26 Jan 2009 09:30
26 January 2009
Novolipetsk Steel (NLMK) Q4 2008 and FY2008 Trading Update
Novolipetsk Steel (LSE: NLMK) today announces the following regular trading update for Q4 2008 and FY 2008.
Production and sales 1
NLMK Q4 2008 and FY 2008 production volumes:
| Million, t |
| Q4 2008 | Q3 2008 | Q4 2008 / Q3 2008 |
| 2008 | 2007 | 2008 / 2007 |
|
|
| |||||||
| Pig iron |
| 1.367 | 2.214 | -38.3% | 8.408 | 9.056 | -7.2% | |
| Steel |
| 1.373 | 2.296 | -40.2% | 8.514 | 9.056 | -6.0% | |
| Slabs |
| 0.591 | 0.980 | -39.7% | 3.612 | 3.724 | -3.0% | |
| Hot-rolled steel 2 |
| 0.261 | 0.430 | -39.3% | 1.719 | 1.953 | -12.0% | |
| Cold-rolled steel |
| 0.249 | 0.401 | -37.8% | 1.494 | 1.454 | 2.8% | |
| Hot dip galvanized steel |
| 0.088 | 0.129 | -31.7% | 0.450 | 0.475 | -5.1% | |
| Pre-painted steel |
| 0.066 | 0.102 | -34.7% | 0.357 | 0.344 | 3.9% | |
| Dynamo steel |
| 0.045 | 0.094 | -52.4% | 0.318 | 0.376 | -15.3% | |
| Transformer steel |
| 0.038 | 0.044 | -11.9% | 0.164 | 0.139 | 17.8% |
NLMK Q4 2008 and FY 2008 sales volumes:
| Million, t |
| Q4 2008 | Q3 2008 | Q4 2008 / Q3 2008 |
| 2008 | 2007 | 2008 / 2007 |
|
|
| |||||||
| Pig iron |
| 0.062 | 0.154 | -60.0% |
| 0.636 | 0.853 | -25.5% |
| Slabs |
| 0.776 | 0.934 | -16.9% |
| 3.511 | 3.654 | -3.9% |
| Hot-rolled steel 2 |
| 0.217 | 0.412 | -47.4% |
| 1.593 | 1.876 | -15.1% |
| Cold-rolled steel |
| 0.234 | 0.403 | -42.1% |
| 1.431 | 1.444 | -0.9% |
| Hot dip galvanized steel |
| 0.082 | 0.123 | -32.8% |
| 0.423 | 0.443 | -4.5% |
| Pre-painted steel |
| 0.061 | 0.100 | -39.2% |
| 0.340 | 0.327 | 4.0% |
| Dynamo steel |
| 0.051 | 0.094 | -45.5% |
| 0.315 | 0.377 | -16.5% |
| Transformer steel |
| 0.037 | 0.045 | -17.3% |
| 0.160 | 0.143 | 11.3% |
Dansteel A/S Q4 2008 and FY 2008 sales volumes:
| Million, t |
| Q4 2008 | Q3 2008 | Q4 2008 / Q3 2008 |
| 2008 | 2007 | 2008 / 2007 |
|
|
| |||||||
| Heavy plates |
| 0.110 | 0.104 | 5.6% |
| 0.504 | 0.496 | 1.6% |
VIZ‐Stal Q4 2008 and FY 2008 sales volumes:
| Million, t |
| Q4 2008 | Q3 2008 | Q4 2008 / Q3 2008 |
| 2008 | 2007 | 2008 / 2007 |
|
|
| |||||||
| Transformer steel |
| 0.042 | 0.048 | -12.4% |
| 0.183 | 0.188 | -2.5% |
| Dynamo steel |
| 0.000 | 0.001 | -43.5% |
| 0.008 | 0.019 | -59.5% |
Stoilensky GOK Q4 2008 and FY 2008 sales volumes:
| Million, t |
| Q4 2008 | Q3 2008 | Q4 2008 / Q3 2008 |
| 2008 | 2007 | 2008 / 2007 |
|
|
| |||||||
| Iron ore concentrate |
| 1.833 | 2.929 | -37.4% |
| 10.592 | 11.577 | -8.5% |
| Sinter ore |
| 0.147 | 0.352 | -58.2% |
| 1.299 | 1.764 | -26.4% |
Altai‐koks Q4 2008 and FY 2008 sales volumes:
| Million, t |
| Q4 2008 | Q3 2008 | Q4 2008 / Q3 2008 |
| 2008 | 2007 | 2008 / 2007 |
|
|
| |||||||
| Coke (dry) |
| 0.551 | 0.872 | -36.8% |
| 3.249 | 3.506 | -7.3% |
Maxi‐Group3 Q4 2008 and FY 2008 sales volumes:
| Million, t |
| Q4 2008 | Q3 2008 | Q4 2008 / Q3 2008 |
| 2008 | 2007 | 2008 / 2007 |
|
|
| |||||||
| Billet |
| 0.074 | 0.171 | -56.5% |
| 0.539 | 0.842 | -36.0% |
| Rebar |
| 0.194 | 0.247 | -21.3% |
| 0.972 | 0.645 | 50.8% |
| Wire rod |
| 0.045 | 0.059 | -22.7% |
| 0.203 | 0.032 | 542.8% |
| Metalware |
| 0.033 | 0.035 | -5.5% |
| 0.146 | 0.269 | -45.8% |
| Scrap 4 |
| 0.495 | 0.851 | -41.8% |
| 2.673 | 2.103 | 27.1% |
1 Q4 2008 and FY 2008 production and sales data is indicative and subject to amendments
2 Including semi-finished products to other productions
3 Including hot‐rolled pickled steel
4 Maxi‐Group companies have been included in the Group since December 2007
5 Including sales to Maxi‐Group
Management comments
NLMK sales were consistent with overall 2008 market trends. Demand growth from January to July in the export market and from March - April in the domestic market has led to a boost in sales volumes constrained only by production capacities. Prices for all types of products soared to record levels in the export and domestic markets by mid-year 2008.
In Q4 2008 the accelerating drop in demand for steel-intensive products and, consequently, for steel, forced producers to drastically cut prices and production volumes across the product mix. The sharpest decline in demand, sales prices and volumes was recorded in low value added products. In 2008 the Lipetsk production site cut production volumes to 8.5 million tonnes compared to the planned 9.4 million tonnes. At Maxi-Group, steel production volumes in 2008 reached 1.9 million tonnes, 12% lower than the planned 2.2 million tonnes. NLMK Group's total steel production reached 10.4 million tonnes (+14% year-on-year, but an 11% decrease compared to the planned 11.6 million tonnes).
Lower FY2008 production volumes for most of the product range were primarily attributable to a decrease in orders in Q3 and Q4 2008 followed by a slump in Q4 2008 sales. Sales of pre-painted, transformer steel and plate bucked this trend which is mainly attributable to the long-term contract sales.
NLMK's Q4 2008 sales volumes decreased quarter-on-quarter across the product range. The decline in slab sales was partially mitigated by increased supplies to Duferco JV facilities. Prices decreased mostly for pig iron, slabs and hot-rolled products.
The decline in demand for VIZ-Stal products in December 2008 led to lower transformer steel sales volumes in Q4 2008 and FY2008. Prices for VIZ-Stal's electrical steel in Q4 2008 were lower quarter-on-quarter, primarily due to higher USD/RUR exchange rate.
In 2008 iron ore concentrate and sinter ore sales volumes in Stoilensky GOK were dependent on NLMK's iron ore requirements. Higher Q4 2008 USD/RUR exchange rates and lower sinter ore export sales volumes reduced average prices for iron ore concentrate and sinter ore.
The accelerating deterioration of the pricing environment and falling demand witnessed in Q4 2008 translated into a significant decrease in prices and sales volumes and, as a result, output of coke-chemical products at Altai-Koks, leading to a decrease in Altai-Koks 2008 coke sales volumes on a year-on-year basis.
The growth in wire rod and rebar production and sales volumes in the first nine months of 2008 led to a decrease in billet and metal-ware sales volumes on a year-on-year basis. The quarter-on-quarter decline in sales volumes and prices for Maxi-Group's products was mainly due to weaker demand for steel products in Q4 2008.
Outlook
The global economic environment deteriorated significantly in Q4 2008 leading to weaker demand and a slump in prices for steel products. This resulted in a year-on-year decrease in output for NLMK and its subsidiaries.
As steel demand weakened sharply in September - December 2008, we expect that NLMK will post lower financial results than was anticipated in previous outlook statements. Nevertheless, due to a strong financial performance during the first nine months of 2008, we believe that our FY2008 revenue will reach USD11.6 billion and EBITDA is expected to be USD4.7 - 4.8 billion.
In early 2009, we are facing further deterioration in the pricing environment in our key markets, and, despite decreasing production costs for our main products, this may adversely impact our H1 2009 financial 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.
About NLMK
Novolipetsk Steel (LSE: NLMK) is one of the world's leading producers of steel and one of Russia's largest steel companies, with key production capacities mainly located in Russia, as well as the EU and USA.
NLMK is a vertically integrated group controlling every stage of steel production from mining to delivery of finished products to end-users. The Group's structure and efficient management system help achieve strong financial performance. NLMK's well diversified sales geography ideally positions the Company to capture growth in its core markets.
NLMK is a rapidly growing business with a balanced development strategy. Apart from developing in-house production and mining assets, the strategy envisages a stronger presence in key markets through the acquisition of high-quality rolling assets in these markets.
For further information:
NLMK
Anton Bazulev, Investor Relations
Tel: +7 495 915 1575
Email: info@nlmk.msk.ru
Financial Dynamics
Jon Simmons
Tel: +44 207 831 3113
Email: jon.simmons@fd.com