NLMK Group (LSE: NLMK, MOEX: NLMK) in Q4 2020 increased revenue by 7% qoq to $ 2.4 billion, EBITDA amounted to $ 890 million. By the end of the year, EBITDA increased by 3% to $ 2.6 billion, while EBITDA margin increased to 29% (+5 p.p.). p.y /g).
Q4 Key Results 2020
- Revenue increased to $ 2.4 bn (+ 7% qoq; + 3% yoy) amid recovery in rolled metal prices.
- EBITDA increased to $ 890 mn (+ 54% qoq; + 85% yoy) due to widening price spreads between raw materials and slabs, recovery of production volumes of SGOK after the incident in September, compensation accrued under the amicable agreement with the Ministry of Trade And the effects of the implementation of Strategy 2022 projects. EBITDA margin amounted to 37% (+11 pp qoq; +16 pp yoy).
- Free cash flow decreased to $ 229 mn (-4% q /q). EBITDA growth was offset by cash outflows to replenish working capital amid global growth in metal and raw materials prices.
- Net income rose 79% qoq to $ 558 mn on the back of increased operating profit.
- Revenue decreased by 12% YoY to $ 9.2 billion due to lower prices for metal products in Q2-23 and an increase in the share of semi-finished products in sales by 5 pp. up to 40%.
- EBITDA grew by 3% YoY to $ 2.6 billion on the back of the effects of the implementation of the investment program and operational efficiency programs of Strategy 2022, the weakening of the ruble, as well as the accrual of compensation under the amicable agreement with US Department of Commerce. EBITDA margin reached 29% (+5 p.p. YoY).
- Free cash flow decreased by 28% YoY to $ 1.1bn due to high base last year, when significant the release of cash from working capital with a decrease in accounts receivable and a decrease in inventories (for more details see press release for Q4 2019, page 8).
- Net income decreased by 8% YoY to $ 1.2 billion amid growing losses from joint ventures, including due to the recognition of the impairment of the investment in NBH in the amount of $ 120 million in Q2. 2020 Without the impact of this non-cash transaction, the net profit would have amounted to $ 1.4 billion (+ 1% YoY).
Comment of Shamil Kurmashov, Vice President for Finance of NLMK Group :
“In the 4th quarter. In 2020, a recovery in business activity, including in the form of deferred demand and restocking in the global chain with a limited supply of metal products, led to a sharp increase in prices for metal products in the company's key markets. High prices for iron ore also supported this trend.
Against this background, NLMK Group in Q4. 2020 increased revenue by 7% qoq to $ 2.4 billion, EBITDA - by 54% qoq to $ 890 million. EBITDA margin increased to 37%.
In 2020, despite due to the restrictions due to the pandemic, we maintained capacity utilization and were able to achieve an EBITDA growth of 3% yoy to $ 2.6 billion. Thanks to the company's flexible business model, sales of steel products increased by 3% YoY to 17.5 mln tons Free cash flow for 12 months. 2020 amounted to $ 1.1 billion.
The structural effect from the implementation of the Strategy projects for 12 months. 2020 reached $ 261 million by 2019 base. The operating efficiency programs contributed $ 176 million, and investment projects - $ 85 million. At the Lipetsk site, the modernization of blast furnace and steelmaking facilities was completed, which will increase steel production capacity by 1 million tons per year from 2021. At Altai-Koks, the construction of a coal charge compaction unit has been completed, which will reduce NLMK's dependence on expensive and scarce coal grades. The effect of a full year from these projects will be reflected in the company's financial results in 2021.
Net debt /EBITDA was 0.94x, total debt - $ 3.5 billion.
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