NLMK Group Q4 and 12M 2020 IFRS Financial Results
In Q4 2020, NLMK Group (LSE: NLMK, MOEX: NLMK) increased its revenue by 7% qoq to $2.4 bn with EBITDA reaching $890 m. At year-end, EBITDA amounted to $2.6 bn, gaining 3%, with EBITDA margin reaching 29% (+5 p.p. yoy).
k t/$ million | Q4 2020 | Q3 2020 | QoQ | Q4 2019 | YoY | 2020 | 2019 | YoY |
Sales volumes | 4,220 | 4,443 | -5% | 4,172 | 1% | 17,520 | 17,069 | 3% |
Revenue | 2,385 | 2,229 | 7% | 2,312 | 3% | 9,245 | 10,554 | -12% |
EBITDA 2 | 890 | 579 | 54% | 480 | 85% | 2,645 | 2,564 | 3% |
EBITDA margin | 37% | 26% | +11 p.p. | 21% | +16 p.p. | 29% | 24% | +5 p.p. |
Profit for the period 3 | 558 | 312 | 79% | 200 | 2.8x | 1,236 | 1,339 | -8% |
Free cash flow 4 | 229 | 239 | -4% | 338 | -32% | 1,103 | 1,523 | -28% |
Net debt 5 | 2,495 | 1,946 | 28% | 1,786 | 40% | 2,495 | 1,786 | 40% |
Net debt/EBITDA 5 | 0.94x | 0.87x |
| 0.70x |
| 0.94x | 0.70x |
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Q4 2020 key highlights
· Revenue increased to $2.4 bn (+7% qoq; +3% yoy), supported by a recovery in rolled product prices.
· EBITDA grew to $890 m (+54% qoq; +85% yoy), due to the expansion of the raw material/slab price spreads, recovery of production volumes at Stoilensky after the September incident, accrued refund from the US Department of Commerce in line with the settlement agreement, and gains from Strategy 2022 projects. EBITDA margin was 37% (+11 p.p. qoq; +16 p.p. yoy).
· Free cash flow reduced to $229 m (-4 % qoq). The increase in EBITDA was offset by the outflow of cash to replenish working capital amid growing global steel and raw material prices.
· Net profit grew by 79% qoq to $558 m, due to an increase in operating profit.
| Investor relations contact: Dmitry Kolomytsyn, CFA +7 (495) 504 0504 | Media relations contact: Maria Simonova +7 (915) 322 62 25 simonova_mn@nlmk.com |
1 Consolidated financial results are prepared under IFRS. Reporting periods of the Company are 3M, 6M, 9M and 12M. Quarterly figures are obtained by calculation, including in the segment reporting. Figures for comparable periods may differ from figures posted earlier because of rounding off to integers.
2 EBITDA is the operating profit before equity share in financial results of joint ventures, impairment of capital assets and losses from retirement of fixed assets, allowed for amortization and depreciation. EBITDA calculations and further details are presented in the Appendix.
3 Profit for the period attributable to NLMK shareholders.
4 Free cash flow is determined as net cash from operations plus interest received net of interest paid and capital investment. Free cash flow calculations are presented in the Appendix.
5 Net debt is calculated as the sum of long-term and short-term borrowings less cash and cash equivalents, as well as short-term deposits at period end. Net debt / EBITDA is represented by net debt as at the end of the reporting period and EBITDA as last 12 months EBITDA. Net debt calculations are presented in the Appendix.
12M 2020 key highlights
· Revenue reduced by 12% yoy to $9.2 bn, due to a reduction in steel product prices in Q2-Q3 and an increase in the share of semi-finished products in total sales by 5 p.p. to 40%.
· EBITDA grew by 3% yoy to $2.6 bn, supported by investment programme and operational efficiency programme gains, a weaker ruble, and refund from the US Department of Commerce under the settlement agreement. EBITDA margin reached 29% (+5 p. p. yoy).
· Free cash flow reduced by 28% yoy to $1.1 bn, due to the high base of the previous year, when there was a significant release of cash from the working capital with a decrease in receivables and inventory reduction (for details, see p. 8, Q4 2019 Financial release).
· Net profit reduced by 8% yoy to $1.2 bn amid increased losses in the joint ventures' performance, including due to the recognition of the NBH investment value impairment in the amount of $120 m in Q2 2020. Without the impact of this non-cash transaction, net profit would have stood at $1.4 bn (+1% yoy).
Comment from NLMK Group CFO Shamil Kurmashov:
"In Q4 2020, the recovery in business activity, including in the form of pent-up demand and restocking in the global supply chain coupled with a limited supply of steel products, led to a spike in steel product prices in our key regions. High iron ore prices supported this trend.
"In this context, NLMK Group increased its revenue by 7% qoq to $2.4 bn, and its EBITDA by 54% qoq to $890 m in Q4 2020. EBITDA margin grew to 37%.
"In 2020, despite the constraints of the pandemic, we maintained our capacity utilization rates and were able to achieve a 3% yoy increase in EBITDA, reaching $2.6 bn. Our flexible business model enabled a 3% yoy increase in sales to 17.5 m t. Free cash flow for 12M 2020 totalled $1.1 bn.
"Over 12M 2020, the structural gain from our Strategy projects reached $261 m vs. the 2019 base. Operational efficiency programmes contributed $176 m, with $85 m coming from investment projects. We have completed upgrades at the Lipetsk site blast furnace and steelmaking operations, which will enable an increase in steel production capacity of 1 m t pa starting from 2021. Construction of a coal charge stamping unit was completed at Altai-Koks, which will reduce NLMK Group's dependence on expensive and scarce coal grades. The full-year effect of these projects will be reflected in our financial results in 2021.
"Net debt/EBITDA ratio stood at 0.94x, total debt was $3.5 bn.
"Solid financial performance enabled the management to recommend NLMK's Board of Directors to pay $570 as Q4 2020 dividends."
TELECONFERENCE
NLMK is pleased to invite the investment community to a conference call and webcast with the management of NLMK:
Thursday, February 11th 2021
· 09:00 am (New York)
· 2:00 pm (London)
· 5:00 pm (Moscow)
To join the conference call and webcast, please dial:
US Number:
+1 929-477-0402 (Local access) // 888-254-3590 (Toll free)
United Kingdom Number:
+44 (0)330 336 9411 (Local access) // 0800 279 7204 (Toll free)
Russian Number:
+7 495 646 9190 (Local access) // 8 10 800 2867 5011 (Toll free)
Conference ID: 4792848
To join the webcast, please follow the link
https://www.webcast-eqs.com/nlmk20210211
*We recommend that participants start dialing in 5-10 minutes prior to ensure a timely start of the conference call.
MANAGEMENT COMMENTS
Q4 2020 market review
· In Q4 2020, demand for steel products in the Western markets continued to recover, albeit at an uneven pace. US steel consumption increased by 3% qoq (-15% yoy) amid limited supply from local steel producers, which led to a spike in prices. Steel demand in the EU grew by 19% qoq (+5% yoy), supported by recovering activity in the automotive sector and other metal-intensive industries.
· In China, steel consumption decreased by 5% qoq (+11% yoy), due to the high base effect of the previous quarter, when all-time-high steel output was achieved thanks to state support measures.
· Steel product consumption in Russia decreased by 7% qoq as a result of the high base of the previous quarter, when the pent-up demand effect was most pronounced following the decline in April-May 2020. Year-on-year, consumption increased by 5%, due mainly to demand in the flat steel segment.
Q4 2020 prices · Raw material prices: coal price trends on the global market were multidirectional. Australian coking coal prices decreased by 3% qoq (-22% yoy) due to import restrictions imposed by China. In China, coking coal prices grew by 33% qoq (+2% yoy), driven by a limited supply of raw materials amid high demand from steel producers. Iron ore prices grew by 12% qoq (+48% yoy), driven by high steel output in China and recovering activity in other key regions. · Market prices** for flat steel grew by 44% qoq (+34% yoy) in the US and by 23% qoq (+29% yoy) in Europe as global demand and raw material prices continued to recover. · Uncoated steel prices on the Russian market denominated in dollars grew by 11% qoq (-3% yoy), following global prices. Dollar-denominated rebar prices grew by 13% qoq (+4% yoy). · Export slab prices (FOB Black Sea) grew by 19% qoq (+35% yoy).
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* Data on steel consumption trends on regional markets are estimates.
** Market prices reflect the level of prices for a given calendar period and differ from the average sales prices of the Company and its segments due to the time lag of the production & sales cycle.
Q4 2020 output and sales breakdown · Steel output* grew by 1% qoq to 3.9 m t (+3% yoy) following the completion of upgrades at NLMK Lipetsk steelmaking operations. · Sales decreased to 4.2 m t (-5% qoq), as slab inventories in ports grew due to higher output and slab shipments at the end of the calendar year. Year-on-year, steel product sales increased by 1%. · Sales of semi-finished products declined by 4% qoq to 1.6 m t due to the growth of slab inventories and the redistribution of slab shipments to NBH. Sales to third parties declined by 25% qoq to 1 m t, while slab supplies to NBH grew by 89% qoq to 0.6 m t. Year-on-year, semi-finished product sales to third parties grew by 15% as pig iron sales increased. Slab supplies to NBH grew by 11% yoy. · Sales of finished products totalled 2.6 m t (-5% qoq; -5% yoy) as sales of rebar and coated steel decreased. 12M 2020 output and sales breakdown · Steel output* increased by 1% yoy to 15.8 m t. · Sales grew by 3% yoy to 17.5 m t. · Sales of semi-finished products to third parties grew by 25% yoy to 4.9 m t due to higher pig iron and billet exports. Slab sales to NBH remained flat yoy, at 2.1 m t. · Finished rolled steel sales declined by 5% yoy to 10.5 m t amid weak demand in April-May 2020 and sales redistribution to semi-finished products. |
* Hereinafter NLMK Group steel output and sales in home markets include NBH. Consolidated sales are given without NBH. Sales to home markets mean sales of the Group's companies in the regions where production capacities are located in Russia, Europe, and the US |
NLMK GROUP KEY FINANCIALS Q4 2020 revenue · Revenue grew by 7% qoq to $2.4 bn against the backdrop of higher steel product prices. Year-on-year, revenue increased by 3% amid higher sales volumes and steel prices. · The share of semi-finished products in the revenue increased by 1 p.p. to 30% due to pig iron and billet sales. The share of finished products totalled 65% (-1 p.p. qoq). The share of high value-added products decreased by 4 p.p. to 33%. · The share of the Russian market in the revenue totalled 42% (-4 p.p. qoq and yoy). The share of Asian countries dropped to 4% (-10 p.p. qoq; +2 p.p. yoy) due to sales being redirected to traditional markets: the EU share grew to 19% (+8 p.p. qoq; +3 p.p. yoy), while the US share reached 14% (+1 p.p. qoq; |
12M 2020 revenue · Revenue decreased by 12% yoy to $9.2 bn due to lower steel product prices and a higher share of semi-finished products in the sales portfolio. · The share of semi-finished products in the revenue grew by 4 p.p. yoy to 30% as a result of higher pig iron sales; the share of finished products went down by 3 p.p. yoy to 65%. The share of revenue from high value-added products was 36% (-2 p.p. yoy). · The share of the Russian market in the revenue totalled 41% (flat yoy). The share of the EU and US in the consolidated revenue decreased to 17% and 15%, respectively (-1 p.p. yoy; -3 p.p. yoy). |
Q4 2020 EBITDA · EBITDA* grew by 54% qoq to $890 m (+85% yoy) due to the expansion of the raw material/steel price spreads, recovery of production volumes at Stoilensky after the September incident, and gains from Strategy 2022 investment and operational efficiency programmes. In addition, EBITDA growth was supported by the accrued refund of $97 m (a total of $105 m with interest) from the US Department of Commerce in line with the settlement agreement resolving NLMK's lawsuit on the exclusion of slabs from import tariffs. NLMK USA received this compensation in January 2021. · Commercial expenses went down by 5% qoq (-7% yoy) to $198 m due to lower sales. General and administrative expenses stood at $94 m (+12% qoq; +3% yoy). 12M 2020 EBITDA · EBITDA reached $2.6 bn (+3% yoy). Strategy 2022 programme gains, the accrued refund from the US Department of Commerce in line with the settlement agreement, and a weaker ruble fully offset the narrower slab/uncoated flat steel spread and the negative impact of the incident at Stoilensky in September 2020. · Commercial expenses totalled $647 m (flat yoy). General and administrative expenses decreased by 3% yoy to $346 m. Net profit** · Q4 2020 net profit increased to $558 m (+79% qoq; +179% yoy) amid EBITDA growth and a lower average income tax rate (due to the financial performance of NLMK USA). 12M 2020 net profit decreased by 8% yoy to $1.2 bn, due mainly to the recognition of the NBH investment impairment in the amount of $120 m in Q2 2020. Without this factor, net profit would have amounted to $1.3 bn.
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* EBITDA used in NLMK's financial releases is calculated as operating profit before equity share in net losses of associates and other companies accounted for using the equity method of accounting, impairment and write-off of assets, adjusted to depreciation and amortization. EBITDA is not an indicator of operating profit, operating activity or liquidity under IFRS, and NLMK discloses it because equivalent indicators could be used by investors and analysts. That said, NLMK's EBITDA should not be viewed on a standalone basis, or in place of profit before tax, or cash flows from operations, as defined by IFRS, or as an indicator of operational efficiency, or as the sum of free cash funds that NLMK can invest into business development. NLMK's EBITDA margin and EBITDA might not be comparable to similar indicators disclosed by other companies as there are no commonly accepted rules for calculating them. For instance, NLMK's EBITDA is calculated similar to what is termed as 'Adjusted EBITDA' in other companies, as NLMK's EBITDA excludes other profit/loss items in addition to interest payments, income tax, depreciation and amortization. **Profit for the period, attributable to NLMK shareholders. |
Q4 2020 free cash flow · Free cash flow went down by 4% qoq to $229 m (-32% yoy) due to a cash outflow to finance working capital amid growing steel product and raw material prices. · Operating cash flow decreased by 11% qoq to $524 m. · Cash outflow to finance working capital totalled $256 m due to: o - $205 m: an increase in receivables due to higher steel product prices at the end of the year and a redistribution of sales to NBH with longer payment periods. o - $81 m: higher cost of raw materials and finished products in stock amid growing prices, amassed winter stocks of scrap, and more goods in transit and at ports due to higher export shipments (including to NBH) at the end of the calendar year. o + $28 m: an increase in payables due to higher raw material prices. 12M 2020 free cash flow · Free cash flow decreased by 28% yoy to $1.1 bn due to working capital financing as receivables grew. · Cash outflow from working capital totalled $16 m due to: o - $177 m: an increase in receivables due to higher prices and increased slab sales to NBH. o + $117 m: a decrease in raw material and finished product stocks. o + $46 m: an increase in payables. |
Investment
· The Group's investment in Q4 2020 decreased by 21% qoq to $273 m (-24% yoy) following the completion of large-scale upgrade projects at the NLMK Lipetsk blast furnace and steelmaking operations and projects at Stoilensky.
· The Group's investment in 12M 2020 went up by 4% yoy to $1.1 m in line with the previous guidance.
Dividends
· In Q4 2020 NLMK paid out $0.8 bn in dividends.
· On 11th February 2021, the Board of Directors recommended that shareholders approve the payment of Q4 2020 dividends in the amount of 7.25 rubles per share (for a total of $570 m). Consequently, the Company can accrue 12M 2020 dividends in the amount of 21.64 rubles per share.
Strategy 2022 execution
· In 12M 2020 operational efficiency improvements added $176 m to EBITDA, due mainly to initiatives introduced in the Russia Flat Products segment. Capex projects, mainly Stoilensky's output growth and NLMK Lipetsk Briquetting Plant, added $85 m to EBITDA.
Debt management
· Total debt in Q4 2020 grew by 9% qoq to $3.5 bn. Weighted average interest rates on loans decreased from 3% to 2.8%.
· Net debt increased by 28% qoq to $2.5 bn due to cash outflow to Q4 2020 dividend payments, including a one-off payment of $250 m above the dividend policy aimed at compensating the lower dividends in Q4 2019, as approved by NLMK's General Meeting of Shareholders on 24th April 2020. Net debt/EBITDA was 0.94x.
Q1 2021 outlook
· We expect that the higher equipment productivity following upgrades and its ramp-up to full capacity will enable an increase in NLMK Lipetsk's steel output to 3.5 m t in Q1 2021, which is in line with goal of 14.2 m t of steel per year announced earlier.
· Global steel prices in January 2021 were at multi-year highs, driven by high demand for steel amid limited supply. Considering the price increase in late Q4 2020 and the sales recognition time gap, average sales prices in Q1 2021 will be higher qoq, which have a positive impact on our financial performance.
NLMK Russia Flat Products |
Q4 2020 highlights · Sales were down by 3% qoq to 3.2 m t (-2% yoy) due to lower slab sales to the market as port stocks increased in December 2020. · Revenue in the Segment grew by 11% qoq to $1.8 bn (+5% yoy) due to higher steel product prices. Meanwhile, as supplies of semis to NLMK Group and NBH companies increased, the share of intersegment revenue reached 20% (+9 p.p. qoq). · EBITDA grew by 52% qoq to $466 m (+88% yoy) due to wider price spreads, a lower share of iron ore purchases from third parties as run rates were restored at Stoilensky, investment programme gains, and a weaker ruble. 12M 2020 highlights · Sales in the Segment increased by 7% yoy to 13.4 m t as export sales of pig iron grew, along with hot-rolled steel sales on the Russian market due to higher Hot Strip Mill productivity. · Revenue was down by 7% yoy to $6.8 bn as steel product prices decreased, which was partially offset by higher sales. · EBITDA decreased by 4% yoy to $1.4 bn amid narrowing price spreads and higher personnel costs due to additional one-off payments to employees as part of COVID-19 pandemic support.
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NLMK Russia Long Products |
Q4 2020 highlights · Sales decreased to 0.7 m t (-15% qoq) amid upgrades of rolling equipment, which were synched with repair works at NLMK's steelmaking facilities. · Revenue decreased by 2% qoq to $445 m. The higher long product prices were offset by lower sales. Year-on-year, revenue grew by 14% due to higher steel product sales and a 2% increase in rebar and metalware prices. · EBITDA in the Segment went down by 14% qoq to $32 m, following lower sales and a higher share of billet in the sales mix. 12M 2020 highlights · Sales went down by 7% yoy to 2.6 m t amid lower demand for long products. · Revenue decreased by 12% yoy to $1.5 bn, following lower sales and prices (-12% yoy on average). · EBITDA grew by 4% yoy to $93 m due to operational efficiency programme gains and a weaker ruble, as the share of billet exports increased.
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Mining and Processing of Raw Materials |
Q4 2020 highlights · Sales were up by 17% qoq to 4.8 m t (+6% yoy) due to the recovery of concentrate output after the incident in September. Sales of iron ore to the external market went down by 12% qoq to 139 k t. · Revenue increased by 28% qoq to $421 m (+31% yoy) supported by a stronger sales performance and a price increase of 24% qoq for concentrate (+47% yoy) and 2% qoq for pellets (+12% yoy). · EBITDA went up by 36% qoq to $339 m (+41% yoy) as prices increased, output grew, and the schedule of repairs was optimized. 12M 2020 highlights · Sales remained flat yoy at 18.4 m t. · Revenue increased by 6% yoy amid higher iron ore prices. · EBITDA increased by 9% yoy to $1.1 bn due to higher iron ore prices, a weaker ruble, and gains from investment and operational efficiency programmes that offset production losses associated with the September 2020 incident. |
NLMK USA |
Q4 2020 highlights · Sales increased by 1% qoq to 0.37 m t. Year-on-year, sales were 22% lower amid low NLMK Pennsylvania capacity utilization rates due to a lack of slabs available for duty-free imports, and a strike. · Revenue grew by 11% qoq to $248 m, due mainly to recovering hot-rolled steel prices. Year-on-year, revenue was down by 23% due to lower sales. · EBITDA totalled $107 m (vs -$12 m the previous quarter and -$37 in Q4 2019) due to an accrued refund in the amount of $97 m following a settlement agreement with the US Department of Commerce, and the widening of the slab/hot-rolled steel price spread. Without the accrued refund, the Segment's EBITDA was +$10 m. 12M 2020 highlights · Sales decreased by 27% yoy to 1.6 m t amid lower output and weaker steel consumption in the US due to the consequences of the COVID-19 pandemic. · Revenue was down by 37% yoy to $1.1 bn due a steel price adjustment and lower sales. · EBITDA grew to $76 m, vs. -$37 m in 2019. Without the accrued refund in line with the settlement agreement with the US Department of Commerce, the Segment's EBITDA was -$21 m amid lower output and sales.
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NLMK DanSteel* |
Q4 2020 highlights · Sales of plate increased to 0.14 m t (+47% qoq, +11% yoy) as earlier sales were recognized and demand gradually recovered. · Revenue increased by 19% qoq to $95 m, following higher sales. Year-on-year, revenue was down by 14% due to lower plate prices. · EBITDA totalled -$4 m (vs. -$3 m in Q3 2020 and $1 m in Q4 2019). 12M 2020 highlights · Sales totalled 0.52 m t (-1% yoy). · Revenue was down by 19% yoy to $400 m, due mainly to the plate price adjustment. · EBITDA decreased to -$4 m (vs. $8 m the previous year) due to lower plate prices.
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* NLMK DanSteel and plate distribution network. |
JV performance (NBH) |
Q4 2020 highlights · NBH sales grew by 19% qoq to 0.55 m t (+6% yoy) amid recovering flat product demand from automotive companies. · Revenue increased by 29% qoq (+10% yoy) to $385 m against the backdrop of higher steel product supplies and prices recovering by an average of 8% qoq. · EBITDA reached -$28 m, vs. -$32 m the previous quarter and -$27 m the previous year. 12M 2020 highlights · Sales were down by 5% yoy to 2.1 m t due to lower demand for steel products in Q2 2020 amid the COVID-19 pandemic. · Revenue decreased by 12% yoy to $1.4 bn due to lower steel product sales prices and a decrease in sales. · EBITDA totalled -$93 m vs. -$134 m the previous year. Losses in the Segment were due to low prices for end products coupled with a decrease in output and sales amid the COVID-19 pandemic. The relative decrease in losses vs. the previous year was due, among other factors, to last year's accrual of non-operating provisions for NLMK Clabecq restructuring.
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Appendix No. 1 Operating and financial results
(1) Sales markets
k t | Total | Sales markets | |||||
Russia | EU | North America | Middle | Central & South America | Other | ||
NLMK Group (with NBH) | 4 135 | 1 643 | 793 | 596 | 565 | 178 | 361 |
Division sales to third parties: |
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NLMK Russia Flat | 2 435 | 1 200 | 45 | 219 | 535 | 176 | 259 |
NLMK Russia Long | 677 | 438 | 114 | 1 | 25 | 0 | 99 |
International subsidiaries and affiliates, incl.: | 1 023 | 5 | 633 | 376 | 4 | 2 | 3 |
NLMK USA | 370 | 0 | 0 | 370 | 0 | 0 | 0 |
European rolling facilities (NLMK DanSteel and NBH) | 652 | 5 | 633 | 6 | 4 | 2 | 3 |
(2) NLMK Russia Flat
k t/$ million | Q4 2020 | Q3 2020 | qoq | Q4 2019 | yoy | 2020 | 2019 | yoy |
Steel product sales, incl.: | 3,172 | 3,281 | -3% | 3,226 | -2% | 13,355 | 12,460 | 7% |
external customers | 2,433 | 2,870 | -15% | 2,375 | 2% | 10,637 | 9,381 | 13% |
semis to NBH | 582 | 308 | 89% | 523 | 11% | 2,096 | 2,104 | 0% |
intersegmental sales | 158 | 102 | 54% | 328 | -52% | 621 | 975 | -36% |
Revenue, incl.: | 1,776 | 1,600 | 11% | 1,687 | 5% | 6,788 | 7,327 | -7% |
external customers | 1,415 | 1,425 | -1% | 1,347 | 5% | 5,600 | 5,897 | -5% |
intersegmental operations | 361 | 175 | 2,1x | 340 | 6% | 1,188 | 1,430 | -17% |
EBITDA | 466 | 306 | 52% | 248 | 88% | 1,430 | 1,490 | -4% |
EBITDA margin | 26% | 19% | +7 p.p. | 15% | +11 p.p. | 21% | 20% | +1 p.p. |
(3) NLMK Russia Long
k t/$ million | Q4 2020 | Q3 2020 | qoq | Q4 2019 | yoy | 2020 | 2019 | yoy |
Steel product sales | 682 | 802 | -15% | 674 | 1% | 2,647 | 2,850 | -7% |
Revenue, incl.: | 445 | 452 | -2% | 389 | 14% | 1,539 | 1,757 | -12% |
external customers | 323 | 337 | -4% | 316 | 2% | 1,171 | 1,428 | -18% |
intersegmental operations | 122 | 115 | 6% | 73 | 67% | 368 | 329 | 12% |
EBITDA | 32 | 37 | -14% | (2) | -16x | 93 | 89 | 4% |
EBITDA margin | 7% | 8% | -1 p.p. | -1% | +8 p.p. | 6% | 5% | +1 p.p. |
(4) Mining Segment
k t/$ million | Q4 2020 | Q3 2020 | qoq | Q4 2019 | yoy | 2020 | 2019 | yoy |
Iron ore products sales, incl.: | 4,819 | 4,112 | 17% | 4,560 | 6% | 18,415 | 18,446 | 0% |
sales to Lipetsk plant | 4,680 | 3,954 | 18% | 4,440 | 5% | 17,592 | 17,850 | -1% |
Revenue, incl.: | 421 | 330 | 28% | 321 | 31% | 1,399 | 1,315 | 6% |
external customers | 20 | 38 | -47% | 15 | 33% | 92 | 77 | 19% |
intersegmental operations | 401 | 292 | 37% | 306 | 31% | 1,307 | 1,238 | 6% |
EBITDA | 339 | 250 | 36% | 241 | 41% | 1,064 | 977 | 9% |
EBITDA margin | 81% | 76% | +5 p.p. | 75% | +6 p.p. | 76% | 74% | +2 p.p. |
(5) NLMK USA
k t/$ million | Q4 2020 | Q3 2020 | qoq | Q4 2019 | yoy | 2020 | 2019 | yoy |
Steel product sales | 370 | 366 | 1% | 472 | -22% | 1,604 | 2,205 | -27% |
Revenue, incl.: | 248 | 223 | 11% | 322 | -23% | 1,086 | 1,715 | -37% |
external customers | 248 | 223 | 11% | 322 | -23% | 1,086 | 1,715 | -37% |
intersegmental operations | - | - | 0% | - | 0% | - | - | 0% |
EBITDA | 107 | (12) | -8,9x | (37) | -2,9x | 76 | (37) | -2,1x |
EBITDA margin | 43% | -5% | +48 p.p. | -11% | +54 p.p. | 7% | -2% | +9 p.p. |
(6) NLMK DanSteel
k t/$ million | Q4 2020 | Q3 2020 | qoq | Q4 2019 | yoy | 2020 | 2019 | yoy |
Steel product sales | 142 | 97 | 47% | 128 | 11% | 524 | 529 | -1% |
Revenue, incl.: | 95 | 80 | 19% | 110 | -14% | 400 | 491 | -19% |
external customers | 95 | 79 | 20% | 110 | -14% | 399 | 490 | -19% |
intersegmental operations | - | 1.0 | -100% | - | 0% | 1 | 1 | 0% |
EBITDA | (4) | (3) | 33% | 1 | -4x | (4) | 8 | -0,5x |
EBITDA margin | -4% | -4% | 0 p.p. | 1% | -5 p.p. | -1% | 2% | -3 p.p. |
(7) NBH
k t/$ million | Q4 2020 | Q3 2020 | qoq | Q4 2019 | yoy | 2020 | 2019 | yoy |
Steel product sales | 549 | 461 | 19% | 518 | 6% | 2,083 | 2,185 | -5% |
Revenue, incl.: | 385 | 299 | 29% | 349 | 10% | 1,374 | 1,562 | -12% |
external customers | 372 | 286 | 30% | 332 | 12% | 1,325 | 1,502 | -12% |
intersegmental operations | 13.0 | 13.0 | 0% | 17.0 | -24% | 49 | 60 | -18% |
EBITDA | (28) | (32) | -13% | (27) | 4% | (93) | (134) | -31% |
EBITDA margin | -7% | -11% | +4 p.p. | -8% | +1 p.p. | -7% | -9% | +2 p.p. |
(8) Sales by product
k t | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 |
Pig iron | 437 | 389 | 368 | 292 | 253 |
Slabs | 1,083 | 1,215 | 1,445 | 1,430 | 1,172 |
Thick plates | 145 | 97 | 122 | 164 | 128 |
Hot-rolled steel | 947 | 887 | 904 | 921 | 912 |
Cold-rolled steel | 424 | 480 | 405 | 528 | 473 |
Galvanized steel | 273 | 315 | 292 | 362 | 331 |
Pre-painted steel | 82 | 129 | 96 | 97 | 113 |
Grain-oriented steel | 78 | 64 | 65 | 70 | 66 |
Non-grain-oriented steel | 68 | 66 | 62 | 72 | 50 |
Billet | 96 | 86 | 116 | 30 | 1 |
Long products | 522 | 642 | 426 | 474 | 596 |
Metalware | 65 | 74 | 53 | 65 | 77 |
TOTAL | 4,220 | 4,443 | 4,352 | 4,505 | 4,172 |
(9) Sales by region
k t | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 |
Russia | 1,643 | 1,817 | 1,447 | 1,767 | 1,805 |
European Union | 852 | 482 | 767 | 1,026 | 787 |
Middle East, including Turkey | 567 | 580 | 553 | 529 | 556 |
North America | 604 | 562 | 472 | 826 | 727 |
Central and South America | 184 | 49 | 44 | 134 | 73 |
CIS | 101 | 135 | 76 | 91 | 91 |
Asia and Oceania | 190 | 794 | 899 | 23 | 69 |
Rest of World | 79 | 25 | 95 | 108 | 64 |
TOTAL | 4,220 | 4,443 | 4,352 | 4,505 | 4,172 |
(10) Revenue by region
Region | Q4 2020 | Q3 2020 | Q2 2020 | |||
$ million | share | $ million | share | $ million | share | |
Russia | 992 | 42% | 1,022 | 46% | 797 | 37% |
European Union | 447 | 19% | 252 | 11% | 358 | 16% |
Middle East, including Turkey | 296 | 12% | 246 | 11% | 250 | 11% |
North America | 342 | 14% | 300 | 13% | 299 | 14% |
Central and South America | 95 | 4% | 22 | 1% | 23 | 1% |
CIS | 64 | 3% | 52 | 2% | 58 | 3% |
Asia and Oceania | 103 | 4% | 315 | 14% | 333 | 15% |
Rest of World | 46 | 2% | 20 | 1% | 57 | 3% |
TOTAL | 2,385 | 100% | 2,229 | 100% | 2,174 | 100% |
(11) EBITDA calculation*
$ million | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 |
Operating income** | 758 | 437 | 437 | 439 | 338 |
minus: |
|
|
|
|
|
Depreciation and amortization | (132) | (142) | (145) | (155) | (142) |
EBITDA | 890 | 579 | 582 | 594 | 480 |
* EBITDA used in NLMK's financial releases is calculated as operating profit before equity share in net losses of associates and other companies accounted for using the equity method of accounting, impairment and write-off of assets, adjusted to depreciation and amortization. EBITDA is not an indicator of operating profit, operating activity or liquidity under IFRS, and NLMK discloses it because equivalent indicators could be used by investors and analysts. That said, NLMK's EBITDA should not be viewed on a standalone basis, or in place of profit before tax, or cash flows from operations, as defined by IFRS, or as an indicator of operational efficiency, or as the sum of free cash funds that NLMK can invest into business development. NLMK's EBITDA margin and EBITDA might not be comparable to similar indicators disclosed by other companies as there are no commonly accepted rules for calculating them. For instance, NLMK's EBITDA is calculated similar to what is termed as 'Adjusted EBITDA' in other companies, as NLMK's EBITDA excludes other profit/loss items in addition to interest payments, income tax, depreciation and amortization.
** Operating profit before equity share in net losses of associates and other companies accounted for using the equity method of accounting, impairment and write-off of assets
(12) Free cash flow calculation
$ million | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 |
Net cash provided operating activities | 524 | 591 | 549 | 617 | 710 |
Interest paid | (25) | (9) | (28) | (2) | (22) |
Interest received | 3 | 1 | 2 | 4 | 9 |
Advance VAT payments on imported equipment | - | - | - | - | - |
Capex | (273) | (344) | (219) | (288) | (359) |
Free Cash Flow | 229 | 239 | 304 | 331 | 338 |
(13) Net debt calculation
$ million | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 |
Short-term borrowings | 1,054 | 856 | 1,219 | 1,678 | 468 |
Long-term borrowings | 2,432 | 2,346 | 2,139 | 1,799 | 2,188 |
Cash and cash equivalents | (842) | (755) | (1,121) | (1,456) | (713) |
Short-term deposits | (149) | (501) | (407) | (251) | (157) |
Net debt | 2,495 | 1,946 | 1,830 | 1,770 | 1,786 |
(14) Production of main products
k t | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 |
Crude steel, incl.: | 3,863 | 3,824 | 3,809 | 4,171 | 3,749 |
Steel Segment | 2,970 | 2,864 | 3,145 | 3,325 | 2,977 |
Long Products Segment, incl.: | 708 | 786 | 610 | 659 | 603 |
NLMK Kaluga | 349 | 361 | 272 | 256 | 215 |
International Rolled Products Segment | 185 | 173 | 53 | 188 | 169 |
Finished products, incl.: | 2,594 | 2,614 | 2,467 | 2,852 | 2,642 |
Flat steel | 2,024 | 1,957 | 1,978 | 2,240 | 2,058 |
Long steel | 570 | 657 | 489 | 612 | 584 |
Coke (6% moisture), incl.: | 1,486 | 1,506 | 1,530 | 1,540 | 1,487 |
NLMK Lipetsk | 647 | 647 | 643 | 645 | 652 |
Altai-Koks | 839 | 858 | 887 | 895 | 834 |
(15) Slab sales, including intra-group sales to NLMK Group companies
k t | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 |
Sales to 3rd parties, incl.: | 502 | 907 | 973 | 696 | 648 |
Export | 380 | 797 | 796 | 406 | 473 |
Sales to subsidiaries & associates | 728 | 410 | 598 | 970 | 851 |
Sales to NBH | 582 | 308 | 472 | 734 | 523 |
TOTAL | 1,230 | 1,318 | 1,571 | 1,665 | 1,499 |
(16) Export shipments of steel products from Group's Russian companies to third parties
k t | Q4 2020 | Q3 2020 | qoq | Q4 2019 | yoy | 2020 | 2019 | yoy |
Semi-finished products | 912 | 1,271 | -28% | 726 | 26% | 4,191 | 3,073 | 36% |
Pig iron | 437 | 389 | 12% | 253 | 73% | 1,485 | 510 | 2,9x |
Slabs | 380 | 797 | -52% | 473 | -20% | 2,379 | 2,270 | 5% |
Billets | 96 | 85 | 12% | - | 0% | 327 | 293 | 11% |
Flat products | 428 | 416 | 3% | 381 | 12% | 1,873 | 1,959 | -4% |
HRC | 203 | 160 | 27% | 151 | 34% | 863 | 854 | 1% |
CRC | 104 | 148 | -30% | 130 | -20% | 547 | 633 | -14% |
HDG | 6 | 8 | -30% | 12 | -52% | 38 | 53 | -29% |
Coated | 1 | 1 | -24% | 1 | 68% | 3 | 4 | -31% |
Non-grain-oriented | 50 | 47 | 6% | 33 | 50% | 192 | 182 | 5% |
Grain-oriented | 64 | 52 | 25% | 54 | 19% | 231 | 231 | 0% |
Long products | 148 | 169 | -12% | 138 | 8% | 563 | 560 | 1% |
Total | 1,488 | 1,856 | -20% | 1,245 | 20% | 6,627 | 5,591 | 19% |
(17) Segmental information
Q4 2020 | Russian Flat Steel | Russian Long Products | Mining | NLMK USA | NLMK DanSteel and Plates Distribution Network | Investments in NBH | Totals | Intersegmental operations and balances | NBH | Consolidated |
$ million |
| |||||||||
Revenue from external customers | 1,415 | 323 | 20 | 248 | 95 | 372 | 2,473 | - | (88) | 2,385 |
Intersegment revenue | 361 | 122 | 401 | - | - | 13 | 897 | (884) | (13) | - |
Gross profit | 609 | 64 | 332 | 108 | 7 | (10) | 1,110 | (37) | (13) | 1,060 |
Operating income/(loss) | 387 | 22 | 313 | 93 | (7) | (46) | 762 | (26) | 22 | 758 |
Income / (loss) before minority interest | 274 | 16 | 252 | 99 | (7) | (53) | 581 | (1) | (21) | 559 |
Segment assets including goodwill | 6,957 | 940 | 1,738 | 749 | 428 | 1,366 | 12,178 | (1,153) | (1,163) | 9,862 |
Balance figures presented as of 31.12.2020
Q3 2020 | Russian Flat Steel | Russian Long Products | Mining | NLMK USA | NLMK DanSteel and Plates Distribution Network | Investments in NBH | Totals | Intersegmental operations and balances | NBH | Consolidated |
$ million |
| |||||||||
Revenue from external customers | 1,425 | 337 | 38 | 223 | 79 | 286 | 2,388 | - | (159) | 2,229 |
Intersegment revenue | 175 | 115 | 292 | - | 1 | 13 | 596 | (583) | (13) | - |
Gross profit | 457 | 62 | 248 | (16) | 5 | (6) | 750 | (18) | 20 | 752 |
Operating income/(loss) | 218 | 26 | 224 | (26) | (6) | (47) | 389 | (13) | 61 | 437 |
Income / (loss) before minority interest | 441 | 24 | 170 | (26) | (11) | (50) | 548 | (290) | 54 | 312 |
Segment assets including goodwill | 6,756 | 859 | 1,592 | 655 | 403 | 1,362 | 11,627 | (1,281) | (1,128) | 9,218 |
Balance figures presented as of 30.09.2020
Novolipetsk Steel Consolidated statement of financial position (millions of US dollars) |
|
|
| As at 31 December 2020 |
| As at 31 December 2019 |
| As at 31 December 2018 |
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
| 842 |
| 713 |
| 1,179 |
Short-term financial investments |
| 191 |
| 287 |
| 19 |
Trade and other accounts receivable |
| 1,148 |
| 1,047 |
| 1,326 |
Inventories |
| 1,373 |
| 1,634 |
| 1,816 |
Other current assets |
| 16 |
| 14 |
| 10 |
|
| 3,570 |
| 3,695 |
| 4,350 |
Non-current assets |
|
|
|
|
|
|
Long-term financial investments |
| 7 |
| 5 |
| 85 |
Investments in joint ventures |
| 131 |
| 223 |
| 159 |
Property, plant and equipment |
| 5,659 |
| 6,039 |
| 4,798 |
Goodwill |
| 212 |
| 248 |
| 224 |
Other intangible assets |
| 159 |
| 162 |
| 165 |
Deferred income tax assets |
| 119 |
| 101 |
| 152 |
Other non-current assets |
| 5 |
| 11 |
| 11 |
|
| 6,292 |
| 6,789 |
| 5,594 |
Total assets |
| 9,862 |
| 10,484 |
| 9,944 |
|
|
|
|
|
|
|
Liabilities and equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Trade and other accounts payable |
| 1,065 |
| 1,124 |
| 1,122 |
Dividends payable |
| 109 |
| 318 |
| 525 |
Short-term borrowings |
| 1,054 |
| 468 |
| 398 |
Current income tax liability |
| 51 |
| 32 |
| 28 |
Other short-term liabilities |
| 3 |
| - |
| - |
|
| 2,282 |
| 1,942 |
| 2,073 |
Non-current liabilities |
|
|
|
|
|
|
Long-term borrowings |
| 2,432 |
| 2,188 |
| 1,677 |
Deferred income tax liability |
| 359 |
| 405 |
| 346 |
Other long-term liabilities |
| 48 |
| 2 |
| 14 |
|
| 2,839 |
| 2,595 |
| 2,037 |
Total liabilities |
| 5,121 |
| 4,537 |
| 4,110 |
|
|
|
|
|
|
|
Equity attributable to Novolipetsk Steel shareholders |
|
|
|
|
|
|
Common stock |
| 221 |
| 221 |
| 221 |
Additional paid-in capital |
| 8 |
| 9 |
| 10 |
Accumulated other comprehensive loss |
| (7,140) |
| (6,140) |
| (6,782) |
Retained earnings |
| 11,641 |
| 11,840 |
| 12,370 |
|
| 4,730 |
| 5,930 |
| 5,819 |
Non-controlling interests |
| 11 |
| 17 |
| 15 |
Total equity |
| 4,741 |
| 5,947 |
| 5,834 |
Total liabilities and equity |
| 9,862 |
| 10,484 |
| 9,944 |
Novolipetsk Steel Consolidated statement of profit or loss (millions of US dollars, unless otherwise stated) |
|
|
| For the year ended 31 December 2020 |
| For the year ended 31 December 2019 |
| For the year ended 31 December 2018 |
|
|
|
|
|
|
|
Revenue |
| 9,245 |
| 10,554 |
| 12,046 |
Cost of sales |
| (5,920) |
| (7,303) |
| (7,680) |
|
|
|
|
|
|
|
Gross profit |
| 3,325 |
| 3,251 |
| 4,366 |
|
|
|
|
|
|
|
General and administrative expenses |
| (346) |
| (352) |
| (375) |
Selling expenses |
| (845) |
| (843) |
| (886) |
Net impairment losses on financial assets |
| (8) |
| (1) |
| (1) |
Other operating income/(expenses), net |
| 9 |
| 13 |
| (4) |
Taxes other than income tax |
| (64) |
| (66) |
| (88) |
|
|
|
|
|
|
|
Operating profit before share of results of joint ventures and impairment of investments in joint ventures, impairment of non-current assets and loss on disposals of property, plant and equipment |
| 2,071 |
| 2,002 |
| 3,012 |
|
|
|
|
|
|
|
Loss on disposals of property, plant and equipment |
| (8) |
| (4) |
| (7) |
Impairment of non-current assets |
| (5) |
| (30) |
| (4) |
Share of results of joint ventures and impairment of investments in joint ventures |
| (236) |
| (88) |
| (243) |
Losses on investments, net |
| - |
| - |
| (2) |
Finance income |
| 18 |
| 18 |
| 21 |
Finance costs |
| (90) |
| (68) |
| (70) |
Foreign currency exchange (loss)/gain, net |
| (40) |
| (6) |
| 33 |
Hedging result |
| (24) |
| - |
| - |
Expenses on operations with financial instruments |
| (39) |
| - |
| - |
Other expenses, net |
| (67) |
| (30) |
| (11) |
|
|
|
|
|
|
|
Profit before income tax |
| 1,580 |
| 1,794 |
| 2,729 |
|
|
|
|
|
|
|
Income tax expense |
| (343) |
| (453) |
| (486) |
|
|
|
|
|
|
|
Profit for the year |
| 1,237 |
| 1,341 |
| 2,243 |
|
|
|
|
|
|
|
Profit is attributable to: |
|
|
|
|
|
|
Novolipetsk Steel shareholders |
| 1,236 |
| 1,339 |
| 2,238 |
Non-controlling interests |
| 1 |
| 2 |
| 5 |
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to |
| 0.2062 |
| 0.2234 |
| 0.3734 |
|
|
|
|
|
|
|
Weighted-average number of shares outstanding: basic and diluted (in thousands) |
| 5,993,227 |
| 5,993,227 |
| 5,993,227 |
Novolipetsk Steel Consolidated statement of cash flows (millions of US dollars) |
|
|
| For the year ended 31 December 2020 |
| For the year ended 31 December 2019 |
| For the year ended 31 December 2018 |
Cash flows from operating activities |
|
|
|
|
|
|
Profit for the year |
| 1,237 |
| 1,341 |
| 2,243 |
Adjustments to reconcile profit for the year to net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation and amortisation |
| 574 |
| 562 |
| 577 |
Loss on disposals of property, plant and equipment |
| 8 |
| 4 |
| 7 |
Losses on investments |
| - |
| - |
| 2 |
Finance income |
| (18) |
| (18) |
| (21) |
Finance costs |
| 90 |
| 68 |
| 70 |
Share of results of joint ventures and impairment of investments in joint ventures |
| 236 |
| 88 |
| 243 |
Income tax expense |
| 343 |
| 453 |
| 486 |
Impairment of non-current assets |
| 5 |
| 30 |
| 4 |
Foreign currency exchange loss/(gain), net |
| 40 |
| 6 |
| (33) |
Hedging result |
| 24 |
| - |
| - |
Expenses on operations with financial instruments |
| 39 |
| - |
| - |
Change in impairment allowance for inventories and credit loss allowance of accounts receivable |
| 4 |
| 5 |
| 1 |
Changes in operating assets and liabilities |
|
|
|
|
|
|
(Increase)/decrease in trade and other accounts receivable |
| (177) |
| 314 |
| (258) |
Decrease/(increase) in inventories |
| 117 |
| 284 |
| (187) |
(Increase)/decrease in other operating assets |
| (2) |
| (1) |
| 7 |
Increase /(decrease) in trade and other accounts payable |
| 46 |
| (132) |
| 177 |
Сash provided by operations |
| 2,566 |
| 3,004 |
| 3,318 |
Income tax paid |
| (285) |
| (381) |
| (577) |
Net cash provided by operating activities |
| 2,281 |
| 2,623 |
| 2,741 |
Cash flows from investing activities |
|
|
|
|
|
|
Purchases and construction of property, plant and equipment and intangible assets |
| (1,124) |
| (1,080) |
| (680) |
Proceeds from sale of property, plant and equipment |
| 15 |
| 1 |
| 3 |
Purchases of investments and loans given |
| (51) |
| (164) |
| (91) |
Proceeds from repayment of loans given |
| 142 |
| 115 |
| - |
Placement of bank deposits |
| (836) |
| (933) |
| (305) |
Withdrawal of bank deposits |
| 847 |
| 777 |
| 1,349 |
Interest received |
| 10 |
| 29 |
| 22 |
Contribution to share capital of joint venture |
| (131) |
| (155) |
| - |
Acquisition of subsidiary, net of cash and cash equivalents acquired |
| (4) |
| - |
| (4) |
Acquisition of non-controlling interest |
| - |
| (1) |
| (4) |
Net cash (used in)/provided by investing activities |
| (1,132) |
| (1,411) |
| 290 |
Cash flows from financing activities |
|
|
|
|
|
|
Proceeds from borrowings |
| 2,002 |
| 1,015 |
| 470 |
Repayment of borrowings |
| (1,284) |
| (500) |
| (643) |
Payments on leases |
| (20) |
| (14) |
| - |
Interest paid |
| (64) |
| (49) |
| (56) |
Payments from settlement of derivative financial instruments |
| (16) |
| - |
| - |
Dividends paid to Novolipetsk Steel shareholders |
| (1,637) |
| (2,120) |
| (1,888) |
Dividends paid to non-controlling interests |
| (1) |
| - |
| (2) |
Net cash used in financing activities |
| (1,020) |
| (1,668) |
| (2,119) |
Net increase/(decrease) in cash and cash equivalents |
| 129 |
| (456) |
| 912 |
Effect of exchange rate changes on cash and cash equivalents |
| - |
| (10) |
| (34) |
Cash and cash equivalents at the beginning of the year |
| 713 |
| 1,179 |
| 301 |
Cash and cash equivalents at the end of the year |
| 842 |
| 713 |
| 1,179 |
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash investing activities: |
|
|
|
|
|
|
Conversion of debt to equity |
| - |
| - |
| 210 |
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