NLMK Group (LSE, MOEX: NLMK) in Q3 2021 increased EBITDA by 11% q /q to $ 2.3 billion, EBITDA margin was 50%. Free cash flow (FCF) reached $ 1.1 billion. The Board of Directors recommended approving dividends for Q3. 2021 in the amount of RUB 13.33 /share (100% free cash flow).
Key results for Q3 2021
- Revenue increased by 10% q /q to $ 4.6 bn (+ 2x y /y) with higher sales prices for metal products.
- EBITDA rose 11% qoq to $ 2.3bn (+ 3.9x yoy) as a result of widening steel /raw materials spread. EBITDA margin remained at the level of the previous quarter of 50% (+24 pp YoY).
- Free cash flow grew by 29% qoq to $ 1.1bn (+ 4.7x yoy) on the back of higher financial results.
- Net income increased by 19% qoq to $ 1.6bn (+ 5.2x y /y).
- Revenue increased by 69% YoY to $ 11.6 billion on the back of higher average realized prices and an increase in the share of finished goods in the sales portfolio.
- EBITDA increased 3.1 times YoY to $ 5.5 billion due to widening price spreads between metal products and raw materials, as well as due to the implementation of the Strategy 2022 projects. EBITDA margin amounted to 48% (+22 pp YoY).
- Free cash flow grew 2.8 times YoY to $ 2.4 billion with EBITDA growth, which was partially offset by the outflow of funds to replenish working capital amid rising prices for metals and raw materials.
- Net profit increased 5.5 times y /y to $ 3.8 billion with an increase in gross profit.
Comment of Shamil Kurmashov, Vice President for Finance of NLMK Group:
“In Q3 2021, average prices for metal products increased in key sales areas. Steel quotes in the US have renewed their all-time highs again. However, since the middle of the quarter, demand growth in export markets has slowed down along with the ongoing recovery in local production and imports. In China, a decline in steel production and a decline in exports supported global steel prices and simultaneously led to a correction in iron ore prices. Coal export prices from Australia continued to rise amid restocking in India, Europe and Japan.
In August 2021, equipment was repaired at the Lipetsk site following an incident in the oxygen infrastructure of a steelmaking facility. The production utilization recovered with the completion of repairs and in September amounted to 98%. Against this backdrop, the company's sales for the quarter amounted to 4.1 million tonnes (-4% qoq). The positive dynamics of sales prices contributed to an increase in NLMK Group's revenue by 10% qoq to $ 4.6 bn, EBITDA - by 11% qoq to $ 2.3 bn. EBITDA margin remained at the 2Q level. and amounted to 50%. Free cash flow increased by 29% qoq to $ 1.1bn.
Net debt increased by 40% qoq to $ 2.7bn due to an increase in working capital and dividend payments in Q3. 2021 Net debt /EBITDA remained virtually unchanged at 0.43x.
In accordance with the dividend policy, the management recommended to the NLMK Board of Directors for Q3. Pay $ 1.1 billion in dividends by 2021. "
