20 May 2014 07:41
NLMK
20 May 2014
Press release
Q1 2014 CONSOLIDATED FINANCIAL RESULTS UNDER US GAAP
Key highlights
'000 t/$ million | Q12014 | Q412013 | Change qoq, % | Q120132 | Changeyoy, % | ||
Sales volumes | 3,866 | 3,567 | +8% | 3,763 | +3% | ||
Revenue | 2 638 | 2 505 | +5% | 2 856 | -8% | ||
Operating profit | 269 | 204 | +32% | 111 | +143% | ||
EBITDA3 | 468 | 409 | +14% | 318 | +47% | ||
EBITDA margin (%) | 17.7% | 16.3% | +1.4 p.p. | 11.1% | +6.6 p.p. | ||
Net income 4 | 174 | -21 | 38 | +359% | |||
Net debt 5 | 2 301 | 2 702 | -15% | 3 453 | -33% | ||
Net debt / EBITDA | 1.39 | 1.80 | 1.93 |
Notes:
1 Consolidated financial results are prepared based on US GAAP. Reporting periods of the Company are 3M, 6M, 9M and 12M 2013. Quarterly figures (with the exception of Q1) are derived by computational method. The same assumption applies to the calculation of segmental financial results.
2Up till and inclusive of Q3 2013, NLMK Belgium Holdings (NBH) sales were included into the Group's consolidated sales. Starting from Q4 2013, NBH sales are shown separately.
3EBITDA calculations are presented in the Appendix. EBITDA is calculated as operating profit adjusted to loss from impairment of fixed assets and intangible assets (including goodwill) and depreciation and amortization.
4 Net profit attributable to NLMK shareholders.
5 Net debt is calculated as the sum of LT and ST credits and loans less cash and cash equivalents, as well as ST financial investments at period end. Net debt / EBITDA is represented by net debt as at the end of the period and EBITDA is presented as Last 12 months EBITDA
Q1 2014
· EBITDA jumped to $468 million (+14% quarter-on-quarter), EBITDA margin went up to 18% (+1.4 p.p. quarter-on-quarter and +6.6 p.p. year-on-year) driven by increased sales and decreased production costs. Net income totaled $174 million (+359% year-on-year). Net debt/EBITDA ratio totaled 1.39 versus 1.8 in Q4 2013.
Outlook
· In Q2 2014, steel production is expected to remain stable quarter-on-quarter. Ongoing efficiency enhancement programs on the back of improved demand in key markets allow us to expect further growth in the Group's profitability and income.
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.
TELECONFERENCE
NLMK is pleased to invite the investment community to a conference call with the management of
Tuesday, May 20, 2014
09:00 (New York)
14:00 (London)
17:00 (Moscow)
To join the conference call, please, register on-line:
https://eventreg1.conferencing.com/webportal3/reg.html?Acc=975352&Conf=190561
or dial
International Number: +44 (0) 20 7031 0088
US Number: +1 334 323 6201
Conference ID: 944874
*We recommend that participants register on-line to avoid waiting in a queue or to start dialing in 5-10 minutes prior to ensure a timely start to the conference call.
The conference call replay will be available through 27th May 2014.
International Replay Number: + 44 (0) 207 031 4064
US Replay Number: +1 954 334 0342
Replay Access Code: 944874
It is recommended that participants download presentation in advance on NLMK's web-site www.nlmk.com
Investor Relations contacts:
Sergey Takhiev
+7 495 915 1575
tahiev_sa@nlmk.com
Media contacts:
Sergey Babichenko
+7 (916) 824 6743
babichenko_sy@nlmk.comComments from NLMK Group CFO Grigory Fedorishin:
"At the beginning of 2014, demand in key markets remained weak on the back of the seasonal slowdown in consumer activity. By the end of the first quarter, market conditions improved.
"NLMK Group's steelmaking capacities were running at high utilization rates: 92% (including 98% at the main production site in Lipetsk). A mild reduction in steel output was accounted for by the mastering of a new product (section) at NLMK Kaluga. Industrial production of this product is planned to start during the year.
"Q1 Group sales increased by 8% quarter-on-quarter to 3.87 million tonnes, due to improvement in demand in the end of the quarter and due to the sale of previously accumulated stocks.
"Revenue went up by 5% quarter-on-quarter to $2.64 billion. EBITDA increased by 14% quarter-on-quarter to $468 million, EBITDA margin went up to 18%. Strong financial results were achieved as a result of increased sales and reduced production costs. Ongoing operational efficiency programs based on implementing NLMK Production System at all Group sites, allowed obtaining a net profit of $70 million in Q1, which is in line with the plan of achieving target results under Strategy 2017.
"Efficient working capital management remains one of the priorities for the company: in Q1, despite the growth in sales, working capital remained at the level of the end of December 2013 (minus $2 million).
"In Q1, investment totaled $131 million, 15% lower year-on-year. Free cash flow went up to $271 million. This allowed reducing net debt by 15% to $2.3 billion. Net debt/ EBITDA ratio reduced to 1.39.
"We expect seasonal improvements in demand and ongoing efforts to optimize costs to allow us to demonstrate further improvements in financial results in Q2 2014."
MANAGEMENT COMMENTS
· Market overview
Global steel product prices demonstrated varying trends throughout the quarter, due to the seasonal factor and to decrease in raw material prices. Prices for iron ore and coking coal in China went down by 13% and 19%, respectively, by the end of the quarter compared to the beginning of the year.
On the domestic market, prices nominated in USD reduced by 5-10% quarter-on-quarter, mainly due to the weakened ruble rate. At the same time, export prices remained high, resulting in stronger exports from Russia and weaker imports to Russia. Throughout the quarter, prices in the domestic market demonstrated a gradual recovery to the export parity level, supported by lower import deliveries and the seasonal improvement in demand.
Demand and average prices in the European and North American markets remained largely stable.
· Production and sales
The Group's steelmaking capacities were running at 92%, including 98% at NLMK's main production site in Lipetsk; 73% at Long Products Division sites; and 88% at NLMK USA.
Q1 2014 steel output totaled 3.91 million tonnes (-4% quarter-on-quarter). This decline was mainly attributable to the reduction in Long Product Segment steel output (-7% quarter-on-quarter), related to mastering of a new product (sections) at NLMK Kaluga.
Q1 sales were up by 8% quarter-on-quarter to 3.87 million tonnes, supported by improved demand at the end of the period and efficient sales of previously accumulated stock.
Finished product sales grew by 11% quarter-on-quarter to 2.48 million tonnes, or 64% of total sales. Slab sales totaled 1.30 million tonnes (+4% quarter-on-quarter), or 34% of total sales.
· Sales markets
Sales to the Russian market increased by 6% to 1.55 million tonnes on the back of improved demand from construction at the end of Q1. The share of Russian sales was 40%.
Sales to North America increased by 12% quarter-on-quarter to 0.75 million tonnes, supported by growing demand; NLMK USA sales accounted for 61% of the sales into the region.
We sold 0.74 million tonnes to the EU, or 19% of Group's total sales. A significant volume of sales was redirected from Asia (-72% quarter-on-quarter) to other regions (+89% quarter-on-quarter), including Central and South America. Sales to the Middle East totaled 6% (-1 p.p. quarter-on-quarter) of total sales.
· Prices
There were opposing trends for USD sales prices in our sales regions.
Average prices for standard flat and long products in Russia were down by 5-10% in dollar terms, mainly because the RUB rate slashed against the dollar (by 7% quarter-on-quarter). The Group's Russian companies' export prices for slabs and standard products were up by 2-3% on average.
In the US, prices grew by 3-4% as demand remained strong. In Europe, dollar-denominated prices remained stable.
· Investment
Q1 2014 investment totaled $131 million (+33% quarter-on-quarter). This growth was related to the seasonally low year-end investment base. The year-on-year capex reduction by 15% related to the fact that we've completed several large projects including the construction of NLMK Kaluga.
According to preliminary estimates, 2014 investment will total approximately $0.85 billion, including approximately 30% for maintenance. The remaining investment will go towards Strategy 2017 projects, and towards payments for previously completed projects. Key project for 2014 will be the pelletizing plant construction at Stoilensky.
· Debt management
As of 31 March 2014, NLMK Group's net debt was $2.3 billion. The 15% quarter-on-quarter and the 33% year-on-year reduction was accounted for by the stable positive free cash flow.
Net debt/EBITDA at the end of Q1 2014 stood at 1.39. Cash and ST financial investments were $1.58 billion (+9% quarter-on-quarter).
Net settlement of financial debt in Q1 was $147 million. The weakening of the RUB against the dollar had a significant impact on the amount of debt liabilities at the balance sheet date. This led to a corresponding reduction in the cost of RUB liabilities in dollar terms (RUB bonds and LT loans for an amount of around RUB 50 billion).
Due to these factors, at the end of Q1 2014, NLMK's total financial debt stood at $3.88 billion (-7% quarter-on-quarter and -21% year-on-year), including 29% of ST liabilities mostly represented by RUB bonds and revolving credit lines to finance working capital.
Subsequent events
· BoD dividend recommendations
NLMK's Board of Directors met on 16 April. The BoD recommended NLMK's Annual General Shareholder Meeting to announce dividends for 2013 in the amount of RUB 0.67 per ordinary share. Therefore, dividend payments could amount to US$ 114 million (FX rate as of the date of Board of Directors meeting), or 35% of NLMK's US GAAP net profit for 2013, adjusted to one-off non-monetary factors (creating a reserve), as well as expenses related to previous periods.
The proposed level of dividends is in line with NLMK Group's dividend policy and doesn't contradict the company's efforts to achieve the announced targets of its Strategy 2017.
KEY FINANCIALS
· Revenue
Q1 2014 revenue increased by 5% quarter-on-quarter to $2,638 million due to the 8% increase in sales that offset the seasonal decrease in prices in the domestic Russian market and the negative impact from the weakening of the RUB against the dollar. The year-on-year decrease in revenue (-8%) is accounted to the overall reduction in product prices that was partially offset by the 3% year-on-year sales growth.
· Operating profit
Q1 2014 operating profit increased by 32% quarter-on-quarter (+143% year-on-year) to $269 million due to an improved pricing environment in the export markets, our operating efficiency enhancement programs, as well as the weakening of the RUB.
Slab cash cost at the Lipetsk site in Q1 2014 was down to $310/t (-11% quarter-on-quarter) due to the reduction in raw material prices and the weakening of the RUB.
General and administrative expenses increased to $92 million (+9% quarter-on-quarter) due to reserves created in relation to doubtful accounts receivable and salary settlements. Commercial expenses were down to $212 million (-4% quarter-on-quarter) on the back of changes in the geography of sales.
· Net profit
NLMK's Q1 2014 net profit was $174 million (net loss in Q4 2013 was $21 million; net profit in Q1 2013 was $38 million). This increase was related to higher profit from operations, and the impact of one-off factors on Q4 2013 results (see press release).
· Operating cash flow
Q1 net operating cash flow increased by 111% quarter-on-quarter to $401 million (+54% year-on-year) due to higher profitability and a stable level of working capital.
Steel segment*
$ million | Q12014 | Q42013** | Change q-o-q, % | Q12013 | Change y-o-y, % | |
Steel product sales, '000 tonnes | 3,173 | 2,730 | +16% | 2,966 | +7% | |
including third party sales, '000 tonnes | 2,665 | 2,393 | +11% | 2,374 | +12% | |
Revenue, incl. | 2,038 | 1,802 | +13% | 2,005 | +2% | |
Revenue from external customers | 1,742 | 1,595 | +9% | 1,659 | +5% | |
Revenue from intersegmental operations | 296 | 207 | +43% | 346 | -15% | |
EBITDA | 262 | 153 | +72% | 83 | +215% | |
EBITDA margin | 13% | 8% | 4% |
In Q1 2014, Segment sales totaled 3.2 million tonnes (+16% quarter-on-quarter), supported by improved market conditions at the end of the quarter, and by the sale of stocks accumulated in the previous periods. Sales to third parties in Q1 went up by 11% quarter-on-quarter to 2.7 million tonnes (+12% year-on-year).
Overall Segment revenue went up to $2,038 million (+13% quarter-on-quarter) on the back of increased sales and prices on the export markets. Higher sales offset the reduction in average prices compared to Q1 2013 (+2% year-on-year revenue growth).
Segment EBITDA was $262 million (+72% quarter-on-quarter; +215% year-on-year) due to widened spreads between steel products and raw materials prices and due to the weakening of the ruble. EBITDA margin was 13% (+5 p.p. quarter-on-quarter and +9 p.p. year-on-year).
Outlook
In Q2 2014, we expect a seasonal improvement in demand for steel products at our key sales markets that will positively contribute to the Segment's operating and financial results.
* The Steel Segment comprises: Novolipetsk (Lipetsk site), VIZ-Steel (a producer of electrical steel), trading companies Novexco Limited, Cyprus and Novex Trading S.A., Switzerland, Altai-Koks (Russia's largest non-integrated coke manufacturer), as well as a number of service companies.
** Slab sales to NLMK Belgium Holdings (NBH) till Q3 2013 were included in intercompany sales of the Steel segment. Starting from Q4 2013 these sales were considered as third parties sales.Long Products Segment *
$ million | Q12014 | Q42013 | Changeq-o-q, % | Q12013 | Changey-o-y, % | |
Long products and metalware sales, '000 tonnes | 654 | 633 | +3% | 430 | +52% | |
Revenue incl. | 394 | 473 | -17% | 347 | +13% | |
Revenue from external customers | 337 | 371 | -9% | 288 | +17% | |
Revenue from intersegmental operations | 57 | 102 | -44% | 59 | -3% | |
EBITDA | 7 | 12 | -41% | 20 | -64% | |
EBITDA margin | 2% | 3% | 6% |
In Q1 2014, overall Segment sales went up by 3% quarter-on-quarter to 654,000 tonnes. The revenue of the Segment went down by 17% quarter-on-quarter to $394 million. The revenue reduction was accounted for by lower long steel prices in Russia (-10% quarter-on-quarter) following the seasonal reduction in demand; and also by the weakening of the ruble. An additional factor behind the Segment revenue decline was the decreased level of intersegmental scrap sales that led to intersegmental revenue reduction of (-) 44% quarter-on-quarter.
Revenue went up by 13% year-on-year following the increase in NLMK Kaluga sales that offset the year-on-year decline in prices.
EBITDA totaled $7 million (-41% quarter-on-quarter and -64% year-on-year), EBITDA margin went down to 2%. The reduction in steel prices which wasn't offset by scrap price trends was the key factor behind the reduction in profitability.
Outlook
In Q2 2014, we expect a seasonal recovery in demand and prices in the long products market. Coupled with higher utilization rates at NLMK Kaluga this will have a positive impact on the Segment operating and financial results.
* The Long Products Segment: NSMMZ, NLMK Metalware, NLMK Kaluga, and scrap treatment facilities. The core activities of these companies are steelmaking (EAF-based), long products and metalware manufacturing, and ferrous scrap collection and processing.
Mining segment*
$ million | Q12014 | Q42013 | Change q-o-q, % | Q12013 | Change y-o-y, % | |
Sales of iron ore concentrate and sinter ore,'000 tonnes | 3,871 | 3,964 | -2% | 3,747 | +3% | |
Incl. to Lipetsk plant | 2,940 | 3,051 | -4% | 2,771 | +6% | |
Revenue incl. | 317 | 353 | -10% | 337 | -6% | |
Revenue from external customers | 88 | 94 | -6% | 92 | -5% | |
Revenue from intersegmental operations | 229 | 259 | -12% | 245 | -6% | |
EBITDA | 209 | 228 | -9% | 215 | -3% | |
EBITDA margin | 66% | 65% | 64% |
The insignificant reduction in operating results of the Segment in Q1 2014 (quarter-on-quarter) was mainly related to the seasonal decline in demand and to Novolipetsk crude steel production trends.
Segment revenue totaled $317 million (-10% quarter-on-quarter and -6% year-on-year), due to the reduction in iron ore sales prices (impacted, among other factors, by the weakening of the ruble). Efficiency enhancement programs allowed increasing the EBITDA margin to 66% (+1 p.p. quarter-on-quarter and +2 p.p. year-on-year).
Outlook
In Q2 2014, we expect iron sales to go up, driven primarily by sales to third parties. The implementation of efficiency enhancement programs will allow partially offsetting the reduction in iron ore prices recorded in Q2.
* NLMK's Mining Segment comprises Stoilensky (the Group's key mining asset), Dolomit and Stagdok. These companies mainly supply raw materials to NLMK's production facilities in Lipetsk and also sell limited volumes outside the Group.
Foreign Rolled Products Segment *
$ million | Q12014* | Q42013* | Changeq-o-q, % | Q12013 | Change y-o-y, % | |
Steel products sales, '000 tonnes | 557 | 541 | +3% | 959 | -42% | |
Revenue incl. | 471 | 445 | +6% | 817 | -42% | |
Revenue from external customers | 471 | 445 | +6% | 816 | -42% | |
Revenue from intersegmental operations | - | - | - | 1 | -100% | |
EBITDA | 23 | 30 | -22% | -26 | -188% | |
Steel products sales, '000 tonnes | 5% | 7% | -3% |
In Q1 2014, Segment sales totaled 557,000 tonnes (+3% quarter-on-quarter) on the back of the stable situation in Europe and improved market in the USA.
Higher sales of NLMK Dansteel and NLMK USA and higher prices in the USA supported a 6% quarter-on-quarter increase in revenue to $471 million. EBITDA totaled $23 million (-22% quarter-on-quarter). The decline in profitability was accounted for by increased prices for semi-finished products, and by the increase in energy costs due to abnormal weather conditions.
The significant change in the operating and financial results of the segment compared to Q1 2013 is associated with the deconsolidation of NLMK Belgium Holdings (NBH) results.
Outlook
In Q2 2014, demand in the USA is expected to remain strong. In Europe, the situation will remain stable, with the seasonal growth in consumer activity supporting demand.
* The Foreign Rolled Products Segment before the 1st October 2013 was represented by rolling assets in Europe (NLMK Europe) and the USA (NLMK USA). NLMK Europe is represented by thick plate producers NLMK Dansteel (Denmark), NLMK Clabecq (Belgium), NLMK Verona (Italy) and strip product producers NLMK La Louvière (Belgium), NLMK Coating (France), NLMK Strasbourg (France). NLMK USA includes NLMK Pennsylvania, Sharon Coating, NLMK Indiana.
Following the deconsolidation of NBH starting from Q4 2013 the segment includes NLMK USA division companies and NLMK Dansteel.
Appendix
(1) EBITDA
$ million | Q1 2014 | Q4 2013 | Q1 2013 |
Operating profit | 269 | 204 | 111 |
Minus: | |||
Impairment losses | - | - | - |
Depreciation and Amortization | -199 | -205 | -207 |
EBITDA | 468 | 409 | 318 |
(2) Sales by product
('000 tonnes) | Q1 2014 | Q4 2013 | Q3 2013 | Q2 2013 | Q1 2013 |
Pig iron | 6 | 26 | 9 | 91 | 42 |
Slabs | 1,295 | 1,228 | 780 | 937 | 1,130 |
Thick plates | 100 | 90 | 230 | 235 | 224 |
Hot-rolled steel | 840 | 661 | 1,031 | 973 | 900 |
Cold-rolled steel | 497 | 490 | 546 | 494 | 466 |
Galvanized steel | 221 | 220 | 287 | 294 | 276 |
Pre‐painted steel | 132 | 99 | 144 | 145 | 161 |
Transformer steel | 60 | 54 | 63 | 61 | 66 |
Dynamo steel | 61 | 66 | 64 | 75 | 68 |
Billet | 86 | 84 | 34 | 1 | 0 |
Long products | 490 | 472 | 455 | 390 | 359 |
Metalware | 77 | 77 | 80 | 78 | 71 |
TOTAL | 3,866 | 3,567 | 3,724 | 3,774 | 3,763 |
(3) Sales by region
('000 tonnes) | Q1 2014 | Q4 2013 | Q3 2013 | Q2 2013 | Q1 2013 |
Russia | 1,549 | 1,460 | 1,597 | 1,411 | 1,320 |
EU | 736 | 662 | 599 | 615 | 653 |
Middle East incl. Turkey | 245 | 254 | 431 | 419 | 360 |
North America | 748 | 669 | 513 | 438 | 482 |
Asia and Oceania | 69 | 248 | 220 | 457 | 515 |
Other regions | 519 | 274 | 363 | 435 | 435 |
TOTAL | 3,866 | 3,567 | 3,724 | 3,774 | 3,763 |
(4) Revenue by region
Region | Q1 2014 | Q4 2013 | Q1 2013 | |||
$ million | share, % | $ million | share, % | $ million | share, % | |
Russia | 1,022 | 39% | 1,048 | 42% | 1,057 | 37% |
EU | 449 | 17% | 404 | 16% | 574 | 20% |
Middle East incl. Turkey | 145 | 5% | 152 | 6% | 223 | 8% |
North America | 527 | 20% | 485 | 19% | 373 | 13% |
Asia and Oceania | 44 | 2% | 150 | 6% | 282 | 10% |
Other regions | 450 | 17% | 266 | 11% | 348 | 12% |
TOTAL | 2,638 | 100% | 2,505 | 100% | 2,856 | 100% |
(5) Working capital
$ million | 31.03.14 | 31.12.13 | 30.09.13 | 30.06.13 | 31.03.13 |
Current assets | 4,966 | 5,102 | 4,918 | 5,537 | 5,834 |
Cash and cash equivalents | 830 | 970 | 835 | 1,241 | 1,220 |
Short term investments | 753 | 485 | 516 | 121 | 271 |
Accounts receivable | 1,544 | 1,438 | 1,540 | 1,497 | 1,557 |
Inventories | 1,731 | 2,124 | 1,897 | 2,530, | 2,689 |
Other current assets, net | 107 | 85 | 129 | 148 | 97 |
Current liabilities | 2,242 | 2,317 | 1,760 | 2,647 | 2,940 |
Accounts payable | 1,068 | 1,176 | 1,104 | 1,609 | 1,412 |
Short‐term debt | 1,141 | 1,119 | 616 | 994 | 1,484 |
Other current liabilities | 33 | 22 | 40 | 44 | 45 |
Working capital | 2,724 | 2,785 | 3,158 | 2,890 | 2,894 |
(6) Production of main products
('000 tonnes) | Q1 2014 | Q4 2013 | Q3 2013 | Q2 2013 | Q1 2013 |
Coke 6% moisture, incl. | 1,631 | 1,668 | 1,666 | 1,628 | 1,727 |
Novolipetsk | 621 | 620 | 651 | 625 | 635 |
Altai-Koks | 1,009 | 1,048 | 1,016 | 1,004 | 1,093 |
Crude steel, incl. | 3,909 | 4,064 | 3,887 | 3,785 | 3,693 |
Steel Segment | 3,086 | 3,193 | 3,089 | 3,086 | 3,032 |
Long Products Segment | 654 | 707 | 587 | 488 | 450 |
Incl. NLMK-Kaluga | 195 | 253 | 95 | 11 | |
Foreign Rolled Products Segment | 169 | 164 | 211 | 211 | 211 |
Rolled products / finished products, incl. | 2,450 | 2,424 | 2,800 | 2,741 | 2,673 |
Flat steel | 1,904 | 1,834 | 2,271 | 2,289 | 2,229 |
Long steel | 545 | 590 | 529 | 453 | 444 |
(7) Slab sales, including to NLMK Group companies
('000 tonnes) | Q1 2014 | Q4 2013 | Q3 2013 | Q2 2013 | Q1 2013 |
Sales to third parties, incl. | 1,295 | 1,228 | 780 | 937 | 1,130 |
Export | 1,104 | 1,109 | 638 | 756 | 979 |
Incl. sales to NBH | 483 | 446 | |||
Domestic market | 191 | 119 | 142 | 181 | 151 |
Sales to subsidiaries | 369 | 337 | 933 | 616 | 513 |
Total | 1,664 | 1,563 | 1,713 | 1,553 | 1,643 |
OJSC Novolipetsk Steel
Interim condensed consolidated balance sheets
as at March 31, 2014 and December 31, 2013 (unaudited) (thousands of US dollars)
| As at March 31, 2014 | As at December 31, 2013 | ||
ASSETS | ||||
Current assets | ||||
Cash and cash equivalents | 829,934 | 969,992 | ||
Short-term investments | 753,489 | 484,981 | ||
Accounts receivable and advances given, net | 1,543,871 | 1,437,697 | ||
Inventories, net | 1,731,229 | 2,123,755 | ||
Other current assets | 17,300 | 7,578 | ||
Deferred income tax assets | 89,775 | 77,864 | ||
4,965,598 | 5,101,867 | |||
Non-current assets | ||||
Long-term investments | 443,478 | 501,074 | ||
Property, plant and equipment, net | 9,161,990 | 10,002,996 | ||
Intangible assets, net | 109,804 | 115,958 | ||
Goodwill | 428,131 | 463,409 | ||
Deferred income tax assets | 100,628 | 58,585 | ||
Other non-current assets | 38,918 | 40,192 | ||
10,282,949 | 11,182,214 | |||
Total assets | 15,248,547 | 16,284,081 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Current liabilities | ||||
Accounts payable and other liabilities | 1,067,856 | 1,175,709 | ||
Short-term borrowings | 1,141,305 | 1,119,286 | ||
Current income tax liability | 32,671 | 21,553 | ||
2,241,832 | 2,316,548 | |||
Non-current liabilities | ||||
Deferred income tax liability | 607,996 | 599,250 | ||
Long-term borrowings | 2,743,367 | 3,038,041 | ||
Other long-term liabilities | 52,108 | 55,433 | ||
3,403,471 | 3,692,724 | |||
Total liabilities | 5,645,303 | 6,009,272 | ||
Commitments and contingencies | - | - | ||
Stockholders' equity | ||||
NLMK stockholders' equity | ||||
Common stock, 1 Russian ruble par value - 5,993,227,240 shares issued and outstanding at March 31, 2014 and December 31, 2013 | 221,173 | 221,173 | ||
Statutory reserve | 10,267 | 10,267 | ||
Additional paid-in capital | 256,922 | 256,922 | ||
Accumulated other comprehensive loss | (2,739,233) | (1,897,100) | ||
Retained earnings | 11,829,375 | 11,655,490 | ||
9,578,504 | 10,246,752 | |||
Non-controlling interest | 24,740 | 28,057 | ||
Total stockholders' equity | 9,603,244 | 10,274,809 | ||
Total liabilities and stockholders' equity | 15,248,547 | 16,284,081 |
OJSC Novolipetsk Steel
Interim condensed consolidated statements of income
for the three months ended March 31, 2014 and 2013 (unaudited) (thousands of US dollars)
| For the three months ended March 31, 2014 | For the three months ended March 31, 2013 | ||
Revenue | 2,637,829 | 2,855,822 | ||
Cost of sales | ||||
Production cost | (1,824,844) | (2,124,755) | ||
Depreciation and amortization | (199,214) | (207,249) | ||
(2,024,058) | (2,332,004) | |||
Gross profit | 613,771 | 523,818 | ||
General and administrative expenses | (92,474) | (119,625) | ||
Selling expenses | (212,106) | (257,166) | ||
Taxes other than income tax | (40,238) | (36,194) | ||
Operating income | 268,953 | 110,833 | ||
Loss on disposals of property, plant and equipment | (477) | (1,517) | ||
Losses on investments, net | (249) | (735) | ||
Interest income | 6,927 | 10,040 | ||
Interest expense | (32,145) | (30,768) | ||
Foreign currency exchange gain / (loss), net | 46,215 | (26,656) | ||
Other expenses, net | (6,681) | (8,291) | ||
Income before income tax | 282,543 | 52,906 | ||
Income tax expense | (65,176) | (17,579) | ||
Income, net of income tax | 217,367 | 35,327 | ||
Equity in net (losses) / earnings of associates | (44,494) | 77 | ||
Net income | 172,873 | 35,404 | ||
Add: Net loss attributable to the non-controlling interest | 1,012 | 2,494 | ||
Net income attributable to NLMK stockholders | 173,885 | 37,898 | ||
Earnings per share - basic and diluted: | ||||
Net earnings attributable to NLMK stockholders per share (US dollars) | 0.0290 | 0.0063 | ||
Weighted-average shares outstanding, basic and diluted (in thousands) | 5,993,227 | 5,993,227 |
OJSC Novolipetsk Steel
Interim condensed consolidated statements of cash flows
for the three months ended March 31, 2014 and 2013 (unaudited) (thousands of US dollars)
| For the three months ended March 31, 2014 | For the three months ended March 31, 2013 | ||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
Net income | 172,873 | 35,404 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and amortization | 199,214 | 207,249 | ||
Loss on disposals of property, plant and equipment | 477 | 1,517 | ||
Losses on investments, net | 249 | 735 | ||
Interest income | (6,927) | - | ||
Interest expense | 32,145 | 30,768 | ||
Equity in net losses / (earnings) of associates | 44,494 | (77) | ||
Deferred income tax benefit | (8,041) | (39,903) | ||
Losses / (gains) on derivatives | 6,035 | (6,478) | ||
Other | (6,019) | 49,051 | ||
Changes in operating assets and liabilities | ||||
Increase in accounts receivable | (227,756) | (102,199) | ||
Decrease in inventories | 229,868 | 74,726 | ||
(Increase) / decrease in other current assets | (10,566) | 4,762 | ||
Decrease in accounts payable and other liabilities | (2,903) | (16,520) | ||
Increase in current income tax payable | 13,173 | 21,727 | ||
Cash provided by operating activities | 436,316 | 260,762 | ||
Interest received | 5,388 | - | ||
Interest paid | (40,499) | - | ||
Net cash provided by operating activities | 401,205 | 260,762 | ||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Purchases and construction of property, plant and equipment | (130,664) | (153,753) | ||
Proceeds from sale of property, plant and equipment | 3,563 | 1,424 | ||
(Purchases) / proceeds from sale of investments and loans given, net | (69,331) | 8,557 | ||
Placement of bank deposits, net | (183,318) | (169,884) | ||
Acquisition of additional stake in existing subsidiary | - | (9,609) | ||
Net cash used in investing activities | (379,750) | (323,265) | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Proceeds from borrowings and notes payable | 1,972 | 852,323 | ||
Repayment of borrowings and notes payable | (148,632) | (553,061) | ||
Capital lease payments | (5,750) | (7,021) | ||
Dividends to shareholders | (16) | (83) | ||
Net cash (used in) / provided by financing activities | (152,426) | 292,158 | ||
Net (decrease) / increase in cash and cash equivalents | (130,971) | 229,655 | ||
Effect of exchange rate changes on cash and cash equivalents | (9,087) | 38,928 | ||
Cash and cash equivalents at the beginning of the year | 969,992 | 951,247 | ||
Cash and cash equivalents at the end of the period | 829,934 | 1,219,830 | ||
Supplemental disclosures of cash flow information: | ||||
Placements of bank deposits | (400,101) | (281,285) | ||
Withdrawals of bank deposits | 216,783 | 111,401 |