17 Apr 2009 10:24
Please see below a correction to this morning's press release from NLMK entitled "Q1 2009 Trading Update".
The correction relates to product lines for the main production site in Lipetsk, outlined in the table below.
NLMK (Main production site in Lipetsk)
NLMK (Lipetsk production site) steel sales volumes in Q1 2009:
Million, t |
| Q1 2009 | Q4 2008 | Q1 2008 |
| Q1 2009 / Q4 2008 | Q1 2009 / Q1 2008 |
|
| ||||||
Pig iron |
| 0.011 | 0.062 | 0.266 |
| -82.0% | -95.8% |
Slabs |
| 0.598 | 0.776 | 0.738 |
| -22.9% | -19.0% |
Hot-rolled steel3 |
| 0.454 | 0.217 | 0.454 |
| 108.7% | 0.0% |
Cold-rolled steel |
| 0.324 | 0.237 | 0.374 |
| 36.6% | -13.4% |
Hot-dip galvanized steel |
| 0.056 | 0.082 | 0.096 |
| -32.2% | -41.9% |
Pre-painted steel |
| 0.057 | 0.061 | 0.080 |
| -6.9% | -28.9% |
Dynamo steel |
| 0.039 | 0.051 | 0.075 |
| -23.9% | -48.5% |
Transformer steel |
| 0.012 | 0.037 | 0.036 |
| -68.8% | -67.9% |
Novolipetsk Steel (NLMK) Q1 2009 Trading Update
Novolipetsk Steel (LSE: NLMK) today announces the following regular trading update for
Q1 2009.
NLMK Group: Q1 2009 operating highlights
- Production:
Crude steel: 2.1 million tonnes (+21% quarter-on-quarter)
Finished products: 2.2 million tonnes (+26% quarter-on-quarter)
- Sales:
Total sales: 1.95 million tonnes (+4% quarter-on-quarter), including:
Slabs: 0.6 million tonnes (-17% quarter-on-quarter)
Billets: 0.02 million tonnes (-76% quarter-on-quarter)
Flat products: 1.1 million tonnes (+37% quarter-on-quarter)
Long products: 0.2 million tonnes (-7% quarter-on-quarter)
Metal-ware: 0.04 million tonnes (+21% quarter-on-quarter)
Growth drivers
Partial recovery in demand in export markets
Revival of demand in the domestic market in late Q1 2009 due to restocking at the Russian trading and production companies is partially attributable to ruble devaluation and price stabilization in February and March
Outlook
We believe that our H1 2009 financial results will be adversely affected by the weakening of the pricing environment at the beginning of the year. Given the prevailing low level of visibility, H2 2009 sales volumes and prices remain uncertain.
Disclaimer:
This announcement may contain a number of forward-looking statements relating to, among others, the financial condition and results of operations of the Company. Such forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by them and are based on assumptions regarding the Company's present and future business strategies and the environment in which the Company and its subsidiaries operate both now and in the future. Forward-looking statements speak only as at the date of this announcement and save as required by applicable legal and/or regulatory requirements the Company expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements.
NLMK Group: 1
NLMK Group Q1 2009 sales volumes2:
Million, t |
| Q1 2009 | Q4 2008 | Q1 2008 |
| Q1 2009 / Q4 2008 | Q1 2009 / Q1 2008 |
Pig iron |
| 0.011 | 0.062 | 0.266 |
| -82.0% | -95.8% |
Slabs |
| 0.555 | 0.667 | 0.589 |
| -16.9% | -5.8% |
Billets |
| 0.019 | 0.077 | 0.121 |
| -75.8% | -84.6% |
Flats |
| 1.093 | 0.795 | 1.272 |
| 37.4% | -14.1% |
Longs |
| 0.229 | 0.247 | 0.328 |
| -7.3% | -30.2% |
Metalware |
| 0.039 | 0.032 | 0.027 |
| 21.4% | 43.5% |
Total sales products |
| 1.945 | 1.880 | 2.604 |
| 3.5% | -25.3% |
NLMK (Main production site in Lipetsk)
NLMK (Lipetsk production site) steel sales volumes in Q1 2009:
Million, t |
| Q1 2009 | Q4 2008 | Q1 2008 |
| Q1 2009 / Q4 2008 | Q1 2009 / Q1 2008 |
|
| ||||||
Pig iron |
| 0.011 | 0.062 | 0.266 |
| -82.0% | -95.8% |
Slabs |
| 0.598 | 0.776 | 0.738 |
| -22.9% | -19.0% |
Hot-rolled steel3 |
| 0.454 | 0.217 | 0.454 |
| 108.7% | 0.0% |
Cold-rolled steel |
| 0.324 | 0.237 | 0.374 |
| 36.6% | -13.4% |
Hot-dip galvanized steel |
| 0.056 | 0.082 | 0.096 |
| -32.2% | -41.9% |
Pre-painted steel |
| 0.057 | 0.061 | 0.080 |
| -6.9% | -28.9% |
Dynamo steel |
| 0.039 | 0.051 | 0.075 |
| -23.9% | -48.5% |
Transformer steel |
| 0.012 | 0.037 | 0.036 |
| -68.8% | -67.9% |
DanSteel A/S.
DanSteel A/S sales volumes in Q1 2009:
Million, t |
| Q1 2009 | Q4 2008 | Q1 2008 |
| Q1 2009 / Q4 2008 | Q1 2009 / Q1 2008 |
|
| ||||||
Heavy plates |
| 0.072 | 0.110 | 0.136 |
| -34.8% | -47.4% |
Beta Steel Corp.
Beta Steel Corp. sales volumes in Q1 2009:
Million, t |
| Q1 2009 | Q4 2008 | Q1 2008 |
| Q1 2009 / Q4 2008 | Q1 2009 / Q1 2008 |
|
| ||||||
Hot-rolled steel |
| 0.076 | 0.051 | 0.155 | 50.7% | -50.8% |
VIZ-Stal.
VIZ-Stal sales volumes in Q1 2009:
Million, t |
| Q1 2009 | Q4 2008 | Q1 2008 |
| Q1 2009 / Q4 2008 | Q1 2009 / Q1 2008 |
|
| ||||||
Transformer steel |
| 0.010 | 0.042 | 0.047 |
| -75.5% | -78.0% |
Dynamo steel |
| 0.000 | 0.000 | 0.004 |
| -23.3% | -94.5% |
Stoilensky GOK.
Stoilensky GOK sales volumes in Q1 2009:
Million, t |
| Q1 2009 | Q4 2008 | Q1 2008 |
| Q1 2009 / Q4 2008 | Q1 2009 / Q1 2008 |
|
| ||||||
Iron ore concentrate |
| 2.235 | 1.833 | 3.000 |
| 21.9% | -25.5% |
Sinter ore |
| 0.329 | 0.147 | 0.419 |
| 123.6% | -21.5% |
Altai-koks.
Altai-koks sales volumes in Q1 2009:
Million, t |
| Q1 2009 | Q4 2008 | Q1 2008 |
| Q1 2009 / Q4 2008 | Q1 2009 / Q1 2008 |
|
| ||||||
Coke (dry) |
| 0.551 | 0.551 | 0.865 |
| -0.1% | -36.3% |
Maxi-Group.
Maxi-Group sales volumes in Q1 2009:
Million, t |
| Q1 2009 | Q4 2008 | Q1 2008 |
| Q1 2009 / Q4 2008 | Q1 2009 / Q1 2008 |
|
| ||||||
Billets |
| 0.019 | 0.077 | 0.121 |
| -75.8% | -84.6% |
Rebar |
| 0.188 | 0.199 | 0.262 |
| -5.5% | -28.1% |
Wire rod |
| 0.040 | 0.047 | 0.066 |
| -14.6% | -38.7% |
Metalware |
| 0.039 | 0.032 | 0.027 |
| 21.4% | 43.5% |
Ferrous and non-ferrous scrap 4 |
| 0.201 | 0.497 | 0.498 |
| -59.7% | -59.7% |
1 Q1 2009 production and sales data is indicative and subject to amendments
2 Excluding inter-group operations
3 Including hot-rolled pickled steel
4 Including sales to Maxi-Group
MANAGEMENT COMMENTS
NLMK Group operating performance overview
In Q1 2009, NLMK Group produced 2.1 million tonnes of steel, an increase of 21% quarter-on-quarter. Production increased primarily due to the restart of two out of three blast furnaces. These furnaces were idled for repairs in Q4 2008. In Q1 2009, Group capacities were run at approximately 77% and at the same rate both at the main production site in Lipetsk and at Maxi-Group's facilities.
NLMK Group's Q1 2009 sales amounted to 1.9 million tonnes, a growth of 3% quarter-on-quarter. In Q1 2009, sales of commercial slabs significantly decreased quarter-on-quarter to 555,000 tonnes (excluding sales to DanSteel of about 44,000 tonnes), primarily due to increased flats production and sales. This number includes 285,000 tonnes of sales to NLMK and Duferco JV companies (Steel Invest and Finance S. A.). Growth was mainly seen in sales of hot-rolled and cold-rolled steel. This was driven by a slight recovery in demand which began in mid-February and continued into March, occurring primarily in the export markets, particularly in South-East Asia, including China.
Domestic sales increased in March (by 36% month-on-month) largely due to restocking at trading and manufacturing companies and improvements in real sector lending. Although we cannot claim that demand in April for our entire product mix is stable in the domestic market, we can state that there is an increase in electrical steel sales, primarily in transformer steel.
NLMK (Lipetsk site)
In Q1 2009, steel production at the main site in Lipetsk rose 22% to 1.67 million tonnes, primarily driven by the recommissioning of two out of three blast furnaces idled in Q4 2008.
During the period, sales volumes at NLMK's main production site in Lipetsk exceeded Q4 2008 by 2%. In the low value-added products segment, which includes pig iron and commercial slabs, sales fell by 82% and 23% respectively. This growth was attributable to higher sales of hot-rolled and cold-rolled steel (109% and 37%, respectively).
In February and, notably, March the demand for flats increased compared to December and January, which enabled the company to increase production and sales. The growth in sales is attributable to larger volumes of export sales.
A sharp drop in hot-dip galvanized steel demand was due to a seasonal decline in demand from the construction sector, the main consumer of this product, coupled with a general downturn in production on the back of the global financial crisis.
Q1 2009 transformer steel sales fell by 69% quarter-on-quarter due to lower demand and significant stockpiles accumulated in previous periods by end-customers
DanSteel A/S
Orders for DanSteel A/S products in Q1 2009 declined quarter-on-quarter due to cuts in production at end-customers which put pressure on Q1 2009 heavy plate sales. In Q4 2008 DanSteel A/S delivered the orders made in Q3 2008 in a favourable market environment, which can explain lower prices in Q1 2009 quarter-on-quarter.
Beta Steel Corp.
Lower sales volumes and prices at Beta Steel Corp. in Q4 2008 and Q1 2009 were driven by the deteriorating market environment. A decrease in sales in November and December 2008 was mainly attributable to lower utilization rates at Beta Steel's major customers' production capacities. Restocking at traders and distributors was the main sales growth driver in Q1 2009.
VIZ-Stal
The decline in demand continued into Q1 2009 and led to lower transformer steel sales volumes. Another factor driving down transformer steel sales was significant stockpiles of this product accumulated in previous reporting periods by end-customers. This is predominantly due to sales contract terms. However, unlike other products, average prices for transformer steel declined moderately in Q1 2009.
Stoilensky
Stoilensky Q1 2009 iron ore concentrate and sinter ore sales grew quarter-on-quarter by 22% and 124% respectively due to larger supplies of iron ore concentrate to NLMK's Lipetsk production site, and an increase in deliveries of iron ore concentrate and sinter ore to external customers. However, despite the slight revival in demand in February and March 2009, total sales in Q1 2009 failed to reach Q1 2008 levels. In Q1 2009, average prices weakened due to the deterioration in the steel and raw materials markets.
Altai-koks
The falling demand for steel and raw materials, including costs, caused a significant decrease in production and sales volumes in Q4 2008 and Q1 2009 and, as a result, in prices in Q1 2009 quarter-on-quarter. These factors caused Q1 2009 Altai-koks utilization rates to fall to 50%.
Maxi-Group
In Q1 2009 Maxi-Group produced 380,000 tonnes of steel, a 15% increase quarter-on-quarter. However, sales volumes decreased, primarily due to a sequential drop of 76% in billet sales. This decline can be attributed to the terms of a number of export sales contracts. These are related to conditions under which the title for materials delivered is transferred only after full payment is made by the purchaser. The decline is also because the bulk of Maxi-Group's billet output was processed into wire rod and metalware.
Metalware sales grew by 21% quarter-on-quarter. This increase in demand is attributable to lower supply in the market due to idled production capacities of main competitors during the quarter. At the Berezovsky site (a Maxi-Group production facility) work is underway to start production at a new light section "150" mill which has an annual capacity of 1 million tonnes of long products. In Q1 2009, the Berezovsky site produced 47,000 tonnes of long products (wire rod and rebar in bundles).
In Q1 2009, Maxi-Group products sales prices significantly decreased quarter-on-quarter due to low demand in the longs market.
Outlook
The pricing environment deteriorated in Q1 2009 in the core sales markets. This, coupled with low sales volumes, puts downward pressure on the company's financial results. Nevertheless, these adverse effects will be partially offset by lower production costs. This is due to a decrease in prices for basic raw materials, coupled with management's efforts to reduce costs and enhance efficiency, as well as the devaluation of the ruble (a 30% decrease since October 2008).
In Q2 and Q3 2009 the situation will remain challenging. Initiatives taken by governments, a seasonal revival in the construction sector and an increase in demand from steel-intensive sectors may have a positive effect in sustaining steel demand in the mid- and long term.
About NLMK
Novolipetsk Steel (LSE: NLMK) is one of the world's leading producers of steel, with 2008 revenue exceeding USD11 billion, output over 10.5 million tonnes. The key production facilities located in Russia, the EU and USA employ 70,000 people.
The company produces a wide range of steel products, including slabs and billets, hot-rolled, cold-rolled, galvanized and electrical steel and other HVA products. In 2008 NLMK delivered its products to customers from 70 countries.
NLMK shares are traded in Russia on MICEX and RTS, and GDRs - on the London Stock Exchange.
For further information:
NLMK
Anton Bazulev, Investor Relations
Tel: +7 495 915 1575
Email: info@nlmk.msk.ru