EBITDA of NLMK Group (LSE, MOEX: NLMK) Q2 2020 amounted to $582 million, EBITDA increased by 3 percentage points QoQ to 27%. Free cash flow (PSD) was $304 million, the Board of Directors recommended to approve dividends for Q2 2020 in the amount of 4,75 RUB/share (132% SDS).
Key results Q2 2020
- Revenue down 12% q/q to $2.2 bn (-22% yoy) with a decline in average selling prices and an increase in the share of semi-finished products in the sales portfolio of a weakening demand for finished products, and as a result of the drop in sales, NLMK USA, and
- EBITDA decreased by 2% QoQ to $582 million (-21% yoy) amid falling revenue, which was partially offset by lower commodity prices, rouble depreciation and a positive effect of the implementation of the programs of the operating efficiency. EBITDA increased by 3 percentage points QoQ to 27% (+1 PP yoy).
- Free cash flow (PSD) decreased by 8% QoQ to $304 million
- Net profit decreased by 73% QoQ to $77 million (-81% yoy) mainly due to impairment of investment in NBH. Excluding this non-cash transactions net profit would decrease by 24% QoQ to $221 million Excluding impairment of the investment, the result was affected by the recognition of loss on exchange rate differences in the amount of $70 million.
Key findings 6 months. 2020
- Revenue declined 18% yoy to $4.6 billion in response to lower steel prices and increase in the share of semi-finished products in sales by 4 percentage points yoy to 42%.
- EBITDA decreased 18% yoy to $1.2 billion from lower revenues. EBITDA amounted to 25% (unchanged yoy).
- Free cash flow decreased by 32% yoy to $635 million with a decrease of EBITDA and the increase of the investments within the Strategy 2022, the active phase of the investment program implementation began in Q2 2019
- Net profit declined by 54% yoy to $366 million due to lower revenue and the recognition of the impairment value of the investment in NBH.
Comment Vice-President, Finance, NLMK Group Shamil Kurmashov:
"In Q2 2020 pandemic coronavirus has had a negative impact on the overall business activity, which led to a significant weakening in steel demand in our traditional markets and lower prices for steel products.
To maintain a high capacity utilization of the flagship Lipetsk site, we have changed the regional structure of sales (in particular increased its supply into the Asian market in April and may), as well as diversified product portfolio. At the end of April the company was actively working with the export order book for June.
In April we were forced to reduce production in the long products segment Russian Federation due to the ban on construction works in key regions and the shortage of scrap in the background of the quarantine restrictions in Russia. Despite this, the division's sales increased QoQ due to growth of export billets and the effect of pent-up demand at the end of the 2nd quarter.
well-Coordinated work of all departments of the company, implementing initiatives to optimize costs and new projects operating efficiency enabled us to maintain strong financial results this past quarter. Despite the fact that the revenue of NLMK Group decreased by 12% QoQ to $2.2 billion, EBITDA declined only 2% QoQ to $582 million, the profit Margin on EBITDA was 27%.
the Indicator "Net debt/EBITDA" was 0,79 x, total debt declined by 3% QoQ to $3.4 billion.
In accordance with the dividend policy, management recommended to the Board of Directors at the end of Q2 2020 to pay $400 million in the form of dividends".
NLMK_Financial_Release - Q2 2020_RUS.pdf