24 Apr 2018 14:53

NLMK ups Q1 2018 EBITDA 3% to $812 mln, above forecast; revenue down 1%

MOSCOW. April 24 (Interfax) - NLMK Group , whose flagship asset is the Novolipetsk Iron & Steel Works, increased EBITDA in Q1 2018 by 3% to a record $812 million compared with Q4 2017, the company said in a statement.

Analysts told Interfax in a consensus forecast that they thought EBITDA would increase 1.5% quarter-on-quarter to $798 million.

This improved indicator was driven by growth in steel prices and new operational efficiency programs, the statement said.

NLMK revenue in the quarter was down 1% compared with the previous quarter to $2.794 billion. Analysts forecast $2.801 billion.

"The growth of sales in the group's home markets of Europe and the U.S., and an improvement in the pricing environment in international markets enabled NLMK to maintain its revenue practically flat compared to the strong Q4 (-1% q-o-q), despite a seasonal 5% drop in sales q-o-q," said NLMK Group's acting CFO, Sergey Karataev.

Net debt/EBITDA decreased to 0.31x in Q1 with free cash flow up three-fold to $599 million.

Investments by the group fell 51% in the quarter to $131 million.

NLMK financial highlights for Q1 2018 ($ mln):

Q1 2018 Q1 2018/Q4 2017
Sales revenue 2 794 -1%
EBITDA 812 3%
Operating profit 657 7%
EBITDA margin 29% +1 pp
Net profit 502 17%
Free cash flow 599 3x
Net debt 883 -4%
Net debt/EBITDA 0.31x 0.35x (at end-Q4)

Gross debt rose 4% to $2.365 billion.

Q1 2018 operational efficiency gains totaled $57 million, with the annual target set at $130 million.

"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's Karataev said.

The NLMK Russia Flat Products division's EBITDA fell 6% in Q1 to $523 million due to the "narrowing of spreads between steel prices and main feedstock (iron ore concentrate and coal), and changes in the sales breakdown towards a growing share of semis supplied to NBH and NLMK USA for downstream processing in Q2."

NLMK has production assets in Russia, Europe and the U.S. Overall capacity is 17 million tonnes per year, 16 million tonnes of which is located in Russia.

NLMK's principal owner is Vladimir Lisin, whose 84% stake is held by Fletcher Group Holdings. The free float is 16%. Depositary receipts on the company's shares (ten receipts represent one share) are traded on the London Stock Exchange.