30 Apr 2020 09:01
Press release
30 April 2020
NLMK Group Q1 2020 IFRS Financial Results
NLMK Group (LSE, MOEX: NLMK) increased its revenue by 6% qoq to $2,457 m, with its EBITDA margin growing to 24%. Free cash flow totalled $331 m.1
Key highlights
k t/$ million | Q1 2020 | Q4 2019 | QoQ | Q1 2019 | YoY |
Sales volumes | 4,507 | 4,172 | 8% | 4,614 | -2% |
Revenue | 2,457 | 2,312 | 6% | 2,869 | -14% |
EBITDA 2 | 594 | 480 | 24% | 695 | -15% |
EBITDA margin | 24% | 21% | +3 p.p. | 24% | - |
Profit for the period 3 | 289 | 200 | 45% | 382 | -24% |
Free cash flow 4 | 331 | 338 | -2% | 678 | -51% |
Net debt 5 | 1,770 | 1,786 | -1% | 915 | 93% |
Net debt/EBITDA 5 | 0.72x | 0.70x | 0.26x |
Q1 2020 key highlights
· Revenue grew by 6% qoq to $2.5 bn, supported by growth of sales, despite the slowdown of demand for steel in the global markets due to the COVID-19 outbreak.
· EBITDA increased to $594 m (+24% qoq) due to the expansion of spreads in the first half of the quarter and the devaluation of the ruble, as well as operational efficiency gains. EBITDA margin grew to 24% (+3 p.p. qoq; flat yoy).
· Free cash flow totalled $331 m, almost flat qoq, thanks to active working capital management.
· Net profit grew by 45% qoq to $289 m, due to growth of revenue and FX risk hedging, which enabled the Company to avoid significant losses related to the devaluation of the ruble.
· NLMK Group's Strategy 2022 implementation is on course. The impact of Strategy 2022 operational efficiency gains on Q1 2020 EBITDA was $54 m (relative to Q1 2019 base).
Investor relations contact: Dmitry Kolomytsyn, CFA +7 (495) 504 0504 ir@nlmk.com | Media relations contact: Maria Simonova +7 (915) 322 62 25 simonova_mn@nlmk.com |
Comment from NLMK Group CEO Grigory Fedorishin:
"I would like to begin by stressing that we are placing the utmost focus on the safety and welfare of our people. For more information on our countermeasures to minimize the risk of COVID-19 spreading at NLMK Group sites please visit our corporate website.
"Our key markets saw an uptick in demand and growing prices in the first half of Q1. However, the spread of the coronavirus pandemic resulted in slowing down business activities and increasing uncertainty in the second half of the quarter and in April. In Q2 2020, steel demand in EU and US could drop at double digit rates yoy, analysts predict. In Russia we also expect consumer activity to decline. On the whole, there is a high level of uncertainty in terms of the rate at which demand for steel is going to recover across different regions.
"In this context, we have taken a number of preventive measures to ensure our financial stability. Our 2020 capex guidance was reduced to $0.9-0.95 bn from the previously announced $1.2 bn. The volume of available liquidity on the Company's balance sheet was increased to $1.7 bn as of 31 March 2020 (+96% qoq); additional available credit lines are estimated at $0.8 bn.
"NLMK shareholders decided not to approve the Q4 2019 dividend amount recommended earlier by the Board of Directors and proposed that it be halved. The Board of Directors gave NLMK shareholders an updated recommendation on the payment of Q4 2019 dividends in the amount of RUB 3.12 per share, and a recommendation on the payment of Q1 2020 dividends in the amount of RUB 3.21 per share, or 75% of the free cash flow for the relevant quarter.
"A weak market is a good time to carry out the second stage of our planned major repairs at NLMK Lipetsk BF and BOF operations that will enable us to grow our steel output by 1 million tonnes next year. Amid these repairs, NLMK Group's steel output and sales will reduce qoq in Q2.
"All NLMK Group's production sites currently continue operating.
"NLMK Group's flexible business model and Strategy 2022 projects and programmes enabled us to post strong financial in the previous quarter. NLMK Group's revenue grew by 6% qoq to $2.5 bn, while EBITDA grew by 24% qoq to $594 m. Net debt/EBITDA stood at 0.72х at the end of Q1. Free cash flow totalled $331 m (flat qoq)."
1 Consolidated financial results are prepared under IFRS. Reporting periods of the Company are 3M, 6M, 9M and 12M. Quarterly figures are obtained by calculation, including in the segment reporting. Figures for comparable periods may differ from figures posted earlier because of rounding off to integers.
2 EBITDA is the operating profit before equity share in financial results of joint ventures, impairment of capital assets and losses from retirement of fixed assets, allowed for amortization and depreciation. EBITDA calculations and further details are presented in the Appendix.
3 Profit for the period attributable to NLMK shareholders.
4 Free cash flow is determined as net cash from operations plus interest received net of interest paid and capital investment. Free cash flow calculations are presented in the Appendix.
5 Net debt is calculated as the sum of long-term and short-term borrowings less cash and cash equivalents, as well as short-term deposits at period end. Net debt / EBITDA is represented by net debt as at the end of the reporting period and EBITDA as last 12 months EBITDA. Net debt calculations are presented in the Appendix.
TELECONFERENCE
NLMK is pleased to invite the investment community to a conference call with the Company management:
Thursday, 30 April 2020
· 10:00 a.m. - New York
· 3:00 p.m. - London
· 5:00 p.m. - Moscow
To join the conference call and web-cast, the participants are invited to dial:
U.S. number:
+1 929-477-0338 (local access) // 866-454-4207 (toll free)
UK number:
+44 (0) 330 336 9401 (local access) // 0800 279 4827 (toll free)
Russian number:
+7 495 705 9270 (local access) // 8 10 800 2796 5011 (toll free)
Conference code: 917182
To join the webcast, please follow the link: https://webcasts.eqs.com/nlmk20200430
* We recommend participants start dialling 5-10 minutes in advance to avoid waiting.
MANAGEMENT COMMENTS
Q1 2020 market review* · Despite an uptick in demand in the first half of the quarter, the spread of the coronavirus had a negative impact on steel consumption in key markets. In Q2 2020, the drop in demand in the EU and US markets could reach double-digit rates year-on-year, according to analysts' forecasts. In Russia, consumer activity is also expected to decline. · Manufacturers started to mothball their capacities worldwide amid declining demand, pressured by national constraints. Global steel output declined by 2% qoq to 442 m t. · In Q1 2020, net steel exports from China decreased by 21% yoy to 11 m t due to logistics constraints during the lock-down period, which caused all-time-high stockpiling of inventory at ports and service centers. China's steel stocks peaked at the beginning of March and are currently declining, supported by a gradual recovery in domestic demand, due mainly to construction. Economic support measures actively implemented by the Chinese government in Q1-Q2 2020 will enable an increase in consumption from the infrastructure segment. |
Q1 2020 prices · Raw material prices: global coal prices increased by an average of 10% qoq; in Russia, dollar-denominated coal prices declined by 9% qoq (-29% yoy), due to the ruble devaluation, among other factors. Iron ore prices increased by 1.5% qoq (+10% yoy) amid bad weather conditions in Brazil and Australia, and the closure of some mines in China during the epidemic. · Market prices** for flat products in the U.S. increased by 6-11% qoq (-7-15% yoy), supported by an uptick in demand from service centres, the automotive and construction sectors. Prices in Europe grew by 3-8% qoq on average (-18-24% yoy) due to consumer restocking. · Russian prices for steel products, as denominated in dollars, decreased by 1-5% qoq due to the ruble devaluation, with the exception of HRC prices that increased by 5%, driven by the limited supply in the market during overhauls at large steelmaking companies.
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*Data on steel consumption trends on regional markets are estimates.
** Market prices reflect the level of prices for a given calendar period and differ from the average sales prices of the Company and its segments due to the time lag of the production & sales cycle.
Q1 2020 output and sales breakdown · Steel output* increased by 11% yoy to 4.2 m t, due mainly to higher output at NLMK Russia Flat following the completion of the first stage of overhauls at NLMK Lipetsk BF and BOF operations in Q4 2019. · Sales increased by 8% qoq to 4.5 m t driven by higher slab sales, with the growth in steel output and increased demand for flat steel in Europe due to low inventories and an uptick in demand in the U.S. early in Q1. · Finished steel sales totalled 2.7 m t (flat qoq). HVA sales grew by 10% to 1.4 m t. · Sales of semis to 3rd parties grew by 13% qoq to 1 m t due to an increase in the sales of slabs for the production of oil and gas pipes and tubes and higher sales of billets and pig iron. Slab sales to NBH increased by 40% qoq to 0.7 m t against the backdrop of the Segment's restocking and increased sales in Q1 2020. · Sales on home markets (w/o NBH) increased by 5% qoq to 3 m t, driven by higher slab sales. Sales in Russia reduced by 2% qoq to 1.8 m t due to a high base of long product sales in the previous quarter during a period of active destocking. In the U.S. and Europe, sales increased by 14% and 19% qoq, respectively.
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* Hereinafter NLMK Group steel output and sales in home markets include NBH. Consolidated sales are given without NBH. Sales to home markets mean sales of the Group's companies in the regions, where production capacities are located in Russia, Europe and the U.S. |
NLMK GROUP KEY FINANCIALS Q1 2020 revenue · Revenue totalled $2.5 bn (+6% qoq). Higher sales and an increase in slab and pig iron prices by 2% and 6%, respectively, offset the increase in the share of semis and the decline in finished good prices. · The share of semis in the revenue returned to the 2018 average of 30% (+6 p.p. qoq). The share of finished steel reduced to 66% (-4 p.p. qoq), the share of HVA product remained flat at 38%. · The share of the Russian market in the Group's revenue declined by 5 p.p. qoq to 41% amid growing exports of semis, thus increasing the U.S. (20%) and Europe (21%) shares by 2 p.p. and 5 p.p. qoq, respectively. · The share of the Group's revenue, including NBH JV sales, from sales on markets where products were manufactured (Russia, the US and the EU) totalled 73% (-1 p.p. qoq).
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Q1 2020 EBITDA · EBITDA* increased by 24% qoq to $594 m due to the widening of steel/raw material price spreads and growing sales volumes, as well as operational efficiency gains. · Commercial expenses remained flat qoq at $212 million, despite an increase in export volumes, supported by a decrease in the average logistics costs for finished goods. The decrease in commercial expenses year-on-year was due to lower exports and lower average export logistics costs. · G&A expenses decreased by 5% qoq.
Net profit** · Net profit increased by 45% qoq, supported by growth of revenue. Net profit was also impacted by hedge accounting (please see the Methodology section of our financial statements for details).
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Free cash flow · NLMK's free cash flow amounted to $331 m (-2% qoq). Year-on-year, free cash flow decreased by 51% amid lower sales profitability and an increase in capital expenditures due to the active phase of Strategy 2022 investment project implementation. · Operating cash flow decreased by 13% qoq to $617 m, driven by lower release of cash from working capital than in the previous quarter. · Cash inflow from working capital totalled $85 m (-75% qoq) due to: o -$44 m: an increase in receivables driven by higher steel product sales volumes to NBH and sales by international companies o +$126 m: seasonal decrease in scrap inventory and accumulated stocks of raw materials during the first stage of overhauls, decrease in WIP and finished product inventory and changes in the ruble exchange rate.
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Investment
· NLMK Group Q1 2020 investment reduced by 20% qoq to $288 m following the completion of the first stage of overhauls at NLMK Lipetsk BF and BOF operations in Q4 2019.
Dividends
· In Q1 2020 cash outflow for dividend payments amounted to $308 m.
· On 30 April 2020, NLMK Board of Directors recommended that shareholders approve the payment of Q1 2020 dividends in the amount of RUB 3.21 per share, which is equivalent to 75% of the free cash flow.
Debt management
· Total debt increased by 31% qoq to $3.48 bn, which was associated with the increase in the Group's short-term debt as it drew down its revolving credit lines. These loans were taken to create an additional safety cushion amid high market volatility.
· Net debt decreased by 1% qoq to $1.77 bn due to increased liquidity on the Company's balance sheet. Net debt/EBITDA stood at 0.72х.
Q2 2020 and FY2020 outlook
· We expect steel output at NLMK Lipetsk to reduce qoq due to the start of the second stage of overhauls at the site's BF and BOF operations.
· Due to the revision of the investment programme amid the coronavirus outbreak, total investment in 2020 will amount to close to $0.9-0.95 bn, which is lower than the previously announced guidance of$1.1-1.2 bn due to the shift in the execution of a part of the projects and the devaluation of the ruble.
NLMK Russia Flat |
Q1 2020 highlights: · Sales increased by 8% qoq, supported by an increase in steel production after the first stage of repairs at NLMK Lipetsk last quarter. · Revenue of the Segment increased by 6% qoq to $1.8 bn, supported by an increase in sales of semis and finished products. Compared to Q1 2019, revenue was 10% lower due to a reduction in steel prices. · EBITDA increased by 43% qoq to $355 m, supported by wider steel/raw material spreads, an increase in sales, a weaker ruble, as well as operational efficiency gains. Compared to last year, EBITDA was 16% lower yoy due to the narrowing of price spreads.
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NLMK Russia Long |
Q1 2020 highlights: · Sales decreased by 16% qoq to 0.6 m t amid trade companies amassing high stocks of long products. Regional restrictions due to the coronavirus pandemic and the worldwide economic slowdown have prevented the effect of seasonal demand recovery from fully manifesting. · Revenue in Q1 2020 totalled $316 m (-19% qoq) due to a reduction in sales and long product prices. The 24% decrease in revenue yoy was driven by a 26% yoy reduction in sales. · EBITDA of the Segment amounted to $14 m versus -$2 m last quarter. The qoq and yoy growth was due to an increase in the scrap/rebar price spread and operational efficiency programme gains.
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Mining Segment |
Q1 2020 highlights: · Sales of iron ore remained flat qoq at 4.6 m t, with sales to third parties decreasing to 75,000 t (-38% qoq). · Revenue decreased by 3% qoq to $312 m due to lower dollar prices for concentrate and pellets (-3% and -2%, respectively), given the devaluation of the ruble. The 16% growth in revenue yoy was driven by growth in iron ore prices. · EBITDA decreased by 6% qoq to $227 m, following the decrease in revenue as well as an increase in spending on current repairs. Compared to Q1 2019, there has been a 19% increase in EBITDA yoy amid increasing product prices. Q1 2020 EBITDA margin stood at 73% (-2 p.p. qoq).
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NLMK USA |
Q1 2020 highlights: · Sales increased by 14% qoq to 0.54 m t, supported by higher demand from service centres, the automotive industry, and the construction sector. · Revenue increased by 17% qoq to $377 m, as sales and steel prices grew on the U.S. market. Revenue was 28% lower yoy due to a normalisation in steel prices and a reduction in sales. · EBITDA totalled -$22 m. This financial result is determined predominantly by the impact of the non-monetary inventory revaluation reserve as at the end of March (-$15 m), due to the deterioration in market conditions. This reserve is associated mainly with the stocks of slabs purchased in 2019. Without the reserve, Q1 2020 EBITDA would be - $7 m.
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NLMK Dansteel* |
Q1 2020 highlights: · Sales of plate increased by 28% qoq to 0.16 m t due to higher demand from wind power, shipbuilding, and infrastructure projects. · Revenue grew by 18% qoq to $130 m, following the increase in sales. The 6% decrease in revenue yoy was due to lower average sales prices. · EBITDA increased to $6 m, supported by sales growth and operational efficiency programme gains.
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*NLMK Dansteel and plate distribution network. |
JV performance (NBH) |
Q1 2020 highlights: · NBH sales increased by 17% qoq to 0.6 m t, supported by an uptick in demand on the EU market in January and February 2020. · Revenue grew by 9% qoq to $382 m, following the increase in sales. Compared to Q1 2019, revenue decreased 4% yoy due to low prices. · EBITDA was -$19 m vs. -$27 m in Q4 2019. The increase in EBITDA was supported by wider rolled steel/slabs price spreads and an increase in sales volumes. Sales in March decreased by 9% vs. February levels, due mainly to the decrease in thick plate and billet sales resulting from a temporary stoppage of NLMK Verona operations (-20% mom). This partially offset the impact of wider price spreads.
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Appendix No. 1 Operating and financial results
(1) Sales markets
k t | Total | Sales markets | |||||
Russia | EU | NorthAmerica | MiddleEast and Turkey | C. and S. America | Other | ||
NLMK Group (with NBH) | 4,377 | 1,767 | 857 | 828 | 532 | 135 | 258 |
Division sales to third parties: | |||||||
NLMK Russia Flat | 2,500 | 1,365 | 61 | 285 | 506 | 134 | 148 |
NLMK Russia Long | 569 | 402 | 79 | 0 | 20 | 0 | 69 |
International subsidiaries and affiliates, incl.: | 1,308 | 0 | 718 | 542 | 6 | 1 | 41 |
NLMK USA | 539 | 0 | 0 | 539 | 0 | 0 | 0 |
European rolling facilities (NLMK DanSteel and NBH) | 769 | 0 | 718 | 3 | 6 | 1 | 41 |
(2) NLMK Russia Flat
k t/$ million | Q1 2020 | Q4 2019 | QoQ | Q1 2019 | YoY |
Steel product sales, incl.: | 3,469 | 3,226 | 8% | 3,403 | 2% |
external customers | 2,500 | 2,375 | 5% | 2,658 | -6% |
semis to NBH | 734 | 523 | 40% | 441 | 66% |
intersegmental sales | 235 | 328 | -28% | 304 | -23% |
Revenue, incl.: | 1,788 | 1,687 | 6% | 1,976 | -10% |
external customers | 1,376 | 1,347 | 2% | 1,624 | -15% |
intersegmental operations | 412 | 340 | 21% | 352 | 17% |
EBITDA | 355 | 248 | 43% | 424 | -16% |
EBITDA margin | 20% | 15% | +5 p.p. | 21% | -1 p.p. |
(3) NLMK Russia Long
k t/$ million | Q1 2020 | Q4 2019 | QoQ | Q1 2019 | YoY |
Steel product sales | 569 | 674 | -16% | 768 | -26% |
Revenue, incl.: | 316 | 389 | -19% | 415 | -24% |
external customers | 260 | 316 | -18% | 374 | -30% |
intersegmental operations | 56 | 73 | -23% | 41 | 37% |
EBITDA | 14 | (2) | 7x | 9 | 56% |
EBITDA margin | 4% | -1% | +5 p.p. | 2% | +2 p.p. |
(4) Mining Segment
k t/$ million | Q1 2020 | Q4 2019 | QoQ | Q1 2019 | YoY |
Iron ore products sales, incl.: | 4,604 | 4,560 | 1% | 4,589 | 0% |
sales to Lipetsk plant | 4,529 | 4,440 | 2% | 4,589 | -1% |
Revenue, incl.: | 312 | 321 | -3% | 268 | 16% |
external customers | 10 | 15 | -33% | 4 | 2,5x |
intersegmental operations | 302 | 306 | -1% | 264 | 14% |
EBITDA | 227 | 241 | -6% | 190 | 19% |
EBITDA margin | 73% | 75% | -2 p.p. | 71% | +2 p.p. |
(5) NLMK USA
k t/$ million | Q1 2020 | Q4 2019 | QoQ | Q1 2019 | YoY |
Steel product sales | 539 | 472 | 14% | 601 | -10% |
Revenue, incl.: | 377 | 322 | 17% | 526 | -28% |
external customers | 377 | 322 | 17% | 526 | -28% |
intersegmental operations | - | - | 0% | - | 0% |
EBITDA | (22) | (37) | -41% | 17 | -1,3x |
EBITDA margin | -6% | -11% | +5 p.p. | 3% | -9 p.p. |
(6) NLMK DanSteel
k t/$ million | Q1 2020 | Q4 2019 | QoQ | Q1 2019 | YoY |
Steel product sales | 164 | 128 | 28% | 146 | 13% |
Revenue, incl.: | 130 | 110 | 18% | 139 | -6% |
external customers | 130 | 110 | 18% | 139 | -6% |
intersegmental operations | - | - | 0% | - | 0% |
EBITDA | 6 | 1 | 6x | 3 | 100% |
EBITDA margin | 5% | 1% | +4 p.p. | 2% | +3 p.p. |
(7) NBH
k t/$ million | Q1 2020 | Q4 2019 | QoQ | Q1 2019 | YoY |
Steel product sales | 605 | 518 | 17% | 513 | 18% |
Revenue, incl.: | 382 | 349 | 9% | 396 | -4% |
external customers | 370 | 332 | 11% | 385 | -4% |
intersegmental operations | 12.0 | 17.0 | -29% | 11.0 | 9% |
EBITDA | (19) | (27) | -30% | (15) | 27% |
EBITDA margin | -5% | -8% | +3 p.p. | -4% | -1 p.p. |
(8) Sales by product
k t | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | Q1 2019 |
Pig iron | 292 | 253 | 54 | 156 | 47 |
Slabs | 1,432 | 1,172 | 1,173 | 1,288 | 1,559 |
Thick plates | 164 | 128 | 118 | 137 | 146 |
Hot-rolled steel | 921 | 912 | 852 | 901 | 1,016 |
Cold-rolled steel | 528 | 473 | 533 | 498 | 509 |
Galvanized steel | 362 | 331 | 338 | 331 | 348 |
Pre-painted steel | 97 | 113 | 117 | 100 | 89 |
Transformer steel | 70 | 66 | 63 | 74 | 71 |
Dynamo steel | 72 | 50 | 75 | 68 | 61 |
Billet | 30 | 1 | 60 | 78 | 173 |
Long products | 474 | 596 | 568 | 570 | 526 |
Metalware | 65 | 77 | 65 | 68 | 69 |
TOTAL | 4,507 | 4,172 | 4,015 | 4,268 | 4,614 |
(9) Sales by region
k t | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | Q1 2019 |
Russia | 1,767 | 1,805 | 1,682 | 1,704 | 1,451 |
European Union | 1,026 | 787 | 674 | 1,130 | 987 |
Middle East, including Turkey | 529 | 556 | 633 | 409 | 709 |
North America | 826 | 727 | 606 | 748 | 654 |
Central and South America | 134 | 73 | 164 | 24 | 246 |
CIS | 91 | 91 | 114 | 106 | 122 |
Asia and Oceania | 23 | 69 | 21 | 61 | 180 |
Rest of World | 110 | 64 | 122 | 85 | 264 |
TOTAL | 4,507 | 4,172 | 4,015 | 4,268 | 4,614 |
(10) Revenue by region
Region | Q1 2020 | Q4 2019 | Q3 2019 | |||
$ million | share | $ million | share | $ million | share | |
Russia | 1,009 | 41% | 1,073 | 46% | 1,170 | 45% |
European Union | 505 | 21% | 377 | 16% | 376 | 15% |
Middle East, including Turkey | 241 | 10% | 246 | 11% | 321 | 12% |
North America | 485 | 20% | 408 | 18% | 427 | 17% |
Central and South America | 70 | 3% | 40 | 2% | 94 | 4% |
CIS | 75 | 3% | 88 | 4% | 100 | 4% |
Asia and Oceania | 29 | 1% | 54 | 2% | 29 | 1% |
Rest of World | 43 | 2% | 26 | 1% | 58 | 2% |
TOTAL | 2,457 | 100% | 2,312 | 100% | 2,576 | 100% |
(11) EBITDA*
$ million | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | Q1 2019 |
Operating income** | 439 | 338 | 512 | 593 | 559 |
minus: | |||||
Depreciation and amortization | (155) | (142) | (142) | (142) | (136) |
EBITDA | 594 | 480 | 654 | 735 | 695 |
* EBITDA used in NLMK's financial releases is calculated as operating profit before equity share in net losses of associates and other companies accounted for using the equity method of accounting, impairment and write-off of assets, adjusted to depreciation and amortization. EBITDA is not an indicator of operating profit, operating activity or liquidity under IFRS, and NLMK discloses it because equivalent indicators could be used by investors and analysts. That said, NLMK's EBITDA should not be viewed on a standalone basis, or in place of profit before tax, or cash flows from operations, as defined by IFRS, or as an indicator of operational efficiency, or as the sum of free cash funds that NLMK can invest into business development. NLMK's EBITDA margin and EBITDA might not be comparable to similar indicators disclosed by other companies as there are no commonly accepted rules for calculating them. For instance, NLMK's EBITDA is calculated similar to what is termed as 'Adjusted EBITDA' in other companies, as NLMK's EBITDA excludes other profit/loss items in addition to interest payments, income tax, depreciation and amortization.
** Operating profit before equity share in net losses of associates and other companies accounted for using the equity method of accounting, impairment and write-off of assets
(12) Free cash flow
$ million | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | Q1 2019 |
Net cash provided operating activities | 617 | 710 | 568 | 494 | 851 |
Interest paid | (2) | (22) | (4) | (12) | (11) |
Interest received | 4 | 9 | 1 | 3 | 16 |
Advance VAT payments on imported equipment | - | - | - | - | - |
Capex | (288) | (359) | (316) | (227) | (178) |
Free Cash Flow | 331 | 338 | 249 | 258 | 678 |
(13) Net debt
$ million | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | Q1 2019 |
Short-term borrowings | 1,678 | 468 | 389 | 544 | 224 |
Long-term borrowings | 1,799 | 2,188 | 2,288 | 2,257 | 1,872 |
Cash and cash equivalents | (1,456) | (713) | (421) | (1,142) | (736) |
Short-term deposites | (251) | (157) | (520) | (368) | (445) |
Net debt | 1,770 | 1,786 | 1,736 | 1,291 | 915 |
(14) Production of main products
k t | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | Q1 2019 |
Crude steel, incl.: | 4,171 | 3,749 | 3,714 | 3,940 | 4,128 |
Steel Segment | 3,325 | 2,977 | 2,818 | 2,952 | 3,264 |
Long products Segment, incl.: | 659 | 603 | 719 | 802 | 693 |
NLMK-Kaluga | 256 | 215 | 256 | 349 | 276 |
Foreign Rolled Products Segment | 188 | 169 | 176 | 185 | 171 |
Finished products, incl.: | 2,834 | 2,642 | 2,725 | 2,784 | 2,717 |
Flat steel | 2,222 | 2,058 | 2,071 | 2,129 | 2,129 |
Long steel | 612 | 584 | 653 | 655 | 588 |
Coke (6% moisture), incl.: | 1,538 | 1,487 | 1,418 | 1,417 | 1,531 |
Novolipetsk | 643 | 652 | 655 | 644 | 634 |
Altai-Koks | 895 | 834 | 762 | 774 | 897 |
(15) Slab sales, including intra-group sales to NLMK Group companies
k t | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | Q1 2019 |
Sales to 3rd parties, incl.: | 698 | 648 | 743 | 579 | 1,118 |
Export | 406 | 473 | 532 | 314 | 950 |
Sales to subsidiaries & associates | 970 | 851 | 550 | 933 | 735 |
Sales to NBH | 734 | 523 | 430 | 709 | 441 |
TOTAL | 1,667 | 1,499 | 1,292 | 1,512 | 1,853 |
(16) Export shipments of steel products from Russian assets of the Group to third party consumers
k t | Q1 2020 | Q4 2019 | QoQ | Q1 2019 | YoY |
Semi-finished products | 728 | 726 | 0% | 1,166 | -38% |
Pig iron | 292 | 253 | 15% | 47 | 6,2x |
Slabs | 406 | 473 | -14% | 950 | -57% |
Billets | 30 | - | 0% | 169 | -82% |
Flat products | 438 | 381 | 15% | 635 | -31% |
HRC | 148 | 151 | -2% | 312 | -53% |
CRC | 159 | 130 | 22% | 186 | -15% |
HDG | 17 | 12 | 40% | 29 | -42% |
Coated | 0 | 1 | -32% | 1 | -68% |
Dynamo | 54 | 33 | 63% | 45 | 20% |
Transformer | 60 | 54 | 11% | 62 | -3% |
Long products | 135 | 138 | -2% | 174 | -22% |
Total | 1,302 | 1,245 | 5% | 1,975 | -34% |
(17) Segmental information
Q1 2020 | Russian Flat Steel | Russian Long Products | Mining | NLMK USA | NLMK DanSteel and Plates Distribution Network | Investments in NBH | Totals | Intersegmental operations and balances | NBHdeconsoli-dation | Consolidated |
$ million | ||||||||||
Revenue from external customers | 1,376 | 260 | 10 | 377 | 130 | 370 | 2,523 | - | (66) | 2,457 |
Intersegment revenue | 412 | 56 | 302 | - | - | 12 | 782 | (770) | (12) | - |
Gross profit | 492 | 36 | 219 | (14) | 20 | 14 | 767 | 15 | (28) | 754 |
Operating income/(loss) | 258 | 2 | 199 | (37) | 3 | (33) | 392 | 28 | 19 | 439 |
Income / (loss) before minority interest | 190 | (5) | 160 | (38) | 2 | (34) | 275 | 25 | (11) | 289 |
Segment assets including goodwill | 6,808 | 865 | 1,576 | 828 | 391 | 1,376 | 11,844 | (1,070) | (1,080) | 9,694 |
Balance figures presented as of 31.03.2020
Q4 2019 | Russian Flat Steel | Russian Long Products | Mining | NLMK USA | NLMK DanSteel and Plates Distribution Network | Investments in NBH | Totals | Intersegmental operations and balances | NBHdeconsoli-dation | Consolidated |
$ million | ||||||||||
Revenue from external customers | 1 347 | 316 | 15 | 322 | 110 | 332 | 2 442 | - | (130) | 2 312 |
Intersegment revenue | 340 | 73 | 306 | - | - | 17 | 736 | (719) | (17) | - |
Gross profit | 395 | 24 | 230 | (33) | 13 | (7) | 622 | 7 | 20 | 649 |
Operating income/(loss) | 165 | (15) | 212 | (51) | (2) | (47) | 262 | 15 | 61 | 338 |
Income / (loss) before minority interest | 462 | (16) | 172 | (82) | (3) | (53) | 480 | (304) | 24 | 200 |
Segment assets including goodwill | 7 483 | 1 160 | 2 120 | 840 | 371 | 1 318 | 13 292 | (1 752) | (1 056) | 10 484 |
Balance figures presented as of 31.12.2019
Novolipetsk Steel Interim condensed consolidated statement of financial position (unaudited) (millions of US dollars) |
| As at31 March 2020 | As at31 December 2019 | ||
Assets | ||||
Current assets | ||||
Cash and cash equivalents | 1,456 | 713 | ||
Short-term financial investments | 292 | 287 | ||
Trade and other accounts receivable | 977 | 1,047 | ||
Inventories | 1,296 | 1,634 | ||
Other current assets | 23 | 14 | ||
4,044 | 3,695 | |||
Non-current assets | ||||
Long-term financial investments | 5 | 5 | ||
Investments in joint ventures | 243 | 223 | ||
Property, plant and equipment | 4,967 | 6,039 | ||
Goodwill | 203 | 248 | ||
Other intangible assets | 130 | 162 | ||
Deferred income tax assets | 94 | 101 | ||
Other non-current assets | 8 | 11 | ||
5,650 | 6,789 | |||
Total assets | 9,694 | 10,484 | ||
Liabilities and equity | ||||
Current liabilities | ||||
Trade and other accounts payable | 942 | 1,124 | ||
Dividends payable | 5 | 318 | ||
Short-term borrowings | 1,678 | 468 | ||
Current income tax liability | 10 | 32 | ||
2,635 | 1,942 | |||
Non-current liabilities | ||||
Long-term borrowings | 1,799 | 2,188 | ||
Deferred income tax liability | 329 | 405 | ||
Other long-term liabilities | 3 | 2 | ||
2,131 | 2,595 | |||
Total liabilities | 4,766 | 4,537 | ||
Equity attributable to Novolipetsk Steel shareholders | ||||
Common stock | 221 | 221 | ||
Additional paid-in capital | 9 | 9 | ||
Accumulated other comprehensive loss | (7,445) | (6,140) | ||
Retained earnings | 12,129 | 11,840 | ||
4,914 | 5,930 | |||
Non-controlling interests | 14 | 17 | ||
Total equity | 4,928 | 5,947 | ||
Total liabilities and equity | 9,694 | 10,484 |
Novolipetsk Steel Interim condensed consolidated statement of profit or loss (unaudited) (millions of US dollars, unless otherwise stated) |
For the three months ended31 March 2020 | For the three months ended31 March 2019 | |||
Revenue | 2,457 | 2,869 | ||
Cost of sales | (1,703) | (1,988) | ||
Gross profit | 754 | 881 | ||
General and administrative expenses | (86) | (82) | ||
Selling expenses | (212) | (226) | ||
Net impairment losses on financial assets | (3) | (1) | ||
Other operating income, net | 3 | 2 | ||
Taxes, other than income tax | (17) | (15) | ||
Operating profit before share of results of joint ventures, impairment of non-current assets and loss on disposals of property, plant and equipment | 439 | 559 | ||
Impairment of non-current assets | (1) | (5) | ||
Share of results of joint ventures | (30) | 4 | ||
Finance income | 3 | 4 | ||
Finance costs | (21) | (16) | ||
Foreign currency exchange income/ (loss), net | 3 | (61) | ||
Hedging result | (2) | - | ||
Other expenses, net | (24) | (20) | ||
Profit before income tax | 367 | 465 | ||
Income tax expense | (78) | (83) | ||
Profit for the period | 289 | 382 | ||
Profit attributable to: | ||||
Novolipetsk Steel shareholders | 289 | 382 | ||
Non-controlling interests | - | - | ||
Earnings per share - basic and diluted: | ||||
Earnings per share attributable toNovolipetsk Steel shareholders (US dollars) | 0.0482 | 0.0637 | ||
Novolipetsk Steel Interim condensed consolidated statement of cash flows (unaudited) (millions of US dollars) |
| For the three months ended31 March 2020 | For the three months ended31 March 2019 | ||
Cash flows from operating activities | ||||
Profit for the period | 289 | 382 | ||
Adjustments to reconcile profit for the period to net cash provided by operating activities: | ||||
Depreciation and amortisation | 155 | 136 | ||
Loss on disposals of property, plant and equipment | - | - | ||
Finance income | (3) | (4) | ||
Finance costs | 21 | 16 | ||
Share of results of joint ventures | 30 | (4) | ||
Income tax expense | 78 | 83 | ||
Impairment of non-current assets | 1 | 5 | ||
Foreign currency exchange (income)/ loss, net | (3) | 61 | ||
Hedging result | 2 | - | ||
Change in impairment allowance for inventories and credit loss allowance for accounts receivable | 15 | 1 | ||
Changes in operating assets and liabilities | ||||
(Increase)/decrease in trade and other accounts receivable | (44) | 65 | ||
Decrease in inventories | 126 | 302 | ||
Decrease in other operating assets | 2 | 2 | ||
Increase/(decrease) in trade and other accounts payable | 1 | (107) | ||
Сash provided by operating activities | 670 | 938 | ||
Income tax paid | (53) | (87) | ||
Net cash provided by operating activities | 617 | 851 | ||
Cash flows from investing activities | ||||
Purchases and construction of property, plant and equipment andintangible assets | (288) | (178) | ||
Purchases of investments and loans given | - | (61) | ||
Proceeds from repayment of loans given | 85 | - | ||
Placement of bank deposits | (248) | (444) | ||
Withdrawal of bank deposits | 158 | 3 | ||
Interest received | 4 | 16 | ||
Contribution to share capital of joint venture | (55) | - | ||
Net cash used in investing activities | (344) | (664) | ||
Cash flows from financing activities | ||||
Proceeds from borrowings | 938 | 40 | ||
Repayment of borrowings | (116) | (94) | ||
Payments on leases | (4) | (4) | ||
Interest paid | (2) | (11) | ||
Dividends paid to Novolipetsk Steel shareholders | (308) | (547) | ||
Net cash provided by/(used in) financing activities | 508 | (616) | ||
Net increase/(decrease) in cash and cash equivalents | 781 | (429) | ||
Effect of exchange rate changes on cash and cash equivalents | (38) | (14) | ||
Cash and cash equivalents at the beginning of the year | 713 | 1,179 | ||
Cash and cash equivalents at the end of the period | 1,456 | 736 | ||