%)Decrease/(increase) in other current assets 5 12 (8) (62%) 5 2 3 165%Increase in accounts payable and oher liabilities (17) (120) 104 (86%) (17) 13 (30)Increase/(decrease) in current income tax payable 22 15 7 48% 22 0 21Net cash provided from operating activities 261 333 (73) (22%) 261 502 (242) (48%)Cash flow from investing activitiesProceeds from sale of property, plant and equipment 1 5 (3) (71%) 1 3 (2) (52%)Purchases and construction of property, plant and equipment (154) (296) 142 (48%) (154) (358) 204 (57%)Proceeds from sale of investments 120 22 98 438% 120 239 (119) (50%)Placement of bank deposits and purchases of other investments (281) (111) (170) 153% (281) (8) (273)Acquisition of additional stake in existing subsidiary (10) (10) (10) (10)Net cash used in investing activities (323) (380) 57 (15%) (323) (123) (200) 162%Cash flow from financing activitiesProceeds from borrowings and notes payable 852 500 353 71% 852 86 766Repayments of borrowings and notes payable (553) (1 247) 694 (56%) (553) (264) (289) 109%Capital lease payments (7) (6) (1) 19% (7) (5) (2) 46%Dividends to shareholders (0) (1) 1 (87%) (0) (0) 0 (38%)Net cash used in financing activities 292 (754) 1 046 (139%) 292 (183) 475 (260%)Net increase / (decrease) in cash and cash equivalents 230 (801) 1 030 (129%) 230 196 34 17%Effect of exchange rate changes on cash and cash equivalents 39 (51) 90 (177%) 39 (68) 107 (158%)Cash and cash equivalents at the beginning of the period 951 1 803 (852) (47%) 951 797 154 19%Cash and cash equivalents at the end of the period 1 220 951 269 28% 1 220 926 294 32%Q1 2013/Q4 2012 Q1 2013/Q1 2012
  28. 28. 28CONSOLIDATED BALANCE SHEETas at31.03.2013as at31.12.2012as at30.09.2012as at30.06.2012as at31.03.2012as at31.12.2011(mln. USD)ASSETSCurrent assets 5 834 5 469 6 287 5 230 5 714 5 504Cash and cash equivalents 1 220 951 1 803 769 926 797Short-term investments 271 107 11 10 11 227Accounts receivable, net 1 557 1 491 1 559 1 642 1 786 1 573Inventories, net 2 689 2 827 2 819 2 733 2 904 2 828Deferred income tax assets 71 63 54 28 24 19Other current assets, net 25 30 42 47 63 59Non-current assets 12 677 12 988 12 661 11 873 12 895 11 753Long-term investments, net 20 19 13 9 9 8Property, plant and equipment, net 11 442 11 753 11 458 10 716 11 664 10 570Intangible assets 136 142 146 148 159 159Goodwill 776 786 778 752 802 760Other non-current assets, net 36 38 25 17 17 19Deferred income tax assets 266 250 240 230 244 237Total assets 18 510 18 458 18 949 17 103 18 609 17 257LIABILITIES AND STOCKHOLDERS’ EQUITYCurrent liabilities 2 940 3 302 4 155 3 579 3 577 2 940Accounts payable and other liabilities 1 412 1 462 1 713 1 582 1 783 1 623Short-term borrowings 1 484 1 816 2 434 1 971 1 781 1 306Current income tax liability 45 24 9 26 12 11Non-current liabilities 4 678 4 065 3 875 3 329 3 880 4 212Long-term borrowings 3 459 2 816 2 850 2 373 2 693 3 074Deferred income tax liability 765 792 752 690 762 714Other long-term liabilities 454 457 273 266 425 425Total liabilities 7 619 7 367 8 030 6 908 7 457 7 152Stockholders’ equityCommon stock 221 221 221 221 221 221Statutory reserve 10 10 10 10 10 10Additional paid-in capital 257 306 306 306 306 306Other comprehensive income (1 224) (997) (1 178) (1 738) (613) (1 489)Retained earnings 11 620 11 582 11 604 11 437 11 272 11 099NLMK stockholders’ equity 10 885 11 123 10 964 10 237 11 196 10 147Non-controlling interest 7 (33) (45) (42) (45) (42)Total stockholders’ equity 10 892 11 090 10 919 10 195 11 151 10 105Total liabilities and stockholders’ equity 18 510 18 458 18 949 17 103 18 609 17 257
  29. 29. www.nlmk.comNLMKInvestor relationsRussia, 115054, MoscowBakhrushina str, 18, bldg 1t. +7 495 915 15 75f. +7 495 915 79 04ir@nlmk.com

×