NLMK Group announced its Q2 and H1 2016 financial results.
In Q2, steelmaking capacity utilization rates reached 100% (94% in Q1 2016). EBITDA increased by 59% QoQ to $460 million; EBITDA margin reached 25% (+7% QoQ). Net debt / EBITDA stood at 0.7.
Q2 2016 highlights: steel output increased by 6% QoQ, to 4.2 million tons (+4% YoY), with group’s steelmaking capacities running at 100% (+6% QoQ and YoY); sales totaled 4.0 million tons (-5% QoQ and -1% YoY) with the share of finished products growing to 65% of total sales (+3% QoQ and +1% YoY); revenue grew to $1,869 million (+19% QoQ and -13% YoY), driven by the increase in steel prices; EBITDA increased by 59% QoQ to $460 million (-4% YoY); EBITDA margin expanded to 25% (+7% QoQ and +3% YoY); net income increased to $185 million (+225% QoQ and +15% YoY); capex totaled $160 million (+33% QoQ and -13% YoY) due to the construction of the pelletizing plant at Stoilensky; free cash flow totaled $158 million (-43% QoQ and -7% YoY).
H1 2016 highlights: group sales increased by 2% YoY to 8.1 million tons; revenue totaled $3,44 million (-21% YoY) due to the drop in steel prices; EBITDA was $750 million (-33% YoY); EBITDA margin contracted to 22% (-4% YoY); operational efficiency gains: $37 million; net debt was $1.16 billion (+6% by the end of 2015); net debt/EBITDA was 0.7х.
Comment from NLMK Group CFO Grigory Fedorishin: “In Q2, prices for steel products recovered on a QoQ basis on the back of the increase in raw material prices and restocking at customers. Company revenue increased by 19% to $1.9 billion, despite the sales recognition lag in a growing market (for export operations it is up to 2 months after shipment). The bulk of products, up to 67%, were sold in the Group’s local markets: the US, the EU, and Russia. As prices recovered from record lows at the end of the year, EBITDA increased by 59% QoQ to $460 million. Group EBITDA margin gained 7% QoQ to 25%; EBITDA margin of the Group’s international companies increased to 14%, hitting a peak since 2008. Gains from the operational efficiency program totaled $37 million, or 8% of EBITDA. Capex remained at a conservative level, totaling $160 million in Q2, down by 13% YoY. On a QoQ basis, capex increased by 33% on the back of active efforts to complete the construction of the pelletizing plant at Stoilensky. The launch of the plant is schedules for the end of Q3. Free cash flow totaled $158 million on the back of a high operational cash flow and conservative capex level. Due to the payment of dividends in the amount of $324 million in June, net debt as of June 30, increased by 6% compared to the end of 2015 to $1.16 billion; net debt to EBITDA was 0.7х. NLMK’s debt level remains one of the lowest in the industry. We continued to work actively on optimizing our debt portfolio. In June, we redeemed Eurobonds with maturities in 2018 and 2019 for a total of $571 million. This was financed by a new issue of 7-year Eurobonds for a total of $700 million with a coupon rate of 4.5%. NLMK’s annual general meeting of shareholders held in June, approved of dividends for Q4 2015 in the amount of 2.43 RUB per share; and in the amount of 1.13 RUB per share for Q1 2016. Recommendations for Q2 2016 dividends will be reviewed by NLMK’s Board of Directors on August 8”. (NLMK/Ukrainian metal)
