21 Jan 2011 07:00
NLMK Q4 2010 Trading Update
NLMK, the LSE-listed leading Russian steel producer, today announces the following regular trading update for Q4 2010.
FY2010 and Q4 2010 Operating Highlights1
Production,* FY20102
- Crude steel: 11.5 million tonnes (+8.8% year-on-year)
- Finished products: 11.6 million tonnes (+9.9%)
- Q4 2010
- Crude steel: 3.0 million tonnes (+0.9% quarter‐on‐quarter (hereinafter))
- Finished products: 3.0 million tonnes (+4.6%)
Sales, FY2010
- Finished products: 11.7 million tonnes (+10.8%)
- Q4 2010
- Finished products: 3.0 million tonnes (+0.4%), including
- Slabs: 1.1 million tonnes (+24.6%)
- Flat products: 1.4 million tonnes (-4.9%)
- Billets: 0.1 million tonnes (+32.1%)
- Long products: 0.3 million tonnes (-13.8%)
- Metalware: 0.05 million tonnes (-16%)
Outlook
We anticipate that production volumes in Q1 2011 will be similar to Q4 2010, i.e. around 3.0 million tonnes. There is a visible recovery in demand in the beginning of the year, accompanied by rising prices for steel products, especially evident in export markets. This will allow the Company to improve its financial performance, both in terms of revenue and EBITDA.
According to our preliminary estimates, the Company's revenue in Q4 2010 will grow 4% to USD2.3 billion. EBITDA margin is expected to be in the region of 25%.
* - For NLMK Group's and Novolipetsk's (Lipetsk production site) steel production volumes please see the AppendixSales volumes2
NLMK Group:
Million, t | Q42010 | Q32010 | Q4 10 /Q3 10 | Q42009 | Q4 10 /Q4 09 | 2010 | 2009 | 2010 /2009 | ||
Pig iron | 0.077 | 0.173 | -55.5% | 0.233 | -67.0% | 0.582 | 0.559 | 4.1% | ||
Slabs | 1.108 | 0.889 | 24.6% | 0.912 | 21.4% | 3.831 | 3.443 | 11.3% | ||
Flats | 1.394 | 1.467 | -4.9% | 1.258 | 10.8% | 5.664 | 4.910 | 15.4% | ||
Billets | 0.096 | 0.073 | 32.1% | 0.083 | 15.6% | 0.263 | 0.272 | -3.4% | ||
Long products | 0.317 | 0.367 | -13.8% | 0.249 | 27.0% | 1.158 | 1.207 | -4.0% | ||
Metalware | 0.052 | 0.062 | -16.0% | 0.044 | 19.9% | 0.219 | 0.188 | 16.6% | ||
Total sales products | 3.044 | 3.031 | 0.4% | 2.779 | 9.5% | 11.716 | 10.579 | 10.8% |
Novolipetsk (NLMK's main production site in Lipetsk)
Million, t | Q42010 | Q32010 | Q410 /Q3 10 | Q42009 | Q410 /Q4 09 | 2010 | 2009 | 2010 /2009 | ||
Pig iron | 0.147 | 0.159 | -7.7% | 0.163 | -9.6% | 0.637 | 0.503 | 26.7% | ||
Slabs | 1.150 | 0.943 | 21.9% | 1.047 | 9.8% | 3.953 | 3.625 | 9.1% | ||
Hot‐rolled steel3 | 0.508 | 0.522 | -2.6% | 0.473 | 7.5% | 2.020 | 1.935 | 4.4% | ||
Cold‐rolled steel | 0.350 | 0.362 | -3.4% | 0.405 | -13.7% | 1.519 | 1.515 | 0.3% | ||
Hot‐dip galvanized steel | 0.177 | 0.164 | 8.0% | 0.103 | 73.0% | 0.580 | 0.325 | 78.1% | ||
Pre‐painted steel | 0.089 | 0.089 | -0.8% | 0.096 | -7.7% | 0.333 | 0.331 | 0.7% | ||
Dynamo steel | 0.083 | 0.069 | 19.7% | 0.047 | 77.2% | 0.267 | 0.160 | 67.3% | ||
Transformer steel | 0.012 | 0.010 | 17.9% | 0.010 | 19.1% | 0.040 | 0.032 | 27.2% | ||
Total sales products | 2.516 | 2.320 | 8.5% | 2.343 | 7.4% | 9.349 | 8.426 | 11.0% |
DanSteel A/S
Million, t | Q42010 | Q32010 | Q410 /Q3 10 | Q42009 | Q410 /Q4 09 | 2010 | 2009 | 2010 /2009 | ||
Heavy plates | 0.095 | 0.084 | 13.1% | 0.052 | 83.5% | 0.348 | 0.219 | 58.9% |
NLMK Indiana
Million, t | Q42010 | Q32010 | Q410 /Q3 10 | Q42009 | Q410 /Q4 09 | 2010 | 2009 | 2010 /2009 | ||
Hot‐rolled steel | 0.113 | 0.150 | -24.7% | 0.101 | 12.1% | 0.562 | 0.367 | 53.2% | ||
Slabs | 0.011 | 0.007 | 60.9% | 0.010 | 13.6% | 0.043 | 0.024 | 76.6% |
VIZ‐Stal
Million, t | Q42010 | Q32010 | Q410 /Q3 10 | Q42009 | Q410 /Q4 09 | 2010 | 2009 | 2010 /2009 | ||
Transformer steel | 0.044 | 0.038 | 13.6% | 0.038 | 15.8% | 0.154 | 0.101 | 52.2% |
Stoilensky
Million, t | Q42010 | Q32010 | Q410 /Q3 10 | Q42009 | Q410 /Q4 09 | 2010 | 2009 | 2010 /2009 | ||
Iron ore concentrate | 3.046 | 3.051 | -0.1% | 2.941 | 3.6% | 12.023 | 11.876 | 1.2% | ||
Sinter ore | 0.459 | 0.508 | -9.6% | 0.510 | -10.0% | 1.805 | 1.996 | -9.6% |
Altai‐Koks
Million, t | Q42010 | Q32010 | Q410 /Q3 10 | Q42009 | Q410 /Q4 09 | 2010 | 2009 | 2010 /2009 | ||
Coke (dry) | 0.866 | 0.810 | 6.9% | 0.785 | 10.3% | 3.363 | 3.043 | 10.5% |
Long Products Division 4
Million, t | Q42010 | Q32010 | Q410 /Q3 10 | Q42009 | Q410 /Q4 09 | 2010 | 2009 | 2010 /2009 | ||
Billets | 0.075 | 0.091 | -16.8% | 0.066 | 14.3% | 0.243 | 0.239 | 1.7% | ||
Rebar | 0.214 | 0.287 | -25.5% | 0.172 | 24.1% | 0.856 | 0.896 | -4.4% | ||
Wire rod | 0.100 | 0.078 | 27.8% | 0.055 | 81.3% | 0.289 | 0.223 | 29.2% | ||
Metalware | 0.052 | 0.062 | -16.0% | 0.044 | 19.9% | 0.219 | 0.188 | 16.6% | ||
Ferrous and nonferrous scrap5 | 0.876 | 1.037 | -15.6% | 0.605 | 44.8% | 3.159 | 2.413 | 30.9% |
1Q4 2010 production and sales data is preliminary and subject to further update
2Excluding inter‐group operations and including sales of trading companies
3 Including hot‐rolled pickled steel
4 Long Products Division includes the following companies: NSMMZ, UZPS and other scrap collecting facilities
5 Including sales of NSMMZ
MANAGEMENT COMMENTS
Overview of NLMK Group's operating results
The Group's steelmaking facilities were running at practically full capacity (98%) in Q4, with a total output of 3.0 million tonnes of steel (+1% quarter-on-quarter). The utilization rates at our main production site in Lipetsk and the Long Products Division were 100%.
Sales volumes amounted to 3.0 million tonnes which is up 0.4% quarter‐on‐quarter and 9.5% year-on-year
The Group's total steel product sales amounted to 3.0 million tonnes of steel which is up 0.4% quarter‐on‐quarter and 9.5% year-on-year
Slab sales to Steel Invest and Finance (the NLMK and Duferco JV) amounted to 322,000 tonnes, in line with the previous quarter and our production plan.
Total slab sales increased by 25% quarter-on-quarter driven by improved demand in key export markets. Sales of high‐value added products also picked up both in Russia (+8% for galvanized steel) and in export markets (up 4% for dynamo steel and +3% for transformer steel).
NLMK Group's steel production in FY2010 increased by 8.8% and amounted to 11.5 million tonnes, due mainly to increased output at the Lipetsk site. The utilization rate at the Group's steelmaking facilities was 97%, up 4 p.p. year-on-year.
Total steel product sales amounted to 11.7 million tonnes, an increase of 10.8% year-on-year. The Company's slab deliveries to the rolling facilities of Steel Invest and Finance ("SIF"), the NLMK and Duferco JV, continued to increase, reaching a total amount of 1.5 million tonnes in 2010, a 25% increase year-on-year on the back of a gradual recovery of demand in the EU market.
Novolipetsk (Lipetsk site)
Stable demand for steel products in Q4 allowed the Company to maintain peak capacity utilization rates at the Lipetsk production site, achieving a total steel output on 2.4 million tonnes.
Sales increased slightly quarter-on-quarter (+8.5%) and amounted to 2.5 million tonnes. Sales of high‐value added products remained largely stable despite the seasonal slowdown in the internal market. Demand for galvanized steel remained strong in the domestic market, bringing sales up (+8%). Increased export deliveries explain higher dynamo steel sales (+20%). Q4 performance was significantly impacted by higher slab sales (+22%), driven by increased demand for semi-finished products on the back of the ongoing surge in liquid steel production prices in the world. A seasonal contraction in demand from our key consumers resulted in a slightly reduced amount of hot-rolled and cold-rolled steel export deliveries.
FY2010 sales volumes reached 9.3 million tonnes, up 11% year-on-year due to a significant recovery of demand for our key products both on the domestic and export markets. Production growth at the Lipetsk site was additionally supported by increased slab deliveries to DanSteel and SIF following a gradual recovery of demand in the European flat steel market.
Demand for steel in the Russian market recovered throughout the year. This allowed the Company to increase all flat steel product deliveries to the internal market, significantly improving the sales mix in favor of high value-added products: +67% for dynamo steel, +27% for transformer steel. Production output at the new Galvanising Line increased, driving galvanized steel deliveries up almost 80%.
DanSteel A/S
Heavy plate production output increased by 18% in Q4, while sales grew by 13% compared to Q3, which was impacted by planned repairs. Sales growth was additionally supported by stable demand from the European machine-building industry.
FY2010 heavy plate sales rose by 59% year-on-year to 0.35 million tonnes due to a partial recovery in demand from our key consumers.
NLMK Indiana
Repair activities resulted in lower quarter-on-quarter hot-rolled steel production and sales volumes in Q4. Slab sales increased (+61%) due to larger deliveries to Duferco Farrell (JV with Duferco). Overall conditions on the US flat steel market improved, driving prices for rolled steel up at the end of 2010. The trend persisted in the beginning of 2011.
FY2010 saw a drastic improvement in operating performance against 2009 when the market was under significant pressure from unstable demand and high levels of steel product inventory in the US. Steel and rolled product output increased by 42% and 51% respectively on the back of recovering demand from the tube industry and service centers. Rolled product sales were up 53%.
VIZ-Stal
Transformer steel production in Q4 was in line with the previous quarter and amounted to 41,700 tonnes (-4%).
Sales of products delivered in Q3 were recognized, driving sales up by 14% to 43,720 tonnes.
Demand for transformer steel in the export markets stabilized, resulting in a noticeable surge in sales in 2010 compared to 2009. FY2010 sales volumes increased by 52% and totaled 153,500 tonnes.
Stoilensky
Q4 operating results were largely flat quarter-on-quarter given the stable operating performance of the main production site in Lipetsk, a key consumer of the Company. In the second half of the year the Company increased the sale of its products to Eastern European customers on the back of demand recovery in this region. Export sales during this period (July-December) increased to 106,000 tonnes of iron ore concentrate.
On a year-on-year basis, production was up by 10% that, among other factors, is attributable to the launch of the new equipment at Stoilensky.
Altai-Koks
In Q4, the Company's coke sales increased by 7% driven by growing sales to external customers including export sales. In 2010 coke production grew by 13% year-on-year.
Long Products Division
In Q4 the Division demostrated solid operating results with stable production volumes that remained flat quarter-on-quarter (-1.7%). This performance was driven by sustained demand from the construction sector despite a routine slowdown during the winter season.
Q4 sales were down 15% largely due to a decrease in export sales of ordinary grades coupled with the seasonnaly weak sales of metalware in the home market. This trend was influenced by seasonality factors.
Q4 saw a contraction in scrap sales (-15.6% quarter-on-quarter), a traditional seasonal swing for scrap collecting companies as their peak deliveries typically occur during Q3 when steel companies are stocking up on scrap for the winter.
FY2010 performance of the Long Products Division demonstrates a gradual recovery in the market underpinned by stabilization in the broader economy and growth in steel demand from the construction and infrastructure sectors. In 2010 the Division's production grew to 1.65 million tonnes (+1%), and sales increased to 1.61 million tonnes (+4%). Scrap sales were up by 31% driven by growing demand in the steel sector.
For more information:
NLMK
Investor Relations:
+7 (495) 915-1575
e-mail: ir@nlmk.com
Appendix
NLMK Group Q4 2010 production volumes 6:
Million, t | Q42010 | Q32010 | Q410 /Q3 10 | Q42009 | Q410 /Q4 09 | 2010 | 2009 | 2010 /2009 | ||
Pig iron | 2.338 | 2.283 | 2.4% | 2.374 | -1.6% | 9.265 | 8.476 | 9.3% | ||
Steel | 2.988 | 2.962 | 0.9% | 2.886 | 3.5% | 11.548 | 10.614 | 8.8% | ||
Salable pig iron | 0.147 | 0.139 | 6.4% | 0.170 | -13.4% | 0.649 | 0.510 | 27.1% | ||
Salable slabs | 1.033 | 0.853 | 21.1% | 1.019 | 1.4% | 3.614 | 3.420 | 5.7% | ||
Flat steel | 1.400 | 1.446 | -3.1% | 1.300 | 7.7% | 5.709 | 5.008 | 14.0% | ||
Billets | 0.088 | 0.060 | 46.1% | 0.076 | 15.6% | 0.247 | 0.269 | -8.0% | ||
Long steel | 0.330 | 0.358 | -7.9% | 0.274 | 20.4% | 1.184 | 1.177 | 0.6% | ||
Metalware | 0.053 | 0.061 | -13.0% | 0.043 | 23.8% | 0.221 | 0.190 | 16.3% | ||
Total sales products | 3.052 | 2.917 | 4.6% | 2.883 | 5.9% | 11.623 | 10.573 | 9.9% |
Novolipetsk (Lipetsk production site) steel production volumes in Q4 2010:
Million, t | Q42010 | Q32010 | Q410 /Q3 10 | Q42009 | Q410 /Q4 09 | 2010 | 2009 | 2010 /2009 | ||
Pig iron | 2.338 | 2.283 | 2% | 2.374 | -1.6% | 9.265 | 8.476 | 9% | ||
Steel | 2.382 | 2.324 | 3% | 2.352 | 1.3% | 9.288 | 8.507 | 9% | ||
Slabs | 1.089 | 0.967 | 13% | 1.084 | 0.5% | 3.981 | 3.598 | 11% | ||
Hot‐rolled steel7 | 0.501 | 0.544 | -8% | 0.493 | 1.7% | 2.027 | 2.023 | 0% | ||
Cold‐rolled steel | 0.340 | 0.361 | -6% | 0.400 | -15.0% | 1.497 | 1.535 | -3% | ||
Hot‐dip galvanized steel | 0.178 | 0.159 | 12% | 0.113 | 58.3% | 0.604 | 0.350 | 72% | ||
Pre‐painted steel | 0.086 | 0.082 | 5% | 0.094 | -8.5% | 0.339 | 0.333 | 2% | ||
Dynamo steel | 0.080 | 0.074 | 8% | 0.047 | 68.6% | 0.275 | 0.162 | 70% | ||
Transformer steel | 0.013 | 0.010 | 32% | 0.010 | 26.8% | 0.041 | 0.029 | 43% |
6 Excluding inter‐group operations
7 Including hot‐rolled pickled steel