NLMK: 12M 2012 and Q4 2012 US GAAP Financials
-
Upload
sergey-takhiev -
Category
Documents
-
view
181 -
download
3
Transcript of NLMK: 12M 2012 and Q4 2012 US GAAP Financials
1
Q4 AND 12M 2012 US GAAP CONSOLIDATED RESULTS
NLMK
Moscow, 26 March 2013
This document is confidential and has been prepared by NLMK (the “Company”) solely for use at the investor presentation of the Company and may not be reproduced, retransmitted or further distributed to any other person or published, in whole or in part, for any other purpose. This document does not constitute or form part of any advertisement of securities, any offer or invitation to sell or issue or any solicitation of any offer to purchase or subscribe for, any shares in the Company or Global Depositary Shares (GDSs), nor shall it or any part of it nor the fact of its presentation or distribution form the basis of, or be relied on in connection with, any contract or investment decision. No reliance may be placed for any purpose whatsoever on the information contained in this document or on assumptions made as to its completeness. No representation or warranty, express or implied, is given by the Company, its subsidiaries or any of their respective advisers, officers, employees or agents, as to the accuracy of the information or opinions or for any loss howsoever arising, directly or indirectly, from any use of this presentation or its contents. This document is for distribution only in the United Kingdom and the presentation is being made only in the United Kingdom to persons having professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or high net worth entities, and other persons to whom it may otherwise lawfully be communicated, falling within Article 49(2) of the Order (all such persons together being referred to as “relevant persons”). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. The distribution of this document in other jurisdictions may be restricted by law and any person into whose possession this document comes should inform themselves about, and observe, any such restrictions. This document may include forward-looking statements. These forward-looking statements include matters that are not historical facts or statements regarding the Company’s intentions, beliefs or current expectations concerning, among other things, the Company’s results of operations, financial condition, liquidity, prospects, growth, strategies, and the industry in which the Company operates. By their nature, forwarding-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions you that forward-looking statements are not guarantees of future performance and that the Company’s actual results of operations, financial condition and liquidity and the development of the industry in which the Company operates may differ materially from those made in or suggested by the forward-looking statements contained in this document. In addition, even if the Company’s results of operations, financial condition and liquidity and the development of the industry in which the Company operates are consistent with the forward-looking statements contained in this document, those results or developments may not be indicative of results or developments in future periods. The Company does not undertake any obligation to review or confirm analysts’ expectations or estimates or to update any forward-looking statements to reflect events that occur or circumstances that arise after the date of this presentation. By attending this presentation you agree to be bound by the foregoing terms.
DISCLAIMER
2
INTERNATIONAL MARKETS 2012 OVERVIEW
• Demand markedly deteriorated in H2 2012
• Provoking massive destocking in steel products
• Prices dropped and capacity utilization decreased
Q4 2012 OVERVIEW
• Repetition of H2 2012 key trends
• Steel prices stabilized by the year-end
• In Q1 2013 demand somewhat improved driven by stocks
replenishment and growth in iron ore prices
3
40%
50%
60%
70%
80%
90%
100%
Jan-1
1
Mar-1
1
May-1
1
Jul-1
1
Sep
-11
No
v-11
Jan-1
2
Mar-1
2
May-1
2
Jul-1
2
Sep
-12
No
v-12
Jan-1
3
Global average China North America EU (27)
STEELMAKING CAPACITIES UTILISATION
Sources: World Steel Association
- 2.6 p.p. – reduction in global capacities run rate for Q4/Q3
$400
$500
$600
$700
$800
$900
Jan-1
2
Feb
-12
Mar-1
2
Ap
r-12
May-1
2
Jun
-12
Jul-1
2
Au
g-12
Sep
-12
Oct-1
2
No
v-12
Dec-1
2
Russia USA EU China
PRICES FOR HRC BY REGION
$/ metric tonne Quarterly dynamics adjusted for
Production / sales cycle
Sources: Steel Business Briefing
0,6
0,7
0,8
0,9
1
1,1
1,2
1,3
Jan-1
1
Mar-1
1
May-1
1
Jul-1
1
Sep
-11
No
v-11
Jan-1
2
Mar-1
2
May-1
2
Jul-1
2
Sep
-12
No
v-12
Germany
China
USA
Index, January 2011=1
STEEL INVENTORIES
Sources: CRU, Bloomberg (China statistic, Metals Service Center Inst.)
Quarterly inventory change Germany: -6.2%
China : -14.6% USA: - 5.6%
RUSSIAN MARKET 2012 OVERVIEW
• Steel consumption went up by 5%
• Construction market is the largest steel consuming sector – its
share in steel demand expanded by 4 p.p.
• NLMK became the largest steel producer in Russia. with 20%
share in the country steel output
• NLMK is one of the niche products suppliers
Q4 2012 OVERVIEW
• Steel demand was seasonally weaker by 8% q/q
• Steel prices weakened by 2-7%
• … and stabilizing in Q1 2013
4
100
200
300
400
500
600
700
800
900
1,0
2,0
3,0
4,0
5,0
6,0
Jan-1
1
Feb
-11
Mar-1
1
Ap
r-11
May-1
1
Jun
-11
Jul-1
1
Au
g-11
Sep
-11
Oct-1
1
No
v-11
Dec-1
1
Jan-1
2
Feb
-12
Mar-1
2
Ap
r-12
May-1
2
Jun
-12
Jul-1
2
Au
g-12
Sep
-12
Oct-1
2
No
v-12
Dec-1
2
Steel output ASU HRC prices rhs Re-bar prices rhs
CRUDE STEEL OUTPUT, CONSUMPTION AND PRICES
m t/month $/t
Sources: Metal-Expert (prices, consumption), WSA (steel production)
Steel consumption + 5%, y/y
-8% q/q
20%
12%
39%
24%
42%
100%
~70%
21% ~20%
Steelp
rod
uctio
n
HR
C
CR
C
Galvan
ised
Pre-p
ainte
d
Transfo
rmer
Dyn
amo
Reb
ars
Metallw
are
Production data for 12M 2012 Sources: Chermet, Metall-Expert, Company’s data
NLMK MARKET POSITION IN RUSSIA
seasonal decline in demand
60% 61% 65%
7% 7%
7% 13%
14% 13% 20%
18% 15%
2010 2011 2012
Pipe producers
Machinery
Steel processing and coating
Construction andinfrastructure
RUSSIA’S STEEL DEMAND STRUCTURE
+4 p.p. constr. market
~+5 % growth in steel demand
38 m t 40 m t
34 m t
Global average
PRODUCTION >95% - CAPACITY UTILISATION RATE
+25% - CRUDE STEEL PRODUCTION IN 2012 TO 14.9 MT
• Novolipetsk: 12.2 million t, +25% y/y
• NLMK Long Products: 1.8 million t, +23% y/y
• Foreign Rolled Products: 0.9 million t, +27% y/y
Q4 2012: 3.67 MT, -3% Q/Q
Q1 2013: 3,7 MT, FLAT Q/Q
5
CRUDE STEEL PRODUCTION BY SEGMENT
m t
91%
86%
100%
90%
81%
97%
0% 20% 40% 60% 80% 100% 120%
NLMK USA
Long products
Novolipetsk
Q4 2012 Q3 2012
STEELMAKING CAPACITY UTILIZATION
0
2
4
6
8
10
12
14
16
2011 2012
12
14,9
~+25 %
STEELMAKING CAPACITY UTILISATION: NOVOLIPETSK AND GLOBAL AVERAGE
0%
20%
40%
60%
80%
100%
120%
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Q111
Q211
Q311
Q411
Q112
Q212
Q312
Q412
Lipetsk planе capacity utilization
0
1
1
2
2
3
3
4
4
5
Q12012
Q22012
Q32012
Q42012
Q1 2013Е
Steel Long products Foreign rolled products
3,6 3,8 3,8 3.7 ~3.7
SALES GEOGRAPHY 12M 2012: +18% GROWTH IN SALES TO 15.2 MT
• Driven by the launch of new steel capacity
• Intercompany slab sales were up +47% to 2.6 million t
• Growth in sales to growing Russian market
• Increase in sales to S.E. Asia
• In Q4 seasonal decline in domestic demand offset by growth in
exports
+14% Y/Y SALES GROWTH IN RUSSIA TO 4.9 MT
• Over 80% - share of sales to construction sector
• About 11% - share of sales to automotive (+100% growth)
6
1,10 1,20 1,26 1,32
0,83 0,75 0,64 0,60
0,38 0,33 0,27 0,30
0,63 0,61 0,49 0,45
0,63 0,55 0,73 0,51
0,30 0,37 0,43 0,50
0
1
2
3
4
5
Q1 2012 Q2 2012 Q3 2012 Q4 2012
Other regions Asia
North America Middle East incl. Turkey
EU Russia
SALES BY REGION
3,872 3,818 3,816
million t
3,678
REVENUE BY REGION
4,27 4,88
2,87 2,82
1,61 1,28 1,73 2,18 1,33
2,41 1,04
1,61
0
2
4
6
8
10
12
14
16
2011 2012
12,840
15,184
1,02 1,20 1,09 1,09
0,70 0,74
0,52 0,58
0,27 0,19
0,20 0,24
0,46 0,49
0,40 0,30
0,36 0,33
0,45 0,23
0,29 0,30
0,34 0,38
0
1
2
3
4
Q1 2012 Q2 2012 Q3 2012 Q4 2012
Other regions Asia
North America Middle East incl. Turkey
EU Russia
3,094 3,257 3,002
$ million
2,803
4,46 4,40
2,77 2,54
1,24 0,90
1,19 1,65
1,00 1,36 1,07 1,31
0
2
4
6
8
10
12
14
2011 2012
11,728 12,157
1,03 0,97 0,91 0,84
1,40 1,45 1,35 1,22
0,33 0,39 0,37
0,33
1,11 1,00 1,18 1,28
0
1
2
3
4
Q1 2012 Q2 2012 Q3 2012 Q4 2012
Semi-finished Long products HVA Flat
2,87 3,76
4,51 5,43
1,29
1,42 4,18
4,58
0
2
4
6
8
10
12
14
16
2011 2012
SALES STRUCTURE 2012: +22% GROWTH IN FINISHED PRODUCTS SALES
• +20% - growth in high value added (HVA) to 5.4 million t
• - 3 p.p. – decline in share of semi-finished to 30%
Q4 2012: DEMAND FOR SLABS GREW IN GLOBAL MARKET
• 33% - share in value added products, or -2 p.p.
• Sales of slabs went up supported by better demand in
international markets
• Sequential decline in plates sales due to upgrade of rolling
operations at NLMK DanSteel
7
STEEL PRODUCTS SALES million t
SALES AND REVENUE BY PRODUCT IN Q4
HVA products
*Note: Revenue from other operations include revenues from sales of iron ore, coke, scrap and others
-22%
-17%
-14%
-10%
-9%
-8%
-7%
-3%
12%
26%
-30% -20% -10% 0% 10% 20% 30%
Plates*
Transformer
Metalware
CRC
Long products
HRC
Pre-painted
Galvanised
Dynamo
Slabs
CHANGE IN SALES STRUCTURE Q4/Q3
*Lower thick plates sales partially relates to the launch of new mill at NLMK DanSteel
3,872 3,818 3,816 3,678
12,840
15,184
3% 6% 4% 6% 7% 8%
13% 12%
4% 5% 9% 8%
2% 2%
23% 21%
34% 24%
1%
1% 9%
Sales Revenue
0%
20%
40%
60%
80%
100% Revenue from otheroperations*Pig iron
Slabs
HRC
Metalware
Long products
Plate
CRC
Galvanised
Pre-painted
Electrical steel
INVESTMENTS IN 2012 STEEL PRODUCTION GROWTH
• BF#7 capacity of 3.4 m tpa fully ramped up and running
• Steel quality improvement, +30 new steel grades
QUALITY IMPROVEMENTS FOR THE NICHE PRODUCTS
• NLMK DanSteel rolling mill revamping
• Niche products development at NLMK Clabecq
• Transformer steel development program at Lipetsk site and
VIZ-Steel
LONG PRODUCTS DIVISION DEVELOPMENT
• NLMK Kaluga mini-mill (EAF+ rolling mill) of 1.5 m tpa
operational in 2013
• Development of scrap collection facilities
VERTICAL INTEGRATION
• Iron ore capacity growth with continued expansion of
Stoilensky
• Coke-chemical projects (PCI, tar pitch, etc.) to reduce
energy costs
8
24% 19% 13% 18% 23%
76% 81%
87%
82%
77%
0
500
1000
1500
2000
2500
0%
20%
40%
60%
80%
100%
2008 2009 2010 2011 2012
Maintenance capex Development Total investments
5-YEAR CAPEX
$ m
CAPEX BY SEGMENTS, 2012
51%
21%
16%
12% Steel segment
Long productssegment
Mining segment
Foreign rolledproducts segment
INVESTMENTS: NLMK KALUGA MODERN EAF BASED FACILITY WITH TOTAL CAPACITY OF
1.5 MILLION T
• 2012 re-bar consumption exceeded all-time record of 2008
• Construction sector offers strong demand for NLMK-Kaluga
products: re-bar and sections
• Favorable location: 90 km from Moscow city
• Total investments c. $1.2 billion (about 80% has already
been invested)
NLMK-KALUGA TO TAP LONG PRODUCTS DEFICIT IN THE
CENTRAL REGION
9
BALANCE OF PRODUCTION AND CONSUMPTION AT REGIONS
Sources: Metal Expert. Data for 2012
380
800 1000
0
200
400
600
800
1000
1200
2013Е 2014Е 2015Е
NLMK-KALUGA: PRODUCTOIN PLAN
46%
21%
8% 9% 8% 6%
1% 0%
17% 12%
31%
18%
11% 7%
2% 1%
0%
10%
20%
30%
40%
50%
Ura
ls
Sib
eria
Cen
tral
Pri
volz
hs
ky No
rth
-W
est
Sou
th
Far
East
No
rth
Cau
casi
an
Share in long products production
Share in long products consumption
long products deficit – app. 3,8 million t/y
70%
80%
90%
100%
110%
120%
130%
140%
150%
0,0
0,5
1,0
1,5
2,0
2,5
Q1
08
Q2
08
Q3
08
Q4
08
Q1
09
Q2
09
Q3
09
Q4
09
Q1
10
Q2
10
Q3
10
Q4
10
Q1
11
Q2
11
Q3
11
Q4
11
Q1
12
Q2
12
Q3
12
Q4
12
Consumption incl. imports Russian self-sufficiency (r.h.)
RUSSIAN RE-BAR CONSUMPTION
Sources: Metal Expert
million t/quarter
record level of 2008
112
156 127
106
$0
$30
$60
$90
$120
$150
$180
Q1 2012 Q2 2012 Q3 2012 Q4 2012
KEY HIGHLIGHTS 12М 2012 FINANCIAL RESULTS
• Revenue $12,157 m (+4% y/y),
• EBITDA $1,900 m (-16%),
• EBITDA margin 16% (-3,6 p.p.),
• Operating cash flow : $1,825 m (+1%),
• Capex: $1,453 m (-29%),
12М 2012 OPERATING RESULTS
• Steel output: 14,923 m t (+25%),
• Steel sales: 15,184 m t (+18%),
• Revenue/t: $801 (-12%),
Q4 ‘12 FINANCIAL RESULTS
• Sales revenue $2,803 m (-7% q-o-q),
• EBITDA $390 m (-19%),
• EBITDA margin 14% (-2,2 p.p.),
• Operating cash flow: $333 m (-51%),
• Capex: $296 m (-15%),
• Net debt/EBITDA: 1.88
Q4 ‘12 OPERATING RESULTS
• Steel output: 3.674 m t (-3%),
• Steel sales: 3.678 m t (-4%),
• Revenue/t: $762 (-3%),
10
3,09 3,26
3,00 2,80
14%
18%
16%
14%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
$2,0
$2,2
$2,4
$2,6
$2,8
$3,0
$3,2
$3,4
Q1 2012 Q2 2012 Q3 2012 Q4 2012
Revenue EBITDA margin (r.h.)
REVENUE AND EBITDA MARGIN
$ billion
$/t
EBITDA PER TONNE
200
250
300
350
400
450
500
550
600
650
3 123 236 342 454 546 632
Cumulative capacities, million t/a
main production plant, Novolipetsk
PRODUCTION COSTS AND PROFIT PRODUCTION COSTS DOWN BY 5%
• Impacted by further reduction in raw materials prices
• Strict control over operating expenses and overheads
SLAB CASH COST AT NOVOLIPETSK WENT DOWN BY 6% TO
$361/T.
• Sustainable competitive cost advantage
Q4 2012 EBITDA IMPACTED BY:
• The major EBITDA decrease applied to the steel segment (-$90
million) and long products segment (-$29 million) due to lower
steel prices and sales
2 210 2 205 2 095
1 984
177 171 221 199
$0
$500
$1 000
$1 500
$2 000
$2 500
Q1 2012 Q2 2012 Q3 2012 Q4 2012
Production expenses Depreciation
COST OF GOODS SOLD
$ million
STEEL CASH COST GLOBALLY
Sources: World Steel Dynamics. Average data for 2012г.
$/t
EBITDA CHANGE BY SEGMENT
483
-90
-10 -29
+16 +20
390
0
100
200
300
400
500
600
Q3
201
2
Stee
l seg
men
t
Fore
ign
ro
lled
pro
du
cts
segm
ent
Lon
g p
rod
uct
sse
gmen
t
Min
ing
segm
ent
Oth
er o
per
atio
ns
incl
inte
rseg
men
tal
Q4
201
2
$ million
11
CASH FLOW 12M 2012
• Positive impact of working capital release on cash flow from
operations (+ $ 311 million)
• 2012 Capex fell 29% down to $1,453 million as key capital
intensive projected completed
Q4 2012
• Q4 Capex dropped by 15% q/q to $ 296 million
• Balancing the operating and investment cash flow
• Short-term liabilities repayment in Q4 ($1247 million)
• Net financial outflow ($748 million)
12
CHANGE IN CASH
FX rate change
Dividends
FREE CASH FLOW TO THE FIRM
Other financial operations
Net loans
Purchase of property plant and equipment
OPERATING CASH FLOW
Income tax
Other non cash operations
Working capital change
EBITDA
$ million
12M 2012 CASH BRIDGE
1 900
311
-82
-305
1 825
-1 453
+21
-13
379
-117
-109
154
OPERATING CASH FLOW AND CAPEX
502
304
684
333 358
453
347 296
0
200
400
600
800
Q1 2012 Q2 2012 Q3 2012 Q4 2012
Operating cash flow Capex
$ million
DEBT DEBT POSITION
• Net debt $3.57 billion (+3%)
• Cash and equivalents 1 $1.058 billion (-42%)
• Net debt / 12M EBITDA 1.88
• Gross debt $4.63 billion (-12%)
DEBT MANAGEMENT
• Settlement of current liabilities In Q4
• Average debt maturity extended to 3.1 years
RATING
• Investment grade rating (S&P, Moody’s, Fitch)
13
1. Cash and equivalents and ST deposits 2. As of the end of the quarter 3. Management accounts data
3,0
2,5
2,7 3,1
2,0
2,2
2,4
2,6
2,8
3,0
3,2
Q12012
Q22012
Q32012
Q42013
AVERAGE MATURITY AND NET DEBT/EBITDA2
Weighted average maturity period
Years 1,69
1,90
1,84 1,88
1,5
1,6
1,7
1,8
1,9
2,0
Q12012
Q22012
Q32012
Q42013
Net debt/EBITDA
2,9 2,8
2,4
+0,5 -1,2 +0,1
1,8
$0
$1
$2
$3
$4
$5
$6
$7
30 Sep 12 Debt raising Debtsettlements
FX rates andother factors
31 Dec 12
ST Debt LT Debt
$ billion
47% 43%
18% 19%
35% 38%
0%
20%
40%
60%
80%
100%
Q3 2012 Q4 2012
RUR USA Euro
CURRENCY OF THE DEBT AND REVENUE
Debt currency2 Revenue currency 3
39%
42%
19%
0%
20%
40%
60%
80%
100%
Q4 2012
CHANGE IN DEBT POSITION
MATURITY DEBT MATURITY
• Substantial liquidity cushion and portfolio of instruments
for debt restructuring
• Short-term debt $1.82 billion
o Settlement of RUR notes in Q1 2013,
o PXF
• Long term debt $2.82 billion
o Eurobonds
o RUR notes,
o Long term part of ECA and liabilities of European assets
14
LIQUID ASSETS AND ST DEBT MATURITY 1
$0
$500
$1 000
$1 500
$2 000
2013E 2014E 2015E 2016E and onward
PXF Ruble bonds ECA EBRD NLMK Europe Others Eurobonds (USD)
TOTAL DEBT MATURITY 2
$ million
INTEREST EXPENSE 3
67 62 65 68
0%
5%
10%
15%
20%
0
10
20
30
40
50
60
70
Q1 2012 Q2 2012 Q3 2012 Q4 2012
Interest expense Interest expense to EBITDA (right hand)
$ m
1. The ST maturity payments include interests accrued and bond coupon payments 2. The maturity payments do not include interests 3. Quarterly figures are derived by computational method based on reporting data for the 9M, 12M 2011 and for the 3M, 6M, 9M 2012 and 12M 2012.
1 058 1 816
2 493
625
478 210
504
$0
$500
$1 000
$1 500
$2 000
$2 500
$3 000
$3 500
$4 000
Liquid assets Q1 13E Q2 13E Q3 13E Q4 13E
$ million Committed credit
lines
Cash and equivalents
OUTLOOK MARKET OVERVIEW
• Steel prices somewhat improved in Q1 2013 amid restocking by traders and consumers, and raw materials
prices growth
PRODUCTION
• In Q1 2013: 3.7 million t of steel (flat, q/q)
• 12M 2013: 15.5 million t of steel (+4% y/y)
FINANCIAL RESULTS
• Q1 ‘13 Revenue may decline by roughly 5% q/q
• Q1 ‘13 EBITDA is expected to be sequentially lower
• 2013 Capex to further decline by 20-25% y/y
• Debt level is expected to be at relatively stable level as compared to the last year
15
SEGMENTS
16
SEGMENTS CONTRIBUTION – Q4 2012 STEEL SEGMENT
• Revenue and profit decreased as prices went down
FOREIGN ROLLED PRODUCTS SEGMENT
• Negative result on the back of decreased sales and lower
prices
LONG PRODUCTS SEGMENT
• Lower revenue and profit due to seasonal decline on the
Russian construction market
MINING SEGMENT
• Profitability remained stable
17
1 559
764
337
81
646
2 095
1 560
706
291
107
681
1 984
- 1 000 2 000 3 000
Steel segment
Foreign rolled products segment
Long products segment
Mining segment
Intersegmental operations
Consolidated production costs
Q4 2012 Q3 2012
PRODUCTION COSTS BY SEGMENTS
$ млн
SEGMENTS CONTRIBUTION TO Q4’12 EBITDA
197 --72
31
207
27
390
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
Stee
l seg
me
nt
Fore
ign
ro
lled
pro
du
cts
segm
ent
Lon
g p
rod
uct
sse
gmen
t
Min
ing
segm
ent
Oth
ers
Q4
20
12
$ m
1 795 1 816 1 836 1 703
989 1 026 759 692
275 329
314 281
$0
$500
$1 000
$1 500
$2 000
$2 500
$3 000
$3 500
Q1 2012 Q2 2012 Q3 2012 Q4 2012
Steel segment Foreign rolled products segment
Long products segment Mining segment
Others
SALES REVENUE FROM THIRD PARTIES
$ million
STEEL SEGMENT - Q4 2012 (1) STABLE SALES VOLUMES
• Growth of slabs shipments to domestic market (large
diameter pipes producers) and external markets, pig iron
sales decreased
PROFITABILITY SLIGHTLY DECLINED (10%)
• Lower prices and spreads
• Seasonal factor
18
1,79 1,82 1,84 1,70
0,42 0,46 0,30 0,35
8%
14% 13%
10%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
-0,2
0,3
0,8
1,3
1,8
2,3
Q1 2012 Q2 2012 Q3 2012 Q4 2012
Revenue from third parties (l.h.) Intercompany sales (l.h.)
EBITDA margin (r.h.)
$ bn
REVENUE AND EBITDA MARGIN
1,62 1,47 1,64 1,54
0,74 0,75
0,82 0,93
0,0
0,5
1,0
1,5
2,0
2,5
Q1 2012 Q2 2012 Q3 2012 Q4 2012
Sales to Russian market Export sales
3% 5% 2% 4% 5% 8% 5%
7% 14%
14%
20% 17%
49% 39%
2% 1%
6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Sales Revenue
Revenue from otheroperations*Pig iron
Slabs
HRC
CRC
Galvanized
Pre-painted
Dynamo steel
Transformer
Value added grades
Q4 SALES AND REVENUE STRUCTURE
2 465 thousand t $1 703 million
SALES TO DOMESTIC MARKET AND EXPORT
m t
*Note: Revenue from other operations incl. revenue from raw materials and coke, that sell Altai-Koks and Traders as part of Steel segment
Ordinary grades
26
27
28
29
30
31
32
33
34
35
Jan-1
2
Mar-1
2
May-1
2
Jul-1
2
Sep
-12
No
v-12
STEEL SEGMENT - Q4 2012 (2) SLAB CASH COST REDUCTION
• Raw materials prices went down
• Optimization measures at Lipetsk site
FX RATE
• Average RUR/USD rate decreased by 3% q/q (about 90% of
the Segment’s expenses nominated in RUR)
19
COST STRUCTURE OF SEGMENT’S SALES
383 361
205 204
0
50
100
150
200
250
300
350
400
450
Q3 2012 Q4 2012
Slab Coke
$383/т
CONSOLIDATED SLAB CASH COST
CASH COST AND FX RATE DYNAMICS
$/t RUR/$
29%
16%
10%
8%
6%
5%
10%
16%
$361/т
$/т
Average RUR/USD rate decreased by 3% q/q
22%
21%
6% 3% 5% 4%
4% 1%
8%
18%
7%
Iron ore
Coke/coal
Scrap
Ferroalloys
Other raw materials
Electricity
Natural gas
Other energy costs
Labor costs
Other costs and balance changes
Depreciation
56 59
31 35 18 19 19 20 30 29 41 37
78 59
110 104
-
50
100
150
200
250
300
350
400
450
Q3 2012 Q4 2012
Coking coal and coke
Iron ore
Scrap
Other raw materials
Electricity
Natural gas
Labor costs
Other costs
LONG PRODUCTS SEGMENT– Q4 2012 SEASONAL DECLINE IN SALES AND REVENUE
• Segment’ revenue decline by 11% occurred against a
seasonal decrease in sales volume and prices
SEGMENT’S PROFITABILITY 8%
• Decline of segment’s profitability by 6 p.p., which is
caused by seasonal decrease in long products demand
and prices
STABLE OPERATING EXPENSES
• Production costs per ton of steel increased slightly to
$458/t as capacity utilization edged down
20
17% 19%
83% 79%
2%
0%
20%
40%
60%
80%
100%
Sales Revenue
Revenue from otheroperations*
Long products
Metalware
SALES AND REVENUE STRUCTURE IN Q4 2012
401 000’ t 281 $ million
275
329 314
281
73
162
122 88
8% 10% 14%
8%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
0
70
140
210
280
350
Q1 2012 Q2 2012 Q3 2012 Q4 2012
Revenue from third parties (l.h.) EBITDA margin (r.h.)
Intercompany sales (l.h.)
REVENUE AND EBITDA
$ million
345 341
33 33 20 19
47 58
-
50
100
150
200
250
300
350
400
450
500
Q3 2012 Q4 2012
Other costs
Labor
Natural gas
Ferroalloys
Electricity
Scrap
$451/т
78%
7%
4%
0%
1%
10%
$458/т $/t
BILLET CASH COST AT NSMMZ**
** NSMMZ – the main asset of Long products segment
Ordinary grades
Value added grades
* Other sales (scrap)
MINING SEGMENT– Q4 2012 SEGMENT’S REVENUE GROWTH
• Growth of shipments to the Lipetsk Site
• Increase of concentrate supply to the third parties, incl.
export
STABLE HIGH PROFITABILITY
• Concentrate production cost $21/т.
• EBITDA margin is still at competitive level (60%) despite lower
prices for iron ore
21
2,57 3,00
0,74
1,22
0,0
1,0
2,0
3,0
4,0
5,0
Q3 2012 Q4 2012
Sales to third parties Sales to NLMK
IRON ORE CONCENTRATE SALES AND PRODUCTION COST
M t
21 21
0
5
10
15
20
25
Q3 2012 Q4 2012
Iron ore concentrate cost
$/t
COST STRUCTURE OF SALES
6%
21%
1% 4%
15%
37%
15% Raw materials
Electric energy
Natural gas
Other energy resourses
Labour costs
Other expenses
Amortisation
36
86 93 127
281 274
222 220
69%
69%
60% 60%
50%
60%
70%
80%
90%
100%
0
100
200
300
400
Q1 2012 Q2 2012 Q3 2012 Q4 2012
Revenue from sales to third parties (lh)Revenue from intersegmental operations (lh)EBITDA margin (rh)
$/t
SEGMENT REVENUE AND EBITDA
3 33 88 90 75
57 17 13 21 16
120 88 180
102
163 140
209
145
18 17
14
11
405 351
499
365
0
200
400
600
Sales Revenue Sales Revenue
Semi-finished
Thick plates
HRC
CRC
Coated
Other
228 200 238 176
104 82
108 134
73
59
69 56 15
16
407 357
414 383
0
200
400
600
Sales Revenue Sales Revenue
Other
Coated
CRC
HRC
FOREIGN ROLLED PRODUCTS SEGMENT– Q4 2012 SALES VOLUMES DECREASE -11%
• Lower steel prices
• Weak demand in Europe
• Reconstruction of rolling mill on NLMK Dansteel
NEGATIVE FINANCIAL RESULT
• Negative EBITDA $72 million
22
989 1 026
759 692
-10 -5 -62 -72
-200
0
200
400
600
800
1 000
1 200
Q1 2012 Q2 2012 Q3 2012 Q4 2012
EBITDA Revenue from sales to third parties
$ million
Q4 2012 Q3 2012
$ mln
Q4 2012 Q3 2012
SALES VOLUMES AND REVENUES NLMK USA
SALES VOLUMES AND REVENUES NLMK EUROPE
000’t
000’t
$ million
$ million
000’t $ million
000’t $ million
SEGMENT REVENUE AND EBITDA
23
APPENDIX
24
SEGMENTAL INFORMATION
Q4 2012
(million USD)
Revenue from external customers 1 703 692 281 127 0 2 803 2 803
Intersegment revenue 346 88 220 655 (655)
Gross profit 376 (60) 56 220 0 594 26 620
Operating income/(loss) 84 (118) 10 188 (1) 163 28 191
as % of net sales 4% (17%) 3% 54% 7%
Income / (loss) from continuing operations
before minority interest108 (197) 20 136 0 67 (71) (5)
as % of net sales 5% (28%) 5% 39% (0%)
Segment assets including goodwill1 14 603 3 937 2 822 2 270 55 23 688 (5 163) 18 525
Q3 2012
(million USD)
Revenue from external customers 1 836 759 314 93 0 3 002 3 002
Intersegment revenue 295 1 122 222 641 (641)
Gross profit 438 (53) 78 216 0 680 6 686
Operating income/(loss) 152 (110) 40 173 (0) 254 7 262
as % of net sales 7% (15%) 9% 55% 9%
Income / (loss) from continuing operations
before minority interest248 (109) (7) 117 1 250 (84) 166
as % of net sales 12% (14%) (2%) 37% 6%
Segment assets including goodwill2 14 970 3 897 2 764 2 224 54 23 909 (4 960) 18 949
Totals
Intersegmental
operations and
balances
Consolidated
Steel
Foreign
rolled
products
Long
productsMining All other Totals
Intersegmental
operations and
balances
Consolidated
Steel
Foreign
rolled
products
Long
productsMining All other
1 as at 31.12.2012
2 as at 30.09.2012
25 12M 2012, 12M 2011 are official reporting periods. Q3 2012, Q4 2012 figures are derived by computational method.
QUARTERLY DATA: CONSOLIDATED STATEMENT OF INCOME
Q4 2012 Q3 2012 12M 2012 12M 2011
(mln USD) + / - % + / - %
Sales revenue 2 803 3 002 (199) (7%) 12 157 11 729 428 4%
Production cost (1 984) (2 095) 111 (5%) (8 494) (7 780) (714) 9%
Depreciation and amortization (199) (221) 23 (10%) (768) (589) (179) 30%
Gross profit 620 686 (66) (10%) 2 894 3 360 (465) (14%)
General and administrative expenses (113) (99) (15) 15% (448) (556) 108 (19%)
Selling expenses (273) (279) 6 (2%) (1 144) (973) (171) 18%
Taxes other than income tax (43) (46) 4 (8%) (170) (165) (5) 3%
Operating income 191 262 (71) (27%) 1 133 1 666 (533) (32%)
Gain / (loss) on disposals of property, plant and equipment (0) (0) (0) (38) (29) (9) 30%
Gains / (losses) on investments (3) 1 (3) (3) 12 (15) 0%
Interest income 10 6 4 65% 29 30 (1) (3%)
Interest expense (31) (24) (7) 29% (68) (68)
Foreign currency exchange loss, net 14 (13) 27 (206%) 3 19 (15) (82%)
Other expense, net (105) (3) (103) 4066% (140) (14) (126) 879%
Income from continuing operations before income tax 76 229 (153) (67%) 915 1 682 (767) (46%)
Income tax (81) (63) (19) 30% (305) (421) 116 (28%)
Equity in net earnings/(losses) of associate (0) (0) (0) 256% 0 54 (54) (99%)
Net income (5) 166 (172) (103%) 610 1 315 (705) (54%)
Less: Net loss / (income) attributable to the non-controlling interest (16) 0 (17) (15) 42 (57) 0%0%
Net (loss) / income attributable to OJSC Novolipetsk Steel stockholders (22) 167 (188) (113%) 596 1 358 (762) (56%)
EBITDA 390 483 (93) (19%) 1 900 2 254 (354) (16%)
Q4 2012/Q3 2012 12M 2012/12M 2011
26
CONSOLIDATED CASH FLOW STATEMENT
12M 2012, 12M 2011 are official reporting periods. Q3 2012, Q4 2012 figures are derived by computational method.
Q4 2012 Q3 2012 12M 2012 12M 2011
(mln. USD) + / - % + / - %
Cash flow from operating activities
Net income (5) 166 (172) (103%) 610 1 315 (705) (54%)
Adjustments to reconcile net income to net cash provided by operating Depreciation and amortization 199 221 (23) (10%) 768 589 179 30%Loss on disposals of property, plant and equipment 0 0 0 362% 38 29 9 30%(Gain)/loss on investments 3 (1) 3 3 (12) 15Interest expense 68Equity in net earnings of associate 0 0 0 256% (0) (54) 54 (99%)Defferd income tax (benefit)/expense 23 3 20 21 46 (25) (54%)Loss / (income) on forward contracts (1) (7) 5 (80%) (9) 5 (13)
Other movements 6 28 (22) (79%) 14 25 (11) (43%)
Changes in operating assets and liabilitiesIncrease in accounts receivables 92 181 (89) (49%) 167 130 36 28%Increase in inventories 42 79 (37) (47%) 170 (369) 539Decrease/(increase) in other current assets 12 8 5 65% 32 13 18 134%Increase in accounts payable and oher l iabilities (120) 24 (144) (70) 98 (168) (172%)Increase/(decrease) in current income tax payable 15 (19) 33 12 (10) 23 (223%)
Net cash provided from operating activities 333 684 (351) (51%) 1 825 1 805 20 1%
Cash flow from investing activities Proceeds from sale of property, plant and equipment 5 14 (9) (65%) 29 27 2 6%Purchases and construction of property, plant and equipment (296) (347) 51 (15%) (1 453) (2 048) 594 (29%)Proceeds from sale of investments 22 11 12 112% 283 718 (434) (61%)Placement of bank deposits and purchases of other investments (111) (14) (97) 694% (145) (524) 379 (72%)Prepayment for acquisition of interests in new subsidiaries (157) (42) (115) 275%
Net cash used in investing activities (380) (337) (43) 13% (1 443) (1 869) 426 (23%)
Cash flow from financing activities
Proceeds from borrowings and notes payable 500 883 (383) (43%) 1 819 1 967 (148) (8%)
Repayments of borrowings and notes payable (1 247) (167) (1 080) 645% (1 799) (1 684) (115) 7%
Capital lease payments (6) (6) 1 (9%) (23) (33) 9 (29%)Proceeds from disposal of assets to the company under common control 313 (313)
Dividends to shareholders (1) (2) 1 (117) (516) 400
Net cash used in financing activities (754) 707 (1 462) (119) 48 (167)
Net increase / (decrease) in cash and cash equivalents (801) 1 055 (1 856) 263 (15) 278
Effect of exchange rate changes on cash and cash equivalents (51) (21) (30) 139% (109) 65 (173)
Cash and cash equivalents at the beginning of the period 1 803 769 1 034 134% 797 748 49 7%
Cash and cash equivalents at the end of the period 951 1 803 (852) (47%) 951 797 154 19%
Q4 2012/Q3 2012 12M 2012/12M 2011
27
as at
31.12.2012
as at
30.09.2012
as at
30.06.2012
as at
31.03.2012
as at
31.12.2011
as at
30.09.2011
as at
30.06.2011
as at
31.03.2011
as at
31.12.2010
(mln. USD)
ASSETS
Current assets 5 469 6 287 5 230 5 714 5 504 5 644 4 811 4 438 4 105Cash and cash equivalents 951 1 803 769 926 797 830 911 977 748Short-term investments 107 11 10 11 227 59 202 265 423Accounts receivable, net 1 491 1 559 1 642 1 786 1 573 1 694 1 669 1 295 1 260Inventories, net 2 827 2 819 2 733 2 904 2 828 2 939 1 923 1 784 1 580Deferred income tax assets 63 54 28 24 19 53 44 51 43Other current assets, net 30 42 47 63 59 69 62 65 52
Non-current assets 12 988 12 661 11 873 12 895 11 753 11 440 11 140 10 713 9 794Long-term investments, net 19 13 9 9 8 9 932 728 688Property, plant and equipment, net 11 753 11 458 10 716 11 664 10 570 10 275 9 436 9 223 8 382Intangible assets 142 146 148 159 159 173 177 181 181Goodwill 786 778 752 802 760 728 534 528 495Other non-current assets, net 38 25 17 244 19 10 22 25 26Deferred income tax assets 250 240 230 17 237 245 38 28 21#ССЫЛКА! #ССЫЛКА! #ССЫЛКА!
Total assets 18 458 18 949 17 103 18 609 17 257 17 084 15 951 15 150 13 899
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities 3 302 4 155 3 579 3 577 2 940 3 163 2 141 1 831 1 652Accounts payable and other l iabilities 1 462 1 713 1 582 1 783 1 623 2 098 1 535 1 252 1 107Short-term borrowings 1 816 2 434 1 971 1 781 1 306 1 031 544 553 526Current income tax liability 24 9 26 12 11 34 62 26 19
Non-current liabilities 4 065 3 875 3 329 3 880 4 212 3 849 2 539 2 718 2 693Long-term borrowings 2 816 2 850 2 373 2 693 3 074 2 791 2 070 2 074 2 099Deferred income tax liability 792 752 690 762 714 705 455 450 401Other long-term liabilities 457 273 266 425 425 353 14 194 194
Total liabilities 7 367 8 030 6 908 7 457 7 152 7 012 4 680 4 549 4 345
Stockholders’ equityCommon stock 221 221 221 221 221 221 221 221 221Statutory reserve 10 10 10 10 10 10 10 10 10Additional paid-in capital 306 306 306 306 306 306 306 99 99Other comprehensive income (997) (1 178) (1 738) (613) (1 489) (1 391) (108) (241) (917)Retained earnings 11 582 11 604 11 437 11 272 11 099 10 945 10 984 10 654 10 261
NLMK stockholders’ equity 11 123 10 964 10 237 11 196 10 147 10 092 11 414 10 742 9 675Non-controlling interest (33) (45) (42) (45) (42) (21) (144) (141) (121)Total stockholders’ equity 11 090 10 919 10 195 11 151 10 105 10 072 11 270 10 601 9 554
Total liabilities and stockholders’ equity 18 458 18 949 17 103 18 609 17 257 17 084 15 951 15 150 13 899
CONSOLIDATED BALANCE SHEET
www.nlmk.ru
NLMK Investor relations Russia, 115054, Moscow
Bakhrushina str, 18, bldg 1
t. +7 495 915 15 75
f. +7 495 915 79 04