15 Jul 2015 08:27
Press release
15 July 2015
Q2 2015 AND H1 2015 NLMK GROUP TRADING UPDATE
H1 2015 highlights:
· H1 2015 steel output increased to 7.92 m t (+3% yoy) driven by Lipetsk site productivity growth due to operational efficiency programmes.
· H1 2015 sales increased to 7.96 m t (+3% yoy) supported by semi-finished product shipments (+25% yoy).
Q2 2015 highlights:
· Q2 2015 steelmaking utilization rates of the Group were 94% (flat qoq), including 100% at the Lipetsk site.
· Group crude steel output increased to 4.05 m t (+5% qoq) following the completion of maintenance works at the Lipetsk site and NLMK USA.
· Group sales increased to 4.00 m t (+1% qoq) due to higher finished product shipments (2.57 m t; +10% qoq) while semi-finished product sales declined by 12% qoq.
· Sales to the Russian market went up by 9% to 1.53 m t driven by the seasonal recovery in domestic demand. Their share in total sales reached 38% (+2 p.p. qoq).
· Sales of the Foreign Rolled Products Segment companies (NLMK USA and NLMK Dansteel) increased to 0.60 m t (+12% qoq); sales of NBH companies increased to 0.58 m t (+14% qoq).
Outlook:
In Q3 2015, we expect our operating results to grow further mainly due to higher sales of flat steel.
Investor Relations contacts: Sergey Takhiev +7 (985) 760 55 74 tahiev_sa@nlmk.com | Media contacts: Sergey Babichenko +7 (916) 824 6743 babichenko_sy@nlmk.com |
www.nlmk.com |
NLMK Group
Sales, m t 1,2 | Q2 2015 | Q1 2015 | QoQ | 6M 2015 | 6M 2014 | YoY |
Pig iron | 0.120 | 0.155 | -22% | 0.275 | 0.011 | > 100% |
Slabs | 1.235 | 1.418 | -13% | 2.653 | 2.269 | 17% |
Flat steel | 1.981 | 1.817 | 9% | 3.798 | 4.027 | -6% |
Billets | 0.076 | 0.052 | 45% | 0.128 | 0.170 | -25% |
Long products | 0.528 | 0.441 | 20% | 0.969 | 1.058 | -8% |
Metalware | 0.064 | 0.075 | -15% | 0.138 | 0.164 | -16% |
Total steel product sales | 4.004 | 3.958 | 1% | 7.962 | 7.699 | 3% |
to the Russian market | 38% | 36% | 37% | 43% | ||
to the international markets from Russian segments (without intra-group operations) | 50% | 54% | 52% | 42% | ||
foreign rolled product segment sales | 12% | 10% | 11% | 15% | ||
For information: NBH sales were deconsolidated since Q4 2013 | 0.577 | 0.507 | 14% | 1.084 | 0.903 | 20% |
1 Q2 2015 and H1 2015 production and sales data is preliminary and subject to further adjustment/change.
2 Excluding inter-group operations and including sales of trading companies
Group operating highlights
Q2 2015 overview:
Group crude steel output increased to 4.05 m t (+5% qoq), following the completion of maintenance works at the Lipetsk site (+4% qoq) and NLMK USA (+39% qoq). Crude steel output at NLMK's Long Products Segment companies remained flat qoq.
Steelmaking capacities of the Group were running at 94% (flat qoq and yoy), including 100% at the Lipetsk site (flat qoq and yoy).
Total Group sales increased to 4.0 m t (+1% qoq).
Finished steel shipments increased to 2.57 m t (+10% qoq) following the completion of hot-rolling mill current repairs performed at the end of the first quarter. Growth of finished steel sales resulted in a decrease of slab shipments to 1.23 m t (-13%).
Steel Segment Q2 2015 sales totaled 3.13 m t (-2% qoq), this decline being caused by lower export shipments of semi-finished products. This was partially offset by higher sales of HVA products, including shipments to the Russian market. Long Products Segment sales grew to 0.67 m t (+17% qoq) driven by the recovery of demand in the domestic market.
Foreign Rolled Products Segment sales of finished products increased to 0.60 m t (+12% qoq) mainly due to growing demand in the USA.
Seasonal demand recovery in the Russian market pushed NLMK's sales to domestic customers up to 1.53 m t (+9% qoq), or 38% of total sales.
Group international sales totaled 2.47 m t (-3% qoq), or 62% of totals sales, due to the decline in semi-finished product shipments. Key external destinations were Europe, North America, the Middle East (including Turkey), and South America.
H1 2015 overview:
Group crude steel output in H1 2015 increased to 7.92 m t (+3% yoy), due mainly to efforts aimed at boosting steelmaking equipment productivity at the Lipetsk site and higher utilization rates at NLMK Kaluga.
Group sales totaled 7.96 m t (+3% yoy) on the back of a 25% yoy increase in export shipments of semi-finished products that offset of the decline in finished product sales (-7% yoy).
Steady demand for finished steel on the international market triggered an increase in export sales to 5.02 m t (+14% yoy), or 63% of total sales (+6 p.p. yoy).
Steel Segment3
Sales, m t | Q2 2015 | Q1 2015 | QoQ | 6M 2015 | 6M 2014 | YoY |
Pig iron | 0.120 | 0.155 | -22% | 0.275 | 0.011 | > 100% |
Slabs incl.4 | 1.630 | 1.775 | -8% | 3.404 | 3.199 | 6% |
to NLMK USA, NLMK Dansteel | 0.396 | 0.359 | 10% | 0.756 | 0.915 | -17% |
to NBH | 0.743 | 0.466 | 59% | 1.209 | 0.913 | 32% |
Hot-rolled steel | 0.641 | 0.571 | 12% | 1.212 | 1.263 | -4% |
Cold-rolled steel | 0.369 | 0.340 | 8% | 0.709 | 0.763 | -7% |
Galvanized steel | 0.139 | 0.162 | -15% | 0.301 | 0.308 | -2% |
Pre-painted steel | 0.091 | 0.089 | 3% | 0.180 | 0.257 | -30% |
Dynamo steel | 0.071 | 0.054 | 32% | 0.125 | 0.142 | -12% |
Transformer steel | 0.070 | 0.064 | 10% | 0.134 | 0.124 | 8% |
incl. VIZ-Steel | 0.044 | 0.042 | 5% | 0.086 | 0.085 | 0% |
Total products | 3.131 | 3.209 | -2% | 6.341 | 6.067 | 5% |
Coke sales from Altai-Koks 5 | 1.016 | 0.977 | 4% | 1.993 | 1.880 | 6% |
incl. to Novolipetsk | 0.800 | 0.699 | 15% | 1.499 | 1.505 | 0% |
3 Steel Segment companies include Novolipetsk, VIZ-Steel, trading companies and Altai-Koks. Novolipetsk and VIZ-Steel sales are calculated including trading companies.
4 Sales of slabs to NBH are shown as sales to third parties.
5 Coke production and sales are shown in dry weight.
Q2 2015 overview:
Lipetsk site crude steel output increased to 3.23 m t (+4% qoq), following the completion of large-scale steelmaking equipment maintenance conducted in Q1 2015.
Output of finished and semi-finished products was 3.21 m t (+4% qoq), mainly due to pig iron and slab production growth.
Sales of the Steel Segment declined to 3.13 (-2% qoq) due to the deferred recognition of pig iron sales. Most shipments took place at the end of Q2 due to planned repairs of Blast Furnace No. 5 (with a capacity of 3.0 m tpa) in April and May. Sales will be recognized in the next quarter.
In Q2 2015, finished product sales increased to 1.38 m t (+8% qoq) mainly due to higher shipments to the domestic market backed by the seasonal demand recovery in the construction sector. The share of finished products in total sales was 44% (40% in Q1 2015).
Slab shipments to NLMK subsidiaries increased to 0.40 m t (+10% qoq), while slab sales to NBH spiked to 0.74 m t (+59% qoq).
H1 2015 overview:
Crude steel output at the Lipetsk site increased to 6.32 m t (+6% yoy) on the back of efforts aimed at boosting equipment productivity.
Sales of the Steel Segment increased to 6.34 m t (+5% yoy) on the back of higher pig iron sales driven by steady demand on the external markets.
Slab shipments to NBH companies increased to 1.21 m t (+32% yoy) backed by recovering demand for finished steel in Europe.
The decrease in slab shipments to NLMK's captive operations (NLMK USA and NLMK Dansteel) to 0.76 m t (-17% yoy) is related to the processing of inventories accumulated at these assets at the end of 2014.
Outlook
In Q3 2015, we expect operating results to grow.
Long Products Segment 6
Sales, m t | Q2 2015 | Q1 2015 | QoQ | 6M 2015 | 6M 2014 | YoY |
Billet (NLMK Kaluga) | 0.076 | 0.052 | 45% | 0.128 | 0.170 | -25% |
Rebar | 0.499 | 0.407 | 23% | 0.905 | 0.997 | -9% |
incl. NLMK Kaluga | 0.210 | 0.144 | 45% | 0.354 | 0.318 | 12% |
Sections (NLMK Kaluga) | 0.002 | 0.001 | 80% | 0.003 | 0.000 | > 100% |
Wire rod | 0.027 | 0.033 | -18% | 0.061 | 0.061 | 0% |
Metalware | 0.064 | 0.075 | -15% | 0.138 | 0.164 | -16% |
Total steel products | 0.667 | 0.568 | 17% | 1.236 | 1.392 | -11% |
Ferrous and non-ferrous scrap, incl. | 1.164 | 0.690 | 69% | 1.854 | 1.799 | 3% |
to NSMMZ | 0.457 | 0.228 | > 100% | 0.684 | 0.739 | -7% |
to NLMK Kaluga | 0.255 | 0.212 | 20% | 0.467 | 0.418 | 12% |
to Novolipetsk | 0.434 | 0.230 | 88% | 0.664 | 0.613 | 8% |
6 Long Products Division includes: NSMMZ (the Urals based EAF mini-mill), NLMK Metalware, NLMK Kaluga (EAF mini-mill) and scrap collecting facilities.
Q2 2015 overview:
Long Product Segment crude steel output was 0.69 m t (flat qoq). Sales increased to 0.67 m t (+17% qoq) due to the seasonal demand recovery in the construction sector in Russia. The share of export shipments totaled 13% backed by growing demand on the domestic market.
Scrap sales soared to 1.16 m t (+69% qoq) due to seasonality. The bulk of these shipments (98%, or 1.15 m t, +171% qoq) were intra-group sales. Our own capacities processed 0.62 m t (+65% qoq) of scrap.
H1 2015 overview:
Segment crude steel output was steady and totaled 1.38 m t. Higher crude steel production at NLMK Kaluga of 0.52 m t (+10% yoy) fully offset crude the decline in steel output at NSMMZ (-5% yoy).
Lower consumer and service center activity and high finished steel stocks at the traders backed by a growing share of sales with deferred recognition resulted in a sales decline to 1.24 m t (-11% yoy). Export shipments totaled 0.19 m t (+73% yoy), or 15% of total sales.
Scrap sales were in line with consumption requirements for internal crude steel production and totaled 1.85 m t (+3% yoy). Our own capacities processed 0.99 m t (+1% qoq) of scrap.
Outlook
In Q3 2015, operating results will largely depend on construction sector activity and efficiency of government support measures for construction industry.
Mining Segment (Stoilensky)
Sales, m t | Q2 2015 | Q1 2015 | QoQ | 6M 2015 | 6M 2014 | YoY |
Iron ore concentrate | 3.915 | 3.497 | 12% | 7.412 | 7.120 | 4% |
incl. to Novolipetsk | 2.760 | 2.724 | 1% | 5.484 | 5.369 | 2% |
Sinter ore | 0.405 | 0.361 | 12% | 0.766 | 0.755 | 1% |
incl. to Novolipetsk | 0.255 | 0.155 | 64% | 0.410 | 0.280 | 46% |
Q2 2015 overview:
Iron ore concentrate production totaled 3.86 m t (flat qoq); sinter ore production totaled 0.43 m t (+1% qoq).
Concentrate and sinter ore sales increased to 3.92 m t (+12% qoq) and 0.41 m t (+12% qoq), respectively, driven by inventory sales, including export shipments.
Stoilensky expanded intercompany shipments of concentrate and sinter ore to 2.76 m t (+1% qoq) and 0.26 m t (+64% qoq), respectively, on the back of growing production at the Lipetsk site.
H1 2015 overview:
In H1 2015, concentrate production totaled 7.72 m t (+5% yoy); sinter ore output went up to 0.86 m t (+13% yoy). Production growth was achieved due to operational efficiency programmes.
Concentrate and sinter ore sales increased to 7.41 m t (+4% yoy) and 0.77 m t (+1% yoy), respectively, driven by destocking, including export shipments.
Increased steel output at the Lipetsk site triggered higher shipments from Stoilensky, which totaled 5.89 m t (+4% yoy) in H1 2015.
Outlook
In Q3 2015, we anticipate a slight decrease in production results due to maintenance works.
Foreign Rolled Products Segment
NLMK USA7
Sales, m t | Q2 2015 | Q1 2015 | QoQ | 6M 2015 | 6M 2014 | YoY |
Hot-rolled steel | 0.267 | 0.222 | 20% | 0.489 | 0.555 | -12% |
Cold-rolled steel | 0.125 | 0.132 | -5% | 0.257 | 0.287 | -10% |
Galvanized steel | 0.086 | 0.074 | 17% | 0.160 | 0.152 | 5% |
Total rolled steel 8 | 0.479 | 0.428 | 12% | 0.907 | 0.994 | -9% |
7 NLMK USA includes NLMK Indiana, NLMK Pennsylvania, and Sharon Coating. Operating data for NLMK USA is presented in metric tonnes.
8 NLMK USA also sell non-significant volumes of merchant slabs not included into total rolled steel sales. In Q1'15 and Q2'15 slab sales totaled 3,000 t and 1,000 t respectively.
Q2 2015 overview:
In Q2 2015, NLMK USA production results increased. Crude steel production spiked to 0.13 m t (+39% qoq) following the completion of maintenance works. Finished steel output totaled 0.49 m t (+20% qoq).
Demand recovery pushed NLMK USA sales up to 0.48 m t (+12% qoq), including hot-rolled steel to 0.27 m t (+20% qoq) and galvanized steel to 0.09 (+17% qoq).
H1 2015 overview:
In H1 2015, crude steel output declined to 0.23 m t (-31% yoy). Lower crude steel production was associated with repair works at NLMK USA steelmaking facilities conducted at the beginning of the year.
NLMK USA sales declined to 0.91 m t (-9% yoy), pressured by growing competition in the USA market. Steady demand for HVA products drove galvanized steel sales up to 0.16 m t (+5% yoy).
Outlook
In Q3 2015, we expect flat operating results on the back of stable demand from automotive and construction sectors.
NLMK Dansteel
Sales, m t | Q2 2015 | Q1 2015 | QoQ | 6M 2015 | 6M 2014 | YoY |
Thick plates | 0.121 | 0.109 | 11% | 0.229 | 0.203 | 13% |
Steady demand from European and other external thick plate consumers led to an increase in sales to 0.12 m t (+11% qoq) in Q2 2015 and to 0.23 m t (+13% yoy) in H1 2015.
Outlook
In Q3 2015, we expect NLMK Dansteel to show steady operating results.
Associated companies - NLMK Belgium Holdings (NBH) 9
Sales, m t | Q2 2015 | Q1 2015 | QoQ | 6M 2015 | 6M 2014 | YoY |
Hot-rolled steel | 0.267 | 0.219 | 22% | 0.486 | 0.316 | 54% |
Cold-rolled steel | 0.015 | 0.013 | 17% | 0.027 | 0.034 | -19% |
Coated steel | 0.105 | 0.085 | 24% | 0.189 | 0.174 | 9% |
Total flat steel | 0.386 | 0.316 | 22% | 0.702 | 0.523 | 34% |
Semi-finished (ingots) | 0.021 | 0.027 | -20% | 0.048 | 0.041 | 18% |
Thick plates | 0.170 | 0.164 | 4% | 0.334 | 0.340 | -2% |
Total steel products | 0.577 | 0.507 | 14% | 1.084 | 0.903 | 20% |
9 NBH assets include producers of thick plates NLMK Clabecq (Belgium), NLMK Verona (Italy) and producers of flat steel NLMK La Louvière (Belgium), NLMK Coating (France) and NLMK Strasbourg (France).
Q2 2015 overview:
NBH sales in Q2 2015 increased to 0.58 m t (+14% qoq). The significant improvement in performance was driven by the recovery in demand for finished products from key consumers (primarily the automotive sector) in the EU market.
H1 2015 overview:
H1 2015 sales increased to 1.08 m t (+20% yoy) due to the steady recovery of demand in Europe.
Q3 2015 outlook
Q3 2015, we expect operating results to decrease due to major repairs planned for July and August (a period of low demand).
Appendixes
Appendix 1. NLMK Group crude steel production
Production, m t | Q2 2015 | Q1 2015 | QoQ | 6M 2015 | 6M 2014 | YoY |
NLMK Group | 4.049 | 3.874 | 5% | 7.923 | 7.682 | 3% |
Lipetsk site | 3.227 | 3.090 | 4% | 6.317 | 5.980 | 6% |
NLMK Long Products | 0.691 | 0.690 | 0% | 1.381 | 1.376 | 0% |
incl. NLMK Kaluga | 0.262 | 0.261 | 1% | 0.523 | 0.474 | 10% |
NLMK Indiana (NLMK USA) | 0.131 | 0.094 | 39% | 0.225 | 0.326 | -31% |
for information | ||||||
NBH, NLMK Europe (EAF) | 0.054 | 0.058 | -8% | 0.112 | 0.101 | 11% |
Appendix 2. NLMK Group product output
Production, m t | Q2 2015 | Q1 2015 | QoQ | 6M 2015 | 6M 2014 | YoY |
Merchant pig iron | 0.133 | 0.101 | 33% | 0.234 | 0.011 | > 100% |
Merchant slabs | 1.276 | 1.168 | 9% | 2.444 | 1.965 | 24% |
Flat steel | 2.000 | 1.977 | 1% | 3.977 | 3.971 | 0% |
Merchant billets | 0.074 | 0.052 | 41% | 0.126 | 0.159 | -21% |
Long products | 0.466 | 0.529 | -12% | 0.995 | 1.009 | -1% |
Metalware | 0.061 | 0.078 | -21% | 0.139 | 0.165 | -15% |
Total products | 4.010 | 3.905 | 3% | 7.915 | 7.279 | 9% |
Appendix 3. Novolipetsk product output
Production, m t | Q2 2015 | Q1 2015 | QoQ | 6M 2015 | 6M 2014 | YoY |
Merchant pig iron | 0.133 | 0.101 | 33% | 0.234 | 0.011 | > 100% |
Merchant slabs | 1.672 | 1.527 | 10% | 3.199 | 2.880 | 11% |
Hot-rolled steel | 0.702 | 0.717 | -2% | 1.420 | 1.282 | 11% |
Cold-rolled steel | 0.350 | 0.388 | -10% | 0.738 | 0.781 | -6% |
Galvanized steel | 0.152 | 0.168 | -10% | 0.320 | 0.312 | 3% |
Pre-painted steel | 0.103 | 0.104 | -1% | 0.207 | 0.241 | -14% |
Dynamo steel | 0.069 | 0.059 | 19% | 0.128 | 0.144 | -11% |
Transformer steel | 0.025 | 0.025 | 0% | 0.050 | 0.043 | 17% |
Total steel products | 3.207 | 3.089 | 4% | 6.296 | 5.693 | 11% |
Appendix 4. Main raw materials production
Production, m t | Q2 2015 | Q1 2015 | QoQ | 6M 2015 | 6M 2014 | YoY |
Coke | 1.621 | 1.580 | 3% | 3.200 | 3.019 | 6% |
Novolipetsk | 0.600 | 0.598 | 0% | 1.199 | 1.138 | 5% |
Altai-Koks | 1.020 | 0.981 | 4% | 2.001 | 1.881 | 6% |
Iron ore | 4.295 | 4.281 | 0% | 8.576 | 8.137 | 5% |
Iron ore concentrate | 3.864 | 3.854 | 0% | 7.718 | 7.378 | 5% |
Sinter ore | 0.431 | 0.427 | 1% | 0.858 | 0.759 | 13% |
Scrap | 0.617 | 0.374 | 65% | 0.991 | 0.982 | 1% |