NLMK Group (LSE, MOEX: NLMK) increased its revenue by 6% QoQ to $2 457 million with increased profitability on EBITDA to 24%. Free cash flow was $331 million
Key results Q1 2020
- Revenue increased by 6% QoQ to $2.5 billion amid rising sales, despite the slowdown in steel demand on global markets in connection with the epidemic of coronavirus.
- EBITDA increased to $594 million (+24% QoQ) due to expansion of spreads in the first half of the quarter and the devaluation of the ruble, as well as the effects of the programs of the operating efficiency. EBITDA increased to 24% (+3 PP q/q; flat y/y).
- Free cash flow was $331 million, almost the same as last quarter, thanks to active working capital management.
- Net profit rose 45% QoQ to $289 million in connection with revenue growth and the use of currency risk hedging, which allowed to avoid losses in connection with the devaluation of the ruble.
- Group NLMK continues to implement its Strategy 2022. The effect of operational efficiency projects in the framework of the strategy on EBITDA 1Q. 2020 amounted to $54 million (to the base of Q1 2019).
a Review Group President Grigory Fedorishin, NLMK:
"I would like to start with the fact that the company is most focused on ensuring the safety and health of employees. About the measures taken to reduce the risk of spread of coronavirus infection at the sites of the NLMK Group you can read more about on the website of the company.
In the first half of the first quarter our key markets showed a recovery in demand and rising prices, but the spread of the coronavirus pandemic has led to a reduction in business activity and increased uncertainty in the second half of the quarter and April. In Q2 2020 reduction in demand for steel in the EU and the USA analysts predict could reach double digits yoy In Russia is expected to decline in consumer activity. Overall, there is a high level of uncertainty regarding the recovery rate of steel demand in different regions.
In these conditions we have taken a number of preventive measures to ensure financial stability of the company. Forecast of the cost of investment projects in 2020 were reduced to $0,9-0,95 billion compared to the previously announced level of $1.2 billion the Amount of available liquidity on the balance sheet of the company increased to $1.7 billion as at 31 March (+96% QoQ), the additional amount of available lines of credit is estimated at $0.8 billion.
the Shareholders of NLMK approved the previously recommended by the Board of Directors dividends
Q4 2019 and offered to cut it in half. The Board of Directors presented to the shareholders a recommendation on the payment of dividends for Q4 2019 in the amount of 3.12 ruble per share, as well as a recommendation on the payment of dividends for Q1 2020 in the amount of 3.21 ruble per share, representing 75% of free cash flow for the relevant quarter.
the Weak market conditions – a good period for the implementation of the second phase is scheduled for major capital repairs in the blast furnace and steel production at NLMK, which will allow us to increase steel production by 1 million tons next year. Against the background of these repairs in Q2 production and sales of NLMK Group will decrease from the previous quarter.
currently, all of the production site of NLMK Group to continue their work.
Flexible business model NLMK Group and implementation of projects and programmes Strategy 2022 has enabled us to demonstrate strong financial results this past quarter. Revenue NLMK Group grew by 6% QoQ to $2.5 billion, EBITDA by 24% QoQ to $594 million, the Indicator "Net debt/EBITDA" was 0.72 x at the end of Q1 Free cash flow was $331 million (last quarter)".
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NLMK_Financial_Release - Q1 2020_RUS.pdf
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Presentation_NLMK_IFRS_Q1_2020.pdf
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Financial_statements_NLMK_IFRS_3m 2020_USD_RUS.pdf
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