Russian steel maker NLMK’s revenue was reduced by 12% YoY to USD 9.2 billion, due to a reduction in steel product prices in Q2 & Q3 and an increase in the share of semi-finished products in total sales by 5 pp to 40%. EBITDA grew by 3% YoY to USD 2.6 billion, supported by investment programme and operational efficiency programme gains, a weaker ruble, and refund from the US Department of Commerce under the settlement agreement. EBITDA margin reached 29% +5 pp YoY. Net profit reduced by 8% YoY to USD 1.2 billion amid increased losses in the joint ventures’ performance, including due to the recognition of the NBH investment value impairment in the amount of USD 120 million in Q2 2020. NLMK Group CFO Mr Shamil Kurmashov said “In 2020, despite the constraints of the pandemic, we maintained our capacity utilization rates and were able to achieve a 3% YoY increase in EBITDA, reaching USD 2.6 billion. Our flexible business model enabled a 3% YoY increase in sales to 17.5 million tonnes.”
2020 output and sales breakdown
Steel output increased by 1% YoY to 15.8 million tonne
Sales grew by 3% YoY to 17.5 million tonne
Sales of semi finished products to third parties grew by 25% YoY to 4.9 million tonne due to higher pig iron and billet exports. Slab sales to NBH remained flat YoY, at 2.1 million tonne
Finished rolled steel sales declined by 5% YoY to 10.5 million tonne amid weak demand in April-May 2020 and sales redistribution to semi-finished products.
Mr Kurmashov added “Over 12M 2020, the structural gain from our Strategy projects reached USD 261 million vs the 2019 base. Operational efficiency programmes contributed USD 176 million, with USD 85 million coming from investment projects. We have completed upgrades at the Lipetsk site blast furnace and steelmaking operations, which will enable an increase in steel production capacity of 1 million tonne per annum starting from 2021. Construction of a coal charge stamping unit was completed at Altai-Koks, which will reduce NLMK Group's dependence on expensive and scarce coal grades. The full-year effect of these projects will be reflected in our financial results in 2021.”