NLMK Group (LSE: NLMK, MOEX: NLMK), a vertically integrated steel company, today released its financial results for Q2 2019 1 .
Key results 2 sq. 2019:
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Revenue decreased by 10% yoy with a decrease in sales volumes (-3% yoy) due to major overhauls of NLMK's blast furnace and converter operations, and also lower selling prices.
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The Group's revenue decreased by 3% qoq to $ 2.8 billion. The decline in production was partially offset by higher selling prices and an improved sales mix.
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EBITDA increased by 6% qoq (-20% yoy) to $ 735 mn on the back of a growing share of high value-added products in the sales portfolio and widening price spreads to raw materials. EBITDA margin increased by 2 p.p. q /q up to 26%.
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Free cash flow amounted to $ 258 mn in Q2. 2019 Quarterly dynamics is associated with the high base effect of 1Q2019. 2019 amid sales of stocks accumulated in ports at the end of 2018.
Comment of Shamil Kurmashov, Vice President for Finance of NLMK Group:
“In Q2. In 2019, major overhauls of NLMK's blast furnace and converter facilities started. These projects are key to Strategy 2022 and, as they are implemented, will increase steel production by 1 million tonnes by 2021 to 14.2 million tonnes per year.
Despite the decline in sales of NLMK's steel products against the background capital repairs by 7% qoq, NLMK Group's revenue decreased by only 3% qoq thanks to a flexible business model and active management of the sales portfolio. An additional factor was the seasonally high growth in demand in the Russian market.
EBITDA increased by 6% qoq due to an improved product portfolio and an increase in average selling prices in the Russian market. The achievement of the financial result was facilitated by 100% provision of its own iron ore raw materials in conditions of high prices for this type of raw material. Additionally, the overall positive effect on EBITDA from the implementation of projects to improve operational efficiency amounted to $ 72 million, including in Q2. 2019 - $ 53 million
Free cash flow amounted to $ 258 million. The quarterly dynamics of this indicator is associated with the effect of a high base in Q1, as well as an increase in Q /Q investments as part of the implementation of Strategy 2022 and the asset maintenance program.
Net Debt /EBITDA remains conservatively low. "
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