NLMK Group, a vertically integrated steelmaker, has published its Q1 2019 financial results.
Group revenue decreased by 5% QoQ, to $2.87 billion, amid lower average sales prices. Year-on-year, the revenue increased by 3% thanks to a higher sales volume (+11%), which was offset by lower average sales prices.
EBITDA totaled $695 million (-18% QoQ; -14% YoY): this reduction was driven by narrowing price to raw material spreads amid declining steel prices.
Free cash flow increased by 35% QoQ, to $678 million driven by working capital release.
Net debt/EBITDA remained low at 0.26х.
Comment from NLMK Group CFO Shamil Kurmashov: “In Q1 there was a multidirectional trend in steel consumption in our key markets: in Russia and the US demand grew, while in the EU there was a slowdown in activity among steel product consumers. NLMK revenue declined by 5% QoQ, to $2.9 billion due to steel price adjustment. Year-on-year, revenue increased by 3%, due to, among other things, strong slab sales to captive rolling assets early last year. In Q1, 56% of steel products were sold in the group’s home markets – in Russia, the EU, and the US. Sales of the finished steel inventories in the context of steel price correction and the seasonality factor led to an 18% QoQ reduction in EBITDA (-14% YoY). The company managed to increase its free cash flow substantially, reaching $678 million (+35% QoQ) on the back of leaner finished steel inventories in the supply chain and a seasonal reduction in scrap inventory. In addition, in Q1 the company maintained a low capex level, which created a solid foundation for quarterly dividend payout. The company’s debt remained low in the end of Q1: net debt/EBITDA ratio stood at 0.26х.” (NLMK/Ukrainian metal)