NLMK.L Regulatory News (NLMK)

22 Jan 2007 11:29

OJSC Novolipetsk Steel22 January 2007 Novolipetsk Steel (NLMK) releases trading update for Q4 2006 and FY 2006 Novolipetsk Steel (LSE: NLMK) today released the following regular trading update for Q4 2006 and FY 2006. 1. Production* The table below shows the production volume of NLMK's principal steel products on its main site in Lipetsk, Russia: Production Q4 2006 Q3 2006 Q4 2006 / Q3 2006 2005 2006 / 2005 2006 (mln. tonnes) Pig iron 2.273 2.247 1.2% 9.043 7.885 14.7% Steel 2.318 2.217 4.6% 9.127 8.468 7.8% Slabs 1.061 0.850 24.8% 3.866 3.203 20.7% Hot-rolled steel** 0.357 0.408 -12.5% 1.626 2.029 -19.9% Cold-rolled steel 0.408 0.463 -11.9% 1.752 1.744 0.5% Hot dip galvanized steel 0.122 0.111 9.9% 0.430 0.266 61.7% Pre-painted steel 0.090 0.092 -2.2% 0.341 0.265 28.7% Non-grain-oriented steel 0.080 0.092 -13.0% 0.342 0.339 0.9% Grain-oriented steel 0.036 0.037 -2.7% 0.142 0.133 6.8% ** including HR coils supplied to VIZ-Stal The table below shows the principal product tonnage produced at NLMK's Danish subsidiary, DanSteel A/S: Production Q4 2006 Q3 2006 Q4 2006 / Q3 2006 2005 2006 / 2005 2006 (mln. tonnes) Heavy plates 0.149 0.094 58.0% 0.467 0.432 8.0% The table below shows the principal product tonnage produced at NLMK's subsidiary, VIZ-Stal: Production Q4 2006 Q3 2006 Q4 2006 / Q3 2006 2005 2006 / 2005 2006 (mln. tonnes) Non-grain-oriented steel 0.004 0.003 51.5% 0.016 0.034 -50.9% Grain-oriented steel 0.045 0.045 -0.2% 0.180 0.169 6.9% The table below shows the production volume of principal product tonnage produced at NLMK's subsidiary, Stoilensky GOK: Production Q4 2006 Q3 2006 Q4 2006 / Q3 2006 2005 2006 / 2005 2006 (mln. tonnes) Iron ore concentrate 2.857 2.911 -1.9% 11.305 10.810 4.6% Sinter ore 0.389 0.346 12.4% 1.377 1.081 27.4% The table below shows the production volume of principal product tonnage produced at NLMK's subsidiary, Prokopievskugol: Production Q4 2006 Q3 2006 Q4 2006 / Q3 2006 2005 2006 / 2005 2006 (mln. tonnes) Coking coal 0.651 0.656 -0.7% 2.488 2.636 -5.6% Energy coal 0.114 0.137 -16.9% 0.507 0.788 -35.6% Other raw materials 0.218 0.211 3.2% 0.875 0.955 -8.4% The table below shows the principal product tonnage produced at NLMK's subsidiary, Altai-koks: Production Q4 2006 Q3 2006 Q4 2006 / Q3 2006 2005 2006 / 2005 2006 (mln. tonnes) Coke (moisture 6%) 0.916 0.807 13.5% 2.967 2.723 9.0% * All information on Q4 2006 and FY 2006 production volumes is preliminary and may be subject to change; 2. Realized prices* Realized prices are calculated by dividing sales revenue by sales volume. Suchcalculation does not differentiate between particular product types and gradeswithin a product sub-category. Realized prices are not indicative of actualcontract prices and can serve as an approximation only. All information on Q42006 prices is preliminary and may be subject to change. The table below shows the average price realized for each of NLMK's main steelproducts: USD per tonne (FCA)* Q4 2006 Q3 2006 Q4 2006 / Q3 2006 Pig Iron 246.9 256.8 -3.8% Slabs 414.7 454.5 -8.8% Hot-rolled steel 563.6 584.9 -3.6% Cold-rolled steel 618.2 630.6 -2.0% Hot dip galvanized steel 914.5 935.5 -2.3% Pre-painted steel 1 088.3 1 034.8 5.2% Non-grain-oriented steel 715.2 678.8 5.4% Grain-oriented steel 3 279.6 3 230.0 1.5% The table below shows the DanSteel A/S average heavy plate prices: EUR per tonne (FCA)* Q4 2006 Q3 2006 Q4 2006 / Q3 2006 Heavy plates 709.0 612.0 15.8% The table below shows average VIZ-Stal product prices: USD per tonne (FCA)* Q4 2006 Q3 2006 Q4 2006 / Q3 2006 Non-grain-oriented steel 933.9 927.0 0.8% Grain-oriented steel 3 223.2 3 117.9 3.4% The table below shows average Stoilensky GOK product prices: USD per tonne (FCA)* Q4 2006 Q3 2006 Q4 2006 / Q3 2006 Iron ore concentrate 61.9 54.0 14.7% Sinter ore 22.3 20.7 7.6% The table below shows average Prokopievskugol product prices: USD per tonne (FCA)* Q4 2006 Q3 2006 Q4 2006 / Q3 2006 Coking coal 58.3 53.7 8.6% Energy coal 19.9 19.1 4.0% The table below shows the Altai-koks average coke prices: USD per tonne (FCA)* Q4 2006 Q3 2006 Q4 2006 / Q3 2006 Coke (moisture 6%) 109.2 104.0 5.1% * Excluding freight charge 3. Management Board comments 2006 was marked by a substantial increase in pig iron and steel productioncompared to 2005. NLMK has restored production to historic levels afterscheduled maintenance at the major blast furnace and steelmaking facilities in2005. The commissioning of the third hot dip galvanizing line has resulted in a 61.6%increase of HDG steel production. In addition, NLMK has increased the productionof other high value-added products, including a 29% increase in pre-paintedsteel and 7% increase in grain-oriented steel on a y-o-y basis. The decrease in hot-rolled steel output is primarily attributable to the shiftin the company's product portfolio to high value-added products. The production volumes at DanSteel A/S, Stoilensky GOK and Altai-koks went up in2006 compared to 2005. We have been observing an upward trend in the world steel market since the endof Q1 2006. The increase in steel prices continued during Q2 and Q3 2006.However, the year-end market correction has resulted in the slight pricedecrease in Q4 2006 compared to Q3 2006. The semi-finished product prices demonstrated higher volatility than highvalue-added product prices. In Q4 2006, slab prices decreased by 8.8% whilepre-painted and electrical steel prices rose slightly. As for the mining segment, the iron ore concentrate prices continued to growduring Q4 2006. The price of the iron ore concentrate produced at Stoilensky GOKwent up 14.7%. We have also observed an increase in prices for Altai-koks andProkopievskugol products in Q4 2006 compared to Q3 2006. 4. Outlook We believe that NLMK's consolidated sales revenue will increase approximately38% in 2006 compared to 2005. In addition to growing production volumes, salesrevenue in 2006 benefited from new assets' acquisition (DanSteel A/S, VIZ-Stal,Prokopiveskugol and Altai-koks). NLMK's EBITDA in 2006 is expected to reach approximately USD2.6 billion. Theproceeds from disposals of non-core iron ore assets will also contribute toprofit before tax and net income growth in 2006 compared to 2005. NLMK will announce US GAAP consolidated results for 2006 in April 2007. For further information: NLMKAnton Bazulev +7 495 915 1575Financial DynamicsJon Simmons +44 207 831 3113 This information is provided by RNS The company news service from the London Stock Exchange