NLMK Group revenue in Q1 declined by 1%, to $2.79 billion, but grew by 30% YoY, due to a seasonal drop in sales (-5% QoQ), which was offset by the growth in prices.
EBITDA grew to $812 million (+3% QoQ), driven by the growth in steel prices and new operational efficiency programs.
Q1 free cash flow increased 3-fold QoQ, to $599 million, driven by the growth of profitability, partial release of working capital, and lower investment.
Net income grew by 17% QoQ (by 56% YoY), driven by higher operating profit.
Net debt/EBITDA decreased to 0.31х due to reduction of net debt and growth of profitability.
Comment from NLMK Group Acting CFO Sergey Karataev: “The growth of sales on the group’s home markets of Europe and US, and an improvement in the pricing environment in international markets enabled NLMK to maintain its revenue practically flat compared to the strong Q4 2017 (-1% QoQ), despite a seasonal 5% drop in sales QoQ. The widening of steel product/raw material price spreads, gains from completed capex projects, and operational efficiency gains were the key drivers behind the growth of EBITDA to a ten-year high of $812 million. EBITDA margin was 29% (+1% QoQ). It’s important to note that Q1 operational efficiency gains totaled $57 million, with the annual target set at $130 million. Investments in Q1 decreased vs. the high level at 2017 year-end and amounted to $131 million. Business profitability growth, conservative capex and the reduction in working capital supported a 3-fold QoQ increase in the company’s free cash flow to $599 million, resulting in a Net debt / EBITDA reduction to 0.31х. A significant liquidity cushion and a strong balance create favorable conditions for high dividend payments, while maintaining financial stability and conditions for further business development.” (NLMK/Ukrainian metal)