NLMK Group has published its Q2 financial results.
Revenue decreased by 10% YoY, due to lower sales volumes (-3%) as a result of overhauls at NLMK Lipetsk blast furnace (BF) and basic oxygen furnace (BOF) operations, and lower sales prices.
Group revenue decreased by 3% QoQ, to $2.8 billion. The decrease in output was partially offset by higher sales prices and sales mix improvements.
EBITDA grew by 6% QoQ (-20% YoY), to $735 million, driven by the increase in the share of HVA products in total sales and by wider price spreads to raw materials. EBITDA margin increased by 2% QoQ, to 26%.
Free cash flow totaled $258 million in Q2. The QoQ trend was associated with the Q1 high base effect driven by the sale of stocks accumulated at the end of 2018.
Comment from NLMK Group CFO Shamil Kurmashov: “Q2 saw the launch of overhauls at NLMK Lipetsk’s blast furnace and basic oxygen furnace operations. These projects are key in our Strategy 2022, and will enable us to increase our steel output by 1 million tons by 2021, to 14.2 million tons per year. Despite the 7% QoQ decrease in steel shipments driven mainly by overhauls at NLMK Lipetsk, the company’s revenue was down only by 3% QoQ thanks to our flexible business model and proactive sales portfolio management. The seasonally strong demand growth in the Russian market served as an additional factor. EBITDA grew by 6% QoQ, driven by product mix improvements and growth of average sales prices in the Russian market. Solid financial performance was also supported by 100% self-sufficiency in iron ore amid high prices for this type of raw material. Additionally, overall EBITDA gains from operational efficiency projects stood at $72 million, including $53 million in Q2. Free cash flow totaled $258 million. The QoQ trend was associated with the Q1 high base effect, and the QoQ growth of investment as part of Strategy 2022 and maintenance program”. (NLMK/Ukrainian metal)