Osisko Development - Investor Presentation - May 2024
Presentation q3 2014 (us gaap) eng nov 2014 +
1. 1
Moscow, 11 November 2014
Q3 AND 9M’14 US GAAP CONSOLIDATED FINANCIAL RESULTS
2. This document is confidential and has been prepared by NLMK (the “Company”) solely for use at the 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 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 purchase or 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 the basis 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. No representation or warranty, express or implied, is given by the Company, its subsidiaries or any of their respective advisers, officers, employees or agents, as to the accuracy of the information or opinions or for any loss howsoever arising, directly or indirectly, from any use of this presentation or its contents.
The distribution of this document in other jurisdictions may be restricted by law and any person into whose possession this document comes should inform themselves 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 regarding the 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 uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions you thatforward-looking statements are not guarantees of future performance and that the Company’s actual results of operations, financial condition and liquidity and the development of the industry in which the Company operates may differ materially from those made in or suggested by the forward-looking statements contained in this document. In addition, 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 in future periods. The Company does not undertake any obligation to review or confirm analysts’expectations or estimates or to update any forward-looking statements 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.
2
DISCLAIMER
4. OPERATING RESULTS
•GROWTH OF UTILIZATION RATES IN Q3’14:
oNLMK Group: 96% (+2 p.p. qoq), key drivers:
◦Lipetsk site (Steel Segment): +2 p.p.
◦NLMK USA: +10 p.p.
•Q3’14 STEEL OUTPUT GROWTH:
o4.1 m t, +10%qoq
•SALES IN Q3’14:
oSales to third parties: 3.6 m t (-7% qoq)
oOne-off decrease in sales due to a prolonged revenue recognition period for Long Products segment products
oSales growth in Q4 by 2-5%
4
3.0
3.1
3.1
3.2
3.1
2.9
3.2
0.5
0.5
0.6
0.7
0.7
0.7
0.8
0.2
0.2
0.2
0.2
0.2
0.2
0.2
3.7
3.8
3.9
4.1
3.9
3.8
4.1
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Steel segment
Long products segment
Foreign rolled product segment
* NLMK Verona production volumes excluded from total since Q4’13
STEEL OUTPUT*
m t
81%
85%
98%
94%
91%
85%
100%
96%
50%
60%
70%
80%
90%
100%
NLMK USA
NLMK Longproducts
Lipetsk site
NLMK Group
Q2'14
Q3'14
Global average utilization rate
75%
UTILIZATION RATES BY SITE
Sources: global utilization rate as per WSA data
SALES
1,148
1,256
1,189
1,331
1,518
1,372
1,388
1,061
1,022
3,867
480
3,835
454
3,583
684
Q1' 14externalsales
Q1' 14intra- groupsales
Q2' 14externalsales
Q2' 14intra- groupsales
Q3' 14externalsales
Q3' 14intra- groupsales
Semis
Ordinaryproducts
HVA products
Slab sales tosubsidiaries
‘000 t
5. 0.74
0.74
0.81
0.84
0.74
0.77
0.90
0.77
0.77
0.87
0.94
0.36
0.45
0.43
0.39
0.42
0.45
0.52
0.52
0.52
0.62
0.52
1.10
1.20
1.26
1.32
1.32
1.41
1.60
1.46
1.55
1.74
1.69
0%
10%
20%
30%
40%
50%
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Q1'12
Q2'12
Q3'12
Q4'12
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Semi-finished products
Flat products
Long products
TOTAL
Russian market share (r.h.)
•STABLE POSITIONS IN THE RUSSIAN MARKET
oHigh sales in Russia in Q3’14: 1.69 m t (+6% yoy), share: 47%, growth qoqand yoy
o9M’14: growth of sales in Russia: +15% yoy:
◦Flat steel, including HVA* products: +7% yoy
◦Long products driven by NLMK Kaluga: +20% yoy
◦Semi-finished products: +39% yoy
•INTERNATIONAL MARKETS DEVELOPMENTS
oSales of the foreign assets grew by +11% yoy**
•TARGETED SEGMENTS DEVELOPMENT IN ACCORDANCE WITH STRATEGY 2017
oNLMK EU Strip: sales of flat products for automotive in Europe went up to 0.323 m t (+15% yoy, 42% of sales in 9M’14)
oNLMK EU Plates: sales of niche plates went up to 0.150 m t (+53% yoy, 18% of sales in 9M’14)
5
STRATEGIC MARKETS
FOREIGN ASSET SALES **
m t
NLMK SALES IN RUSSIA
Total sales
43%
47%
*HVA-high value added products. HVAincludes cold-rolled, galvanized, pre-painted and electrical steel
** Sales of foreign assets include sales of NBH companies
62%
58%
38%
42%
737
764
0
200
400
600
800
1000
9M'13
9M'14
Automotive
Other industries
NLMK EU STRIP
000’ t
NLMK USA
000’ t
87%
82%
13%
18%
746
858
0
200
400
600
800
1000
9M'13
9M'14
Q&T / niche thick plates
Ordinary grades
Итого
NLMK EU PLATE
000’ t
1,362
1,533
0
400
800
1200
1600
2000
9M'13
9M'14
Flat steel
45%
8. PROFITABILITY
8
•Q3’14 EBITDA: $693 M (+17% QOQ)
•Q3’14 EBITDA MARGIN: 27%
oEfficiency improvement programmes
oWidened spreads between prices for steel products and raw materials
oWeaker RUB exchange rate
•STEEL SEGMENT
oIncreased demand for semi-finished products
•LONG PRODUCTS SEGMENT
oDecrease in the share of direct sales -longer period of revenue recognition
•MINING SEGMENT
oDecline in iron ore prices
•FOREIGN ROLLED PRODUCTS SEGMENT
oSeasonal reduction in steel consumption in the EU market
oStable sales in the US market
EBITDA CHANGE BY SEGMENT (QOQ)
594
+102
+25
-40
+17
-5
693
400
500
600
700
800
Q2'14
Steel segment
Long productssegment
Mining segment
Foreign rolledproductssegment
Other operationsandintersegmental
Q3'14
$ m
SEGMENT CONTRIBUTION TO EBITDA
455
77
145
36
-20
693
200
400
600
800
Steel segment
Long productssegment
Mining segment
Foreign rolledproductssegment
Other operationsandintersegmental
Q3'14
$ m
9. EBITDA
Working capital changes
Other non-cash operations
Income tax
Net interest *
NET OPERATING CASH FLOW
Capital expenditures **
FREE CASH FLOW TO THE FIRM
Net repayments of borrowings/attraction
of funds
FREE CASH FLOW TO EQUITY
Change in deposits and financial investment
FX rate change
CHANGE IN CASH
CASH FLOW IN Q3’14
9
Q3‘14 CASH FLOW BRIDGE
•ONE-OFF DECREASE IN Q3’14 OPERATING CASH FLOW TO $194 M
oQ3’14 EBITDA $693m(+17% qoq)
oWorking capital increase by $364 m due to one-off factors:
◦Seasonal accumulation of winter stock(scrap and NLMK USA slabs)
◦Delayed recognition of Long Products segment revenue
◦Stock accumulation at NLMK Kaluga –preparation for mastering new types of products
◦Impact of RUB exchange rate in terms of working capital of international assets (>$100 m)
•CONSERATIVE INVESTMENT PROGRAM
oQ3’14 capex: $158 m (+5% qoqand-44% yoy)
o9M’14 capex: $439 m(-33% yoy)
o2014 capex:$650-700 m
o2015E capex:$800-900 m
oSource of investment financing –operational cash flow
$ m
-124
-19
149
-254
-290
36
-158
194
-33
-111
9
-364
693
* Including interest paid (w/o capitalized interest) of$42 m and interest received of$10 m
** Including capitalized interest of$16m
10. FREE CASH FLOW GROWTH
10
•STRUCTURAL GROWTH IN BUSINESS PROFITABILITY
oSizable gains coming from operational efficiency programs
oEffects from investment projects
oGrowth in free cash flow available to shareholders/creditors
•LOWER CAPITAL INTENSITY BUSINESS
•LOWER DEBT LOAD
oTarget Net debt / EBITDA achieved
•POTENTIAL DIVIDENT PAYMENT GROWTH
1.8
1.8
1.2
1.2
-2.0
-1.5
-0.8
-0.4
-0.2
0.4
0.4
0.8
2011
2012
2013
9М'14
Operational cash flow
Capex
Free cash flow to the firm
CASH FLOW DYNAMICS
$bn
4.4
4.6
4.2
3.3
3.4
3.6
2.7
1.8
1.5
1.9
1.8
0.8
0.5
1.0
1.5
2.0
0
1
2
3
4
5
2011
2012
2013
9М'14
Financial debt
Net Debt
Net Debt/EBITDA ratio
LOWER DEBT LOAD
$bn
11. 2.68
2.36
1.16
-0.29
-0.26
0.93
0
1
2
3
4
5
30 Jun '14
Net settlements ofdebt
FX rate changeimpact
30 Sep '14
ST debt
LT debt
DEBT POSITION
11
•REDUCTION IN NET DEBT, HIGH LIQUIDITY LEVEL PRESERVED
oNet debt $1.80bn(-14% qoq)
oGross debt$3.29bn(-14% qoq)
oCash and equivalents*$1.48bn(-14% qoq)
oNet debt/ 12M EBITDA 0.83х(-0.31 p. qoq)
CHANGE IN DEBT POSITION IN Q3’14
NET DEBT CHANGE IN Q3’14
MATURITY AND NET DEBT/EBITDA
$bn
Weighted average
maturity
1.93
2.15
1.87
1.80
1.39
1.14
0.83
0.0
0.5
1.0
1.5
2.0
2.5
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Strategy 2017
target –1.0
Net debt/EBITDA
3.3
3.4
3.6
3.3
3.2
3.0
2.9
0.0
1.0
2.0
3.0
4.0
5.0
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
* Cash and equivalents and short term investments
2.10
0.19
0.16
0.26
1.80
1.0
1.5
2.0
2.5
30 Jun '14
Operating cashflow
Capex
FX rate and otherfactors
30 Sep '14
$bn
3.83
3.29
12. 423
748
369
324
817
560
$0
$200
$400
$600
$800
$1,000
Q4 2014
2015
2016
2017
2018
2019 andonward
Other debt
Revolving credit lines for working capital financing
Eurobonds (USD)
ECA financing and investment credits
Ruble bonds
LIQUIDITY AND DEBT SETTLEMENT
12
•STRONG LIQUIDITY POSITION
•COMFORTABLE MATURITY SCHEDULE
oShort term deb$0.93bn
◦Ruble bonds
◦Revolving credit lines for working capital financing
◦ECA financing
oLong term debt$2.36bn
◦Eurobonds and ruble bonds
◦Long term part of ECA financing
TOTAL DEBT MATURITY SCHEDULE***
INTEREST EXPENSES**
$m
1,483
898
2,522
423
173
117
185
$0
$1,000
$2,000
$3,000
$4,000
$5,000
Liquid assets
Q3 '14
Q4 '14
Q1 '15
Q2 '15
12M
$m
Undrawn committed
credit lines
Cash and equivalents
LIQUID ASSETS AND SHORT-TERM DEBT MATURITY*
31
27
22
33
32
33
32
33
35
35
22
21
17
16
0%
5%
10%
15%
20%
25%
0
10
20
30
40
50
60
70
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Non-capitalized interest expense (lhs)
Capitalized interest expense (lhs)
Interest expense to EBITDA (rhs)
* ST maturity payments without interest accrued
** Quarterly figures are derived by computational method on the basis of quarterly reports
*** Maturity payments do not include interest payments
$ m
13. Q4’14 OUTLOOK
•MARKET
oRussia –seasonal slowdown in the construction sector
oEurope –seasonal recovery in demand
oUSA –stable market situation
•OPERATIONAL RESULTS
oExpected Group crude steel production: 4.0 m t
oSales volumes will increase by 2-5%
13
15. 1.66
1.68
1.53
1.60
1.74
1.73
1.64
0.35
0.37
0.47
0.21
0.30
0.27
0.37
0.08
0.21
0.19
0.15
0.26
0.35
0.45
0.0
0.5
1.0
1.5
2.0
2.5
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Revenue from intercompany sales
Revenue from sales to third parties
EBITDA
4%
10%
9%
8%
13%
18%
23%
EBITDA margin
24%
18%
6%
5%
6%
5%
5%
9%
12%
9%
Iron ore materials
Coke and coal
Scrap
Ferroalloys
Other raw materials
Electricity
Natural gas
Other energy resources
Personnel costs
Other expenses and changes in inventories
Depreciation
STEEL SEGMENT
•STABLE TOTAL REVENUE IN Q3’14 QOQ
oHigher total sales volumes (+6% qoq)
oIncreased slab deliveries to the Group’s foreign companies (+50%) and to NBH (+7%)
oLower average sales prices
•EBITDA MARGIN INCREASED TO 23%
oMaximum steelmaking capacity utilization rates
oEfficiency improvement programmes
oWidened spreads between prices for steel and raw materials
COST OF SALES, Q3’14
SEGMENT REVENUE ANDEBITDA
SALES AND REVENUE FROM THIRD PARTIES
$ bn
15
8%
8%
6%
7%
8%
8%
17%
16%
15%
15%
26%
26%
21%
21%
36%
39%
30%
33%
7%
6%
0%
20%
40%
60%
80%
100%
SalesQ3' 14
SalesQ2' 14
RevenueQ3' 14
RevenueQ2' 14
Income from otheroperations*
Pig iron
Slabs
HRC
CRC
Galvanized
Pre-painted
Dynamo
Transformer
2.351 m t
$1,636 m
* Revenue from the sale of other products and services
2.459m t
$1,728m
$1,432 m
16. 288
314
355
371
337
430
378
59
113
114
102
57
101
115
20
23
40
12
7
52
77
0
70
140
210
280
350
420
490
560
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Revenue from intra-group sales
Revenue from third parties
EBITDA
6%
5%
8%
3%
2%
10%
16%
EBITDA margin
67%
3%
1%
8%
9%
5%
7%
Scrap
Ferroalloys
Other raw materials
Electricity
Personnel
Other expenses
Depreciation
$396 m
LONG PRODUCTS SEGMENT
•SALES VOLUME DECREASE BY 18%
oDecrease in the share of direct sales –longer revenue recognition period
oAccumulation of stock at NLMK Kaluga related to activities aimed at mastering new product types
•EXTERNAL REVENUE DECRESE BY 12%
oFavourablepricing environment
•EBITDA MARGIN UP TO 16%
oSustainably high capacity utilization rates
oWidened spreads between rebar and scrap prices
SEGMENT REVENUE AND EBITDA
THIRD PARTY SALES AND REVENUE STRUCTURE
$ m
16
COST OF SALES IN Q3 ‘14
* Revenue from intra-group sales is represented mostly by ferrous scrap deliveries to the Lipetsk site
14%
12%
16%
13%
11%
11%
8%
8%
75%
77%
74%
76%
0%
20%
40%
60%
80%
100%
Sales volumeQ3 '14
Sales volumeQ2 '14
RevenueQ3 '14
RevenueQ2 '14
Other operations*
Long products
Billets
Metalware
739‘000 t
$430 m
* Revenue from other products
$378m
608‘000 t
17. 92
100
86
94
88
117
70
245
249
226
259
229
189
178
215
227
190
228
209
185
145
0
100
200
300
400
500
Q1 '13
Q2 '13
Q3 '13
Q4 '13
Q1 '14
Q2 '14
Q3 '14
Revenue from intersegmental sales
Revenue from third parties
EBITDA
64%
65%
61%
65%
66%
60%
58%
EBITDA margin
7%
23%
6%
23%
21%
19%
Raw materials
Electricity
Natural gas
Other energy resources
Personnel
Other expenses
Depreciation
MINING SEGMENT
•REVENUE DECLINE BY 19% QOQ
oDecline in iron ore prices (15-20% qoq)
oStable iron ore sales at 4 m t, incl.:
◦3.2 m t(+16% qoq) –to the Lipetsk site
◦0.8m t(-36% qoq) –to third parties
•EBITDA MARGIN AT 58%
oLower global iron ore prices
oEfficiency improvement programmesand increase in equipment productivity
SALES AND REVENUE STRUCTURE
17
COST OF SALES IN Q3‘14
79%
70%
68%
60%
21%
33%
26%
36%
0%
20%
40%
60%
80%
100%
SalesvolumesQ3 '14
SalesvolumesQ2 '14
RevenueQ3 '14
RevenueQ2 '14
Otheroperations*
Iron ore salesto third parties
Iron ore salesto Lipetsk site
4,004kt
$306 m
$248 m
3,970kt
* Other operations include limestone and dolomite sales
SEGMENT REVENUE AND EBITDA
$m
$89 m
18. 817
730
750
445
471
533
523
-26
-62
-35
30
23
19
36
-3%
-9%
-5%
7%
5%
4%
7%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
-200
0
200
400
600
800
1,000
Q1 '13
Q2 '13
Q3 '13
Q4 '13
Q1 '14
Q2 '14
Q3 '14
Revenue
EBITDA
EBITDA margin (r.h.)
FOREIGN ROLLED PRODUCTS SEGMENT
•SEGMENT SALES DECLINE BY 3% QOQ
oStable NLMK USA sales volumes as favourablemarket conditions persist
oSeasonal decline in thick plate sales (NLMK Dansteel) by 13% qoqto 90,000 t
•REVENUE DOWN BY 2% QOQ
•SEGMENT PROFITABILITY GROWTH
oWidened spreads between prices for slabs and rolled products
oEfficiency improvement programmes
NLMK USA SALES AND REVENUE STRUCTURE
18
$ m
SEGMENT REVENUE AND EBITDA
58%
56%
51%
49%
26%
29%
27%
30%
15%
14%
16%
16%
5%
5%
0%
20%
40%
60%
80%
100%
SalesvolumeQ3 '14
SalesvolumeQ2 '14
RevenueQ3 '14
RevenueQ2 '14
Other operations
Pre-painted
CRC
HRC
Semi-finished
540‘000 t
$443 m
$445 m
534 ‘000 t
20. SALES STRUCTURE
20
•GROWTH OF INTERCOMPANY SLAB SALES +50% QOQ
•INCREASE OF SLAB SALES TO NBH TO 0.46 M T (+7% QOQ)
•Q3’14: PIG IRON SALES WENT UP TO 97,000 T
•LONG PRODUCT SALES DECREASE –LONGER SALES RECOGNITION PERIOD (Q4’14)
SALES STRUCTURE BY PRODUCT
REVENUE BY PRODUCT
SALES MIX CHANGE BY PRODUCT
13%
15%
13%
3%
4%
3%
3%
3%
3%
6%
6%
6%
13%
14%
15%
22%
25%
25%
34%
25%
24%
Q1'14
Q2'14
Q3'14
Pig iron
Slabs
Billets
HRC
Thick plates
CRC
Galvanized
Pre-painted
Electrical
Long products
Metalware
3.87
3.84
m t
3.58
10%
12%
11%
5%
6%
6%
5%
5%
5%
7%
7%
8%
13%
14%
14%
19%
21%
22%
27%
20%
19%
9%
9%
8%
Q1'14
Q2'14
Q3'14
0%
20%
40%
60%
80%
100%
Other products*
Pig iron
Slabs
Billets
HRC
Thick plates
CRC
Galvanized
Pre-painted
Electrical
Long products
Metalware
$2.81 bn
$2.64bn
$2.61 bn
-42%
-22%
-19%
-13%
-12%
-5%
-4%
-3%
-1%
-1%
5%
x22
NGO steel
Billets
Long products
Thick plates
Slabs
Galvanized
HRC
Metalware
CRC
Pre-painted
GO steel
Pig Iron
Sales changeqoq
21. SALES GEOGRAPHY
21
•SALES IN Q3 ’14: 3.6 M T (-7% QOQ)
oStable sales to the Russian market: 1.7 m t
◦Flat steel sales 0.945 m t (+9% qoq)
oSales to export markets: 1.9 m t (-10% qoq)
◦Sales to Europe decreased (-5% qoq) due to seasonal factor
◦Sales to N. America increased (+10% qoq)
•IN 9M ’14 SALES: 11.3 M T (0% YOY)
oSales to Russia increased to 5.0 m t (+15% yoy)
oSales to USA increased (+46% yoy)
oSales to Europe grew (+13% yoy)
◦Slab sales to NBH from Q4 ’13 recognized as external sales
1.55
1.74
1.69
0.74
0.71
0.67
0.24
0.24
0.22
0.75
0.64
0.70
0.52
0.36
0.13
0
1
2
3
4
Q1 '14
Q2 '14
Q3 '14
Others
SE Asia
N.America
M. East*
EU
Russia
1.04
1.20
1.22
0.45
0.49
0.42
0.15
0.15
0.13
0.51
0.64
0.59
0.04
0.45
0.28
0.20
0
1
2
3
Q1 '14
Q2 '14
Q3 '14
Others
SE Asia
N. America
M. East*
EU
Russia
2.64
$bn
2.81
2.61
m t
3.87
3.84
Share in Q3’14
8%
2%
23%
5%
16%
47%
*Incl. Turkey
3.58
STEEL PRODUCT SALES BY REGION
REVENUE BY REGION
NLMK SALES TO THE RUSSIAN MARKET
72%
13%
14%
0%
20%
40%
60%
80%
100%
Sales by industriesin Q3'14
Pipe producers
Machine building
Construction andinfrastructure
30%
56%
14%
0%
20%
40%
60%
80%
100%
Sales by producttype in Q3'14
Semi-finished
Flat steel
Long products andmetalware
by sector
by product type
25. 25
1as of 30.09.2014
2as of30.06.2014
SEGMENT INFORMATIONQ3 2014(million USD) Revenue from external customers1 6365233787002 6072 607Intersegment revenue373115178666(666) Gross profit5763997159(1)871(65)807Operating income/(loss)312(67)49127(1)421(19)402as % of net sales16%(13%)10%51%15% Income / (loss) from continuing operations before minority interest378(165)2331721619(282)337as % of net sales19%(31%)47%69%13% Segment assets including goodwill111 3501 7862 3602 04113817 674(3 661)14 013Q2 2014(million USD) Revenue from external customers1 72853343011702 8082 808Intersegment revenue271101189561(561) Gross profit4662474208(0)771(44)727Operating income/(loss)207(1)23168(1)396(14)382as % of net sales10%(0%)4%55%14% Income / (loss) from continuing operations before minority interest469(13)(2)990555(336)219as % of net sales23%(2%)(0%)32%8% Segment assets including goodwill212 7371 8672 6612 33712119 724(3 860)15 863TotalsIntersegmental operations and balancesConsolidatedSteelForeign rolled productsLong productsMiningAll otherTotalsIntersegmental operations and balancesConsolidatedSteelForeign rolled productsLong productsMiningAll other
26. QUARTERLY DATA: CONSOLIDATED STATEMENT OF INCOME
26
Reporting periods of the Company are 3M, 6M, 9M and 12M. Quarterly figures (with the exception of Q1) are derived by computational method, including for segment reporting. Q3 2014Q2 20149M 20149M 2013(mln USD)+ / -%+ / -% Sales revenue2 6072 808(201)(7%)8 0538 405(352)(4%) Production cost(1 592)(1 869)277(15%)(5 286)(6 175)889(14%) Depreciation and amortization(208)(212)4(2%)(620)(656)37(6%) Gross profit8077278011%2 1471 57357437% General and administrative expenses(80)(84)4(5%)(257)(339)82(24%) Selling expenses(207)(225)19(8%)(644)(696)52(8%) Taxes other than income tax(35)(35)(0)1%(110)(97)(13)14% Impairment losses(83)(83)(83)(83) Operating income402382205%1 053440613139% Gain / (loss) on disposals of property, plant and equipment(8)(3)(5)155%(12)(17)5(27%) Gains / (losses) on investments3843441231880% Interest income119223%2632(6)(18%) Interest expense(34)(33)(1)2%(99)(80)(19)23% Foreign currency exchange loss, net73(62)135(217%)572136174% Other expense, net(32)(11)(21)185%(50)(26)(25)97% Income from continuing operations before income tax44828516357%1 015393623159% Income tax(111)(66)(45)69%(242)(186)(56)30% Equity in net earnings/(losses) of associate(41)(60)19(146)0(146) Net income29515913786%627207420203% Less: Net loss / (income) attributable to the non-controlling interest(15)(0)(15)(14)2(16)(662%) Net (loss) / income attributable to OJSC Novolipetsk Steel stockholders28115812277%613209404193% EBITDA6935949917%1 7561 09665960% Q3 2014/Q2 20149M 2014/9M 2013
27. CONSOLIDATED CASH FLOW STATEMENT
Reporting periods of the Company are 3M, 6M, 9M and 12M. Quarterly figures (with the exception of Q1) are derived by computational method, including for segment reporting. 28
Q3 2014Q2 20149M 20149M 2013(mln. USD)+ / -%+ / -% Cash flow from operating activities Net income29515913786%627207420203% Adjustments to reconcile net income to net cash provided by operating activitiesDepreciation and amortization208212(4)(2%)620656(37)(6%) Loss on disposals of property, plant and equipment835155%1217(5)(27%) (Gain)/loss on investments(38)(4)(34)863%(41)(23)(18)80% Interest income(11)(9)(2)23%(26)(32)6(18%) Interest expense343312%99801923% Equity in net ernings of associate4160(19)(32%)146(0)146Defferd income tax (benefit)/expense027(27)(100%)2020(1) Loss / (income) on forward contracts11(4)15(375%)13(7)20(277%) Loss of impairment83838383Other movements(42)7(49)(703%)(41)17(58)(348%) Changes in operating assets and liabilitiesIncrease in accounts receivables(42)72(114)(158%)(198)(417)219(53%) Increase in inventories(366)102(468)(459%)(34)152(187)(123%) Decrease/(increase) in other current assets33012%(5)6(10)(184%) Increase in accounts payable and oher liabilities9(23)32(140%)(17)333(350)(105%) Increase/(decrease) in current income tax payable32(10)42(437%)36211573% Cash provided from operating activities2271 2931 03026326% Interest received109111%2424Interest paid(42)(20)(22)107%(103)(103) Net cash provided from operating activities*194618(424)(69%)1 21398722623% Cash flow from investing activities Proceeds from sale of property, plant and equipment(1)3(4)(136%)53277% Purchases and construction of property, plant and equipment(158)(151)(7)5%(439)(658)219(33%) Proceeds from sale / (purchases) of investments, net451133297%(14)19(33) (Placement) / withdrawal of bank deposits, net109(139)248(178%)(213)(403)190Acquisition of additional stake in existing subsidiary(10)10(100%) Net cash used in investing activities(5)(276)271(98%)(660)(1 002)342(34%) 0Cash flow from financing activities Proceeds from borrowings and notes payable19910109%301 664(1 634)(98%) Repayments of borrowings and notes payable(310)(144)(166)115%(602)(1 666)1 064(64%) Capital lease payments(4)(6)2(33%)(15)(19)4(22%) Dividends to shareholders(3)(111)108(115)(113)(1)1% Net cash used in financing activities(298)(252)(46)18%(702)(135)(567) Net increase / (decrease) in cash and cash equivalents(108)91(199)(220%)(149)(150)1Effect of exchange rate changes on cash and cash equivalents(16)18(34)(187%)(7)34(41)(119%) Cash and cash equivalents at the beginning of the period93983010913%970951192% Cash and cash equivalents at the end of the period815939(124)(13%)815835(21)(2%) Q3 2014/Q2 20149M 2014/9M 2013