7 Aug 2014 07:18
NLMK
07 August 2014
Press release
Q2 AND H1 2014 CONSOLIDATED FINANCIAL RESULTS UNDER US GAAP
Key highlights
'000 t/$ million | Q220141 | Q12014 | Change qoq, % | H1 2014 | H1 20132 | Change yoy, % | |
Sales volumes | 3,835 | 3,867 | -1% | 7,702 | 7,537 | +2% | |
Revenue | 2,808 | 2,638 | +6% | 5,446 | 5,685 | -4% | |
Operating profit | 382 | 269 | +42% | 651 | 291 | +124% | |
EBITDA3 | 594 | 468 | +27% | 1,063 | 718 | +48% | |
EBITDA margin (%) | 21.2% | 17.7% | +3.5 p.p. | 19.5% | 12.6% | +6.9 p.p. | |
Net income4 | 158 | 174 | -9% | 332 | 72 | +364% | |
Net debt5 | 2,103 | 2,301 | -9% | 2,103 | 3,424 | -39% | |
Net debt /EBITDA5 | 1.14 | 1.39 | 1.14 | 2.15 |
Примечания:
1 Consolidated financial results are prepared based on US GAAP. Reporting periods of the Company are 3M, 6M, 9M and 12M. 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.
3 EBITDA is calculated as operating profit adjusted to loss from impairment of fixed assets and intangible assets (including goodwill) and depreciation and amortization. EBITDA calculations are presented in the Appendix.
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..
Q2 2014 EBITDA jumped to $594 million (+27% quarter-on-quarter), EBITDA margin went up to 21.2% (+3.5 p.p. quarter-on-quarter) driven by the positive effect from the ongoing operational efficiency programmes, improvements in market conditions and the structure of sales.
Despite the decrease in revenue in H1 2014 by 4% year-on-year to $5.45 billion, 6M 2014 EBITDA grew by 48% year-on-year to $1,063 million; EBITDA margin reached 19.5% (+6.9 p.p. year-on-year).
Net debt reduced by 9% quarter-on-quarter and by 39% year-on-year to $2,103 million. Net debt/EBITDA stood at 1.14 (1.39 in Q1 2014 and 2.15 in Q2 2013).
OUTLOOK
According to preliminary estimates, in Q3 2014 steel production will grow to 4 million tonnes. Financial performance of the Group in Q3 2014 is expected to be in line with or marginally better than the Q2 results.
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.
Conference call details
Thursday, August 07, 2014
09:00 (New York)
14:00 (London)
17:00 (Moscow)
To join the conference call, please, dial
International Number: +44 (0)145 255 55 66
US Number: +1 631 510 74 98
Russian Number: +7 499 677 10 36
Conference ID: 80469034
*We recommend that participants start dialing in 10-15 minutes prior to ensure a timely start of the conference call.
The conference call replay will be available through August 14, 2014.
International Replay Number: + 44 (0)145 255 0000
US Replay Number: +1 (866) 247 4222
Russian Replay Number: +7 499 677 1064
Replay Access Code: 80469034
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.com
Comments from NLMK Group CFO Grigory Fedorishin:
"In Q2, demand from NLMK's key customers in the domestic market - construction and infrastructure companies - showed a seasonal recovery; in the global markets demand for steel products stabilized at the level of the previous quarter.
"NLMK Group's steelmaking capacities continues to run at close to maximum levels despite the decrease in steel production at the main site (-3% quarter-on-quarter) related to the repair activities at blast furnace operations. In Q3, this decrease is expected to be offset by a 5% quarter-on-quarter increase in steel production.
"Q2 Group sales totaled 3.83 million tonnes, in line with the solid performance in the previous quarter. The share of high value added products on total sales increased by 9% quarter-on-quarter to 1.426 million tonnes.
"The change in the structure of sales and the increase in average sales prices supported a 6% quarter-on-quarter revenue growth to $2.81 billion. EBITDA increased by 27% quarter-on-quarter to $594 million, EBITDA margin went up to 21.2%.
"We continue to implement a set of operational efficiency improvement programmes based on implementing the NLMK Production System at all Group sites. The cost saving effect in Q2 was $63 million (vs. 2013 level). Together with the effect achieved in Q1 2014 in the amount of $70 million, in 6M 2014 we have achieved over 50% of the announced Strategy 2017 goal. We can therefore expect to achieve the target strategic level as early as 2014.
"Working capital optimization remains among NLMK's priorities. In Q2, working capital decreased by $144 million compared to Q1 levels.
"In Q2, investment totaled $151 million, 15% higher quarter-on-quarter. Free cash flow went up by 73% quarter-on-quarter to $467 million. This allowed reducing net debt by 9% to $2.1 billion taking into account the payout of 2013 dividends in the amount of $111 million. Cash funds at the end of Q2 stood at $1.73 billion. Net debt/ EBITDA ratio reduced to 1.14, with the long-term target set at 1.0.
"As part of our active debt portfolio management, in July 2014 NLMK completed the partial redemption of bonds issued in 2012 and 2013 for a total of $122 million. This allowed reducing the Company's financial debt through excess liquidity.
"We expect the relatively stable demand in our key markets and our ongoing cost optimization programme to allow the Group to maintain a high level of financial performance in Q3 2014."
MANAGEMENT COMMENTS
· Market overview
On the back of the seasonal increase in demand in Q2, global steel product prices remained resilient to the weakening in prices for raw materials.
Domestic market prices grew throughout the quarter, supported by the significant seasonal increase in demand for steel products, primarily from construction and infrastructure; as well as lower imports.
North America also saw an increase in prices and demand for steel products in some sectors. Demand in the European markets stabilized, demonstrating a positive year-on-year trend (+3%). In the Middle East, demand stabilized, while prices weakened insignificantly.
· Production and sales
Q2 2014
The Group's steelmaking capacities were running at 94% (+2 p.p. quarter-on-quarter, including 98% at NLMK's main production site in Lipetsk (a stable performance quarter-on-quarter considering the repairs); 81% (-6 p.p. quarter-on-quarter) at NLMK USA. Steelmaking capacity utilization rates at the Long Products Division sites increased by 13 p.p. to 86%, with all companies seeing an improvement: 92% (+7 p.p. quarter-on-quarter) at NSMMZ; 77% (+23 p.p. quarter-on-quarter) at NLMK Kaluga.
Q2 2014 steel output totaled 3.77 million tonnes (-3% quarter-on-quarter). This decline was mainly attributable to repair activities and the mastering of the pulverized coal injection (PCI) technologies at the Novolipetsk blast furnace operations.
Sales remained at the level of the previous quarter and totaled 3.83 million tonnes (-1% quarter-on-quarter). There was an increase in the share of high value added products, to 33% (+3 p.p. to 1.26 million tonnes; +9% quarter-on-quarter).
Finished product sales grew by 12% quarter-on-quarter to 2.77 million tonnes, or 72% of total sales. Slab sales totaled 0.97 million tonnes (-25% quarter-on-quarter), or 25% of total sales. The quarter-on-quarter decline in the sale of slabs is attributable to the high base effect in Q1 2014, when stock accumulated in the previous periods was sold.
H1 2014
H1 2014 steel output grew by 3% year-on-year to 7.68 million tonnes, driven by the growth in steel production at NLMK Kaluga.
Steel product sales increased by 2% year-on-year to 7.70 million tonnes due to the increase in the sales of long products on the back of a significant decrease in the sale of commercial pig iron.
The decrease in the sales of finished rolled products (-2% year-on-year) to 5.25 million tonnes was mainly attributable to the deconsolidation of NBH results in Q4 2013. This factor was practically offset by the increase in long product deliveries from NLMK Kaluga.
· Sales markets
Group sales to the Russian market in Q2 increased by 12% quarter-on-quarter to 1.736 million tonnes on the back of the seasonal pickup in demand from the construction sector, accounting for 45% of total sales.
North America, Europe, the Middle East and South-East Asia were our key international sales destinations. Third-party sales from our Russian production assets to external markets decreased by 17% quarter-on-quarter to 1.456 million tonnes (in the previous quarter, export sales included the sales of accumulated stock by the Lipetsk site). In Q2, our international rolling assets accounted for 17% of sales (+3 p.p.).
· Prices
In Q2 2014, there were opposing trends for sales prices in different sales regions.
Average prices for standard flat and long products in Russia in USD terms increased by 5-15% as prices adjusted to export parity levels after the decrease in Q1 2014. The Group's Russian companies' export prices for slabs and standard products decreased insignificantly by 0-5% quarter-on-quarter.
In the US, average prices for flat products were in line with the previous quarter. In Europe, prices in dollar terms saw opposing trends: prices for thick plates increased by 1-2%, while coil prices were down by 1-2%.
· Investment
Q2 2014 investment totaled $151 million (+15% quarter-on-quarter). This growth was related to implementing the portfolio of Strategy 2017 projects.
In H1 2014, investment was down by 25% year-on-year. This decrease in capital investment to $281 million was associated with the completion of a number of large-scale projects in 2013, including the construction of NLMK Kaluga.
According to preliminary estimates, 2014 investment will total approximately $850 million, approximately 30% of which will be directed towards maintenance. The main project in 2014 will be the construction of the Pelletizing Plant at Stoilensky.
· Operational efficiency enhancement programme
In 2014, we continued to implement a set programmes aimed at improving the operational efficiency at all NLMK Group divisions as part of Strategy 2017.
In Q2, the effect was $63 million (in Q1 2014 the effect was $70 million). The Steel Segment accounted for the bulk of savings in H1 (54%); the Mining Segment accounted for 13%.
· Debt management
As of 30 June 2014, NLMK Group's net debt was down by 9% quarter-on-quarter to $2.1 billion. This reduction was accounted for by the stable positive free cash flow.
Net debt/EBITDA at the end of Q2 2014 stood at 1.14. Cash and ST financial investments were $1.73 billion (+9% quarter-on-quarter).
Net settlement of financial debt in Q2 was $135 million. The strengthening of the RUB against the dollar in the course of Q2 2014 (by 6% vs. the rate at 31 March 2014) had an additional impact on the amount of debt liabilities at the balance sheet date. This led to a corresponding increase 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 Q2 2014, NLMK's total financial debt was down by 1% to $3.83 billion, including 30% of ST liabilities mostly represented by RUB bonds and revolving credit lines to finance working capital.
· Dividend payout
NLMK's Annual General Meeting of Shareholders was held on 6 June. The AGM decided to announce dividends for 2013 in the amount of RUB 0.67 per ordinary share. Dividend payments totaled $115 million (FX rate as of the date of the AGM), or 35% of NLMK's US GAAP net profit for 2013, adjusted for one-off non-monetary factors (creating reserves), as well as expenses related to previous periods.
The announced dividends are in line with NLMK Group's dividend policy and the announced targets of its Strategy 2017.
Subsequent events
· Redemption of bonds
On 17 July 2014, NLMK executed a partial early redemption of two Eurobond issues for a total of USD 122 million ($92 million of bonds maturing in 2018; and $29 million of bonds maturing in 2019).
After the redemption, the outstanding Eurobond amount totaled $1,178 million (including $707 million of bonds maturing in 2018; and $471 million of bonds maturing in 2019).
The redemption was aimed at reducing the debt leverage.
KEY FINANCIALS
· Revenue
Q2 2014
Q2 2014 revenue increased by 6% quarter-on-quarter to $2,808 million due to the increase in the share of rolled products and the seasonal improvement in the pricing conditions in the domestic market.
H1 2014
The reduction in the revenue compared to the same period last year (-4% year-on-year) is associated with a drop in the prices for steel products that was partially offset by the increase in sales (+2% year-on-year).
· Operating profit
Q2 2014
Q2 2014 operating profit increased by 42% quarter-on-quarter to $382 million due to an improved sales structure, the widening of the spreads between prices for finished products and key raw materials, as well as operational improvement programmes.
Slab cash cost at the Lipetsk site in Q2 2014 was down by $2/t to $308/t (-11% quarter-on-quarter) due to the reduction in iron ore prices.
General and administrative expenses decreased by 9% quarter-on-quarter to $84 million, largely due to the high base effect in Q1 2014 when reserves were created in relation to doubtful accounts receivable and salary settlements. Commercial expenses were up to $225 million (+6% quarter-on-quarter) on the back of changes in the geography of sales.
H1 2014
H1 2014 operating profit increased by 124% year-on-year to $651 million. The key driver for this growth was our efficiency enhancement programme (with gains of approximately $133 million compared to 2013 level); the widening of spreads between the prices for steel products and raw materials; and the fall in the average RUB rate vs. the USD.
The decrease in general and administrative expenses, as well as commercial expenses (-24% year-on-year and -10% year-on-year, respectively) was attributable mainly to the changes in the perimeter of the Group (the deconsolidation of NBH assets starting from Q4 2013) and the FX rate trends.
· Net profit
Q2 2014
Net profit reduced by 9% quarter-on-quarter to $158 million. This is largely related to the negative FX rate differences (determined by the FX rate trends throughout the reporting quarter); and the increase in the losses of our affiliated company NBH whose results are reflected using the equity method.
H1 2014
In H1 2014, net profit grew by 4.6 times compared with the same period last year to $332 million. This was due to the significant increase in profit from operations.
· Operating cash flow
Q2 2014
Q2 net operating cash flow increased by 54% quarter-on-quarter to $618 million due to higher profitability, and working capital optimization which allowed releasing an additional $146 million, including $102 million through reducing inventories.
H1 2014
H1 net operating cash flow increased by 75% year-on-year to $1.02 billion on the back of increased profit from operations and working capital optimization (+$147 million in H1 2014 vs. -$30 million in H1 2013 with the launch of NLMK Kaluga).
Steel Segment*
$ million | Q22014 | Q12014 | Change qoq, % | H1 2014 | H1 2013** | Change yoy, % | |
Steel product sales, '000 tonnes | 2,894 | 3,173 | -9% | 6,070 | 5,965 | +2% | |
including third party sales, '000 tonnes | 2,459 | 2,665 | -8% | 5,125 | 4,738 | +8% | |
Revenue, incl. | 1,999 | 2,038 | -2% | 4,037 | 4,061 | -1% | |
Revenue from external Customers | 1,728 | 1,742 | -1% | 3,470 | 3,344 | +4% | |
Revenue from intersegmental Operations | 271 | 296 | -8% | 567 | 717 | -21% | |
EBITDA | 353 | 262 | +34% | 615 | 297 | +107% | |
EBITDA margin | 18% | 13% | +5 p.p. | 15% | 7% | +8 p.p. |
Q2 2014
In Q2 2014 overall segment sales totaled 2.9 million tonnes (-9% quarter-on-quarter), sales to third parties totaled 2.5 million tonnes (-8% quarter-on-quarter). Sales volumes went down due to the high base effect: in Q1 2014 the Segment sold stocks accumulated in the previous periods.
Segment total revenue declined by 2% quarter-on-quarter to $1.999 billion. Sales portfolio optimization and a better pricing environment largely offset lower sales volumes.
With widened spreads between prices for steel products and raw materials and with the implementation of our operational efficiency programme, EBITDA of the segment went up by 34% quarter-on-quarter to $353 million. EBITDA margin increased by 5 p.p. to 18%.
H1 2014
Due to increased sales of rolled steel total, Steel Segment sales went up by 2% year-on-year to 6.1 million tonnes. Sales to third parties increased largely due to the deconsolidation of NBH. Slab sales to NBH were reflected as third parties sales since Q4 2013.
Revenue trends in H1 2014 (-1% year-on-year) were largely determined by lower steel prices year-on-year despite the sales growth.
EBITDA increased twofold year-on-year to $615 million driven by widened spreads between prices for steel products and raw materials and by a weakened RUR FX rate against the USD.
Outlook
In Q3, we expect a relatively stable demand for steel products in our key markets. After the completion of repair works at blast furnace operations during Q2 2014, we expect the Segment's operating results to improve. Ongoing operational efficiency programmes will maintain financial results at a strong level.
* 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 | Q22014 | Q12014 | Change qoq, % | H1 2014 | H1 2013 | Change yoy, % | |
Long products and metalware sales, '000 tonnes | 739 | 654 | +13% | 1,392 | 899 | +55% | |
Revenue incl. | 531 | 394 | +35% | 925 | 775 | +19% | |
Revenue from external customers | 430 | 337 | +28% | 767 | 602 | +27% | |
Revenue from intersegmental operations | 101 | 57 | +77% | 158 | 172 | -8% | |
EBITDA | 52 | 7 | +630% | 59 | 43 | +37% | |
EBITDA margin | 10% | 2% | +8 p.p. | 6% | 6% |
Q2 2014
In Q2 2014, overall Segment sales went up by 13% quarter-on-quarter to 0.739 million tonnes, driven by increased utilization rates at NLMK Kaluga supported by improved seasonal demand in the domestic construction market.
With increased sales volumes and prices, the Segment revenue jumped by 35% quarter-on-quarter to $531 million. The seasonal increase in intercompany scrap sales served as an additional factor of revenue growth (intercompany revenue went up by 77% quarter-on-quarter).
EBITDA in Q2 2014 went up to $52 million ($7 million in the previous quarter), EBITDA margin increased by 8 p.p. to 10%. Profitability improved with higher utilization rates and widened spreads between long product and raw material prices.
H1 2014
Segment revenue went up by 19% year-on-year to $925 million driven by a 55% year-on-year sales growth to 1.329 million tonnes after the launch of NLMK Kaluga on the back of lower year-on-year long product prices.
Higher sales volumes and relatively stable profitability resulted in 37% EBITDA increase to $59 million.
Outlook
In Q3, we expect relatively stable demand on the long product market. The seasonal in the price for scrap will put pressure on financial results that will be partially offset by higher NLMK Kaluga utilization rates and ongoing operational efficiency improvement programme.
* 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 | Q22014 | Q12014 | Change qoq, % | H1 2014 | H1 2013 | Change yoy, % | |
Sales of iron ore concentrate and sinter ore, '000 tonnes | 4,004 | 3,871 | +3% | 7,875 | 7,610 | +3% | |
Incl. to Lipetsk plant | 2,709 | 2,940 | -8% | 5,649 | 5,665 | -0% | |
Revenue incl. | 306 | 317 | -3% | 623 | 686 | -9% | |
Revenue from external customers | 117 | 88 | +34% | 205 | 192 | +7% | |
Revenue from intersegmental operations | 189 | 229 | -17% | 418 | 494 | -15% | |
EBITDA | 185 | 209 | -11% | 394 | 442 | -11% | |
EBITDA margin | 60% | 66% | -6 p.p. | 63% | 64% | -1 p.p. |
Q2 2014
Overall segment sales went up by 3% quarter-on-quarter in Q2 2014 driven by increased productivity achieved in the course of the operational efficiency programmes. Higher external sales were supported by an increase in output on the back of reduced deliveries to the Lipetsk production site.
Segment revenue totaled $306 million (-3% quarter-on-quarter) due to lower iron ore prices (-5-10% quarter-on-quarter), that was partially offset by increased sales volumes.
EBITDA of the Segment in Q2 2014 totaled $185 million (-11% quarter-on-quarter) due to lower prices. EBITDA margin was 60% (-6 p.p. quarter-on-quarter).
H1 2014
In 6M 2014, sales went up by 0.3 million tonnes to 7.9 million tonnes. This increase was driven by the ongoing equipment productivity improvement programme.
With decreased prices for iron ore, revenue went down by 9% year-on-year to $623 million. This factor also determined the EBITDA decline of 11% year-on-year to $394 million. The increase in operational efficiency of the Segment companies allowed maintaining its EBITDA margin at the level of 63% (-1 p.p. year-on-year).
Outlook
In Q3 2014 we expect iron ore sales to the Lipetsk production site to increase. Ongoing efficiency programme implementation will partially offset the average quarterly reduction in iron ore prices.
* 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 | Q22014 | Q12014 | Change qoq, % | H1 2014 | H1 2013 | Change yoy, % | |
Steel products sales, '000 tonnes | 644 | 558 | +15% | 1,202 | 1,900 | -37% | |
Revenue incl. | 553 | 471 | +13% | 1,004 | 1,547 | -35% | |
Revenue from external customers | 553 | 471 | +13% | 1,004 | 1,546 | -35% | |
Revenue from intersegmental operations | - | - | - | 1 | -100% | ||
EBITDA | 19 | 23 | -17% | 42 | -89 | ||
EBITDA margin | 4% | 5% | -1 p.p. | 4% | -6% | +10 p.p. |
In Q2 2014, Segment sales went up by 15% quarter-on-quarter to 0.644 million tonnes driven by improved demand in the USA and EU markets. Higher sales volumes were the key factor behind the revenue growth of 13% quarter-on-quarter to $533 million.
Segment EBITDA totaled $19 million (-17% quarter-on-quarter). The reduction in profit was associated with narrowed spreads between rolled product and semi-finished steel prices (slab prices were high during the period). EBITDA margin was at 4% (-1 p.p. quarter-on-quarter).
NBH deconsolidation largely determined the significant change in operational and financial results versus H1 2013.
Outlook
In Q3 2014, we expect a seasonal decline in steel consumer activity in Europe. In the USA, we expect demand to remain high and expect the pricing environment to be relatively stable.
* 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 | Q2 2014 | Q1 2014 | H1 2014 | H1 2013 |
Operating income | 382 | 269 | 651 | 291 |
minus: | ||||
Impairment losses | - | - | - | - |
Depreciation and amortization | -212 | -199 | -411 | -427 |
EBITDA | 594 | 468 | 1,063 | 718 |
(2) Sales by product
('000 tonnes) | Q2 2014 | Q1 2014 | Q4 2013 | Q3 2013 | Q2 2013 |
Pig iron | 4 | 6 | 26 | 9 | 91 |
Slabs | 973 | 1 295 | 1 228 | 780 | 937 |
Thick plates | 103 | 100 | 90 | 230 | 235 |
Hot-rolled steel | 950 | 841 | 661 | 1,031 | 973 |
Cold-rolled steel | 553 | 497 | 490 | 546 | 494 |
Galvanized steel | 240 | 221 | 220 | 287 | 294 |
Pre‐painted steel | 125 | 132 | 99 | 144 | 145 |
Transformer steel | 67 | 60 | 54 | 63 | 61 |
Dynamo steel | 81 | 61 | 66 | 64 | 75 |
Billet | 84 | 86 | 84 | 34 | 1 |
Long products | 568 | 490 | 472 | 455 | 390 |
Metalware | 87 | 77 | 77 | 80 | 78 |
TOTAL | 3,835 | 3,867 | 3,567 | 3,724 | 3,774 |
(3) Sales by region
('000 tonnes) | Q2 2014 | Q1 2014 | Q4 2013 | Q3 2013 | Q2 2013 |
Russia | 1,736 | 1,549 | 1,460 | 1,597 | 1,411 |
EU | 706 | 736 | 662 | 599 | 615 |
Middle East incl. Turkey | 237 | 245 | 254 | 431 | 419 |
North America | 639 | 749 | 669 | 513 | 438 |
Asia and Oceania | 160 | 69 | 248 | 220 | 457 |
Other regions | 356 | 519 | 274 | 363 | 435 |
TOTAL | 3,835 | 3,867 | 3,567 | 3,724 | 3,774 |
(4) Revenue by region
Region | Q2 2014 | Q1 2014 | Q4 2013 | |||
$ million | share, % | $ million | share, % | $ million | share, % | |
Russia | 1,197 | 43% | 1,034 | 39% | 1,049 | 42% |
EU | 491 | 17% | 452 | 17% | 404 | 16% |
Middle East incl. Turkey | 150 | 5% | 145 | 6% | 152 | 6% |
North America | 638 | 23% | 512 | 19% | 484 | 19% |
Asia and Oceania | 50 | 2% | 44 | 2% | 150 | 6% |
Other regions | 283 | 10% | 450 | 17% | 266 | 11% |
TOTAL | 2,808 | 100% | 2,638 | 100% | 2,505 | 100% |
(5) Working capital
$ million | 30.06.14 | 31.03.14 | 31.12.13 | 30.09.13 | 30.06.13 |
Current assets | 5,138 | 4,966 | 5,102 | 4,918 | 5,537 |
Cash and cash equivalents | 939 | 830 | 970 | 835 | 1,241 |
Short term investments | 792 | 753 | 485 | 516 | 121 |
Accounts receivable | 1,561 | 1,544 | 1,438 | 1,540 | 1,497 |
Inventories | 1,735 | 1,731 | 2,124 | 1,897 | 2,530 |
Other current assets, net | 111 | 107 | 85 | 129 | 148 |
Current liabilities | 2,307 | 2,242 | 2,317 | 1,760 | 2,647 |
Accounts payable | 1,125 | 1,068 | 1,176 | 1,104 | 1,609 |
Short‐term debt | 1,157 | 1,141 | 1,119 | 616 | 994 |
Other current liabilities | 25 | 33 | 22 | 40 | 44 |
Working capital | 2,831 | 2,724 | 2,785 | 3,158 | 2,890 |
(6) Production of main products
('000 tonnes) | Q2 2014 | Q1 2014 | Q4 2013 | Q3 2013 | Q2 2013 |
Coke 6% moisture, incl. | 1,581 | 1,631 | 1,668 | 1,666 | 1,628 |
Novolipetsk | 589 | 621 | 620 | 651 | 625 |
Altai-Koks | 992 | 1,009 | 1,048 | 1,016 | 1,004 |
Crude steel, incl. | 3,774 | 3,909 | 4,064 | 3,887 | 3,785 |
Steel Segment | 2,894 | 3,086 | 3,193 | 3,089 | 3,086 |
Long Products Segment | 723 | 654 | 707 | 587 | 488 |
Incl. NLMK-Kaluga | 279 | 195 | 253 | 95 | 11 |
Foreign Rolled Products Segment | 157 | 169 | 164 | 211 | 211 |
Rolled products / finished products, incl. | 2,696 | 2,450 | 2,424 | 2 800 | 2,741 |
Flat steel | 2,067 | 1,904 | 1,834 | 2 271 | 2,289 |
Long steel | 629 | 545 | 590 | 529 | 453 |
(7) Slab sales, including to NLMK Group companies
('000 tonnes) | Q2 2014 | Q1 2014 | Q4 2013 | Q3 2013 | Q2 2013 |
Sales to third parties, incl. | 973 | 1,295 | 1,228 | 780 | 937 |
Export | 801 | 1,103 | 1,107 | 634 | 753 |
Incl. sales to NBH | 430 | 483 | 446 | ||
Domestic market | 169 | 191 | 119 | 142 | 181 |
Slab sales by NLMK USA | 3 | 2 | 2 | 4 | 3 |
Sales to subsidiaries | 454 | 480 | 337 | 933 | 616 |
Total | 1,428 | 1,776 | 1,565 | 1,713 | 1,553 |
OJSC Novolipetsk Steel
Interim condensed consolidated balance sheets
as at June 30, 2014 and December 31, 2013 (unaudited)
(thousands of US dollars)
|
| As at June 30, 2014 | As at December 31, 2013 | |
ASSETS | ||||
Current assets | ||||
Cash and cash equivalents | 939,067 | 969,992 | ||
Short-term investments | 791,624 | 484,981 | ||
Accounts receivable and advances given, net | 1,561,154 | 1,437,697 | ||
Inventories, net | 1,735,344 | 2,123,755 | ||
Other current assets | 15,513 | 7,578 | ||
Deferred income tax assets | 95,784 | 77,864 | ||
5,138,486 | 5,101,867 | |||
Non-current assets | ||||
Long-term investments | 465,882 | 501,074 | ||
Property, plant and equipment, net | 9,609,510 | 10,002,996 | ||
Intangible assets, net | 93,118 | 115,958 | ||
Goodwill | 452,001 | 463,409 | ||
Deferred income tax assets | 61,703 | 58,585 | ||
Other non-current assets | 42,707 | 40,192 | ||
10,724,921 | 11,182,214 | |||
Total assets | 15,863,407 | 16,284,081 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Current liabilities | ||||
Accounts payable and other liabilities | 1,124,922 | 1,175,709 | ||
Short-term borrowings | 1,157,068 | 1,119,286 | ||
Current income tax liability | 24,746 | 21,553 | ||
2,306,736 | 2,316,548 | |||
Non-current liabilities | ||||
Deferred income tax liability | 601,672 | 599,250 | ||
Long-term borrowings | 2,676,290 | 3,038,041 | ||
Other long-term liabilities | 50,590 | 55,433 | ||
3,328,552 | 3,692,724 | |||
Total liabilities | 5,635,288 | 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 June 30, 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 | (2,159,360) | (1,897,100) | ||
Retained earnings | 11,872,738 | 11,655,490 | ||
10,201,740 | 10,246,752 | |||
Non-controlling interest | 26,379 | 28,057 | ||
Total stockholders' equity | 10,228,119 | 10,274,809 | ||
Total liabilities and stockholders' equity | 15,863,407 | 16,284,081 |
OJSC Novolipetsk Steel
Interim condensed consolidated statements of income
for the six months ended June 30, 2014 and 2013 (unaudited)
(thousands of US dollars)
| For the six months ended June 30, 2014 | For the six months ended June 30, 2013 | ||
Revenue | 5,446,019 | 5,685,024 | ||
Cost of sales | ||||
Production cost | (3,694,085) | (4,182,578) | ||
Depreciation and amortization | (411,425) | (426,928) | ||
(4,105,510) | (4,609,506) | |||
Gross profit | 1,340,509 | 1,075,518 | ||
General and administrative expenses | (176,792) | (231,441) | ||
Selling expenses | (437,389) | (484,356) | ||
Taxes other than income tax | (75,162) | (68,894) | ||
Operating income | 651,166 | 290,827 | ||
Loss on disposals of property, plant and equipment | (3,794) | (5,623) | ||
Gains / (losses) on investments, net | 3,655 | (3,535) | ||
Interest income | 15,585 | 21,964 | ||
Interest expense | (65,264) | (58,041) | ||
Foreign currency exchange loss, net | (15,928) | (31,676) | ||
Other expenses, net | (18,041) | (18,450) | ||
Income before income tax | 567,379 | 195,466 | ||
Income tax expense | (131,035) | (127,169) | ||
Income, net of income tax | 436,344 | 68,297 | ||
Equity in net (losses) / earnings of associates | (104,945) | 151 | ||
Net income | 331,399 | 68,448 | ||
Add: Net loss attributable to the non-controlling interest | 891 | 3,149 | ||
Net income attributable to NLMK stockholders | 332,290 | 71,597 | ||
Earnings per share - basic and diluted: | ||||
Net earnings attributable to NLMK stockholders per share (US dollars) | 0.0554 | 0.0119 | ||
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 six months ended June 30, 2014 and 2013 (unaudited)
(thousands of US dollars)
| For the six months ended June 30, 2014 | For the six months ended June 30, 2013 | ||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
Net income | 331,399 | 68,448 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and amortization | 411,425 | 426,928 | ||
Loss on disposals of property, plant and equipment | 3,794 | 5,623 | ||
(Gains) / losses on investments, net | (3,655) | 3,535 | ||
Interest income | (15,585) | (21,964) | ||
Interest expense | 65,264 | 58,041 | ||
Equity in net losses / (earnings) of associates | 104,945 | (151) | ||
Deferred income tax loss | 19,455 | 735 | ||
Losses on derivatives | 2,116 | 8,234 | ||
Other | 966 | 61,444 | ||
Changes in operating assets and liabilities | ||||
Increase in accounts receivable | (155,919) | (122,067) | ||
Decrease in inventories | 331,808 | 100,948 | ||
(Increase) / decrease in other current assets | (7,832) | 1,879 | ||
Decrease in accounts payable and other liabilities | (25,729) | (34,820) | ||
Increase in current income tax payable | 3,638 | 23,709 | ||
Cash provided by operating activities | 1,066,090 | 580,522 | ||
Interest received | 14,024 | - | ||
Interest paid | (60,921) | - | ||
Net cash provided by operating activities | 1,019,193 | 580,522 | ||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Purchases and construction of property, plant and equipment | (281,230) | (374,979) | ||
Proceeds from sale of property, plant and equipment | 6,373 | 1,300 | ||
(Purchases) / proceeds from sale of investments and loans given, net | (58,107) | 30,535 | ||
Placement of bank deposits, net | (322,510) | (21,658) | ||
Acquisition of additional stake in existing subsidiary | - | (9,609) | ||
Net cash used in investing activities | (655,474) | (374,411) | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Proceeds from borrowings and notes payable | 11,169 | 1,213,946 | ||
Repayment of borrowings and notes payable | (292,559) | (1,064,811) | ||
Capital lease payments | (11,405) | (12,551) | ||
Dividends to shareholders | (111,193) | (110,855) | ||
Net cash (used in) / provided by financing activities | (403,988) | 25,729 | ||
Net (decrease) / increase in cash and cash equivalents | (40,269) | 231,840 | ||
Effect of exchange rate changes on cash and cash equivalents | 9,344 | 57,637 | ||
Cash and cash equivalents at the beginning of the year | 969,992 | 951,247 | ||
Cash and cash equivalents at the end of the period | 939,067 | 1,240,724 | ||
Supplemental disclosures of cash flow information: | ||||
Placements of bank deposits | (1,063,004) | (392,260) | ||
Withdrawals of bank deposits | 740,495 | 370,601 |