NLMK Group (MICEX and LSE: NLMK) is pleased to announce* growth in 12M EBITDA by 37% yoy to $2.66 bn. EBITDA margin grew by 1 p.p. to 26%. Free cash flow increased by 16% to $1.27 bn.
12M 2017 key highlights

• Group revenue in 12M 2017 totalled $10.1 bn (+32% yoy), driven by growth of average steel product prices, increase in volume and growth of share of finished product sales.
• EBITDA grew to $2.7 bn (+37% yoy), driven by improved sales economics and Strategy 2017 effects.
• Free cash flow increased by $174 m to $1.27 bn, driven by growth of cash flow from operations 
  (+12% yoy) and moderate growth of capex (+6% yoy).
• Net income grew by 55% yoy to $1.45 bn.
• Net debt/EBITDA decreased to 0.35õ(0.39õin 2016) on strong business profitability.

Q4 2017 key highlights

• Group revenue increased to $2.8 bn (+10% qoq) driven by growth of sales (+3% qoq) and growth of average sales prices. 
• Growth of EBITDA to $786 m (+21% qoq) on wider steel product / raw materials spreads.
• Free cash flow totalled $200 m (-62% qoq), the decrease triggered by growth of capex (launch of BF-6 reconstruction at NLMK Lipetsk, and settlements related to the Pelletizer construction project), and an increase in working capital, against the backdrop of higher prices and stocks accumulated at ports to support exports increase.
• Net income grew by 20% qoq to $428 m, driven by a significant growth of profitability in Q4.

Comment from NLMK Group acting CFO Sergey Karataev:

“In 2017, NLMK Group continued to consistently improve it operating and financial performance: NLMK sales hit an all-time high of 16.5 m t; profitability has been on the rise for five years running, hitting 26% in 2017. 2017 EBITDA grew by 37% yoy to $2.7 bn, a record high since 2009.

“Successful execution of Strategy 2017 was the key driver behind improved financials, with net gains from strategy projects exceeding $1 bn. Non-capital intensive operational efficiency projects accounted for more than half of Strategy 2017 gains.

“Growth of operating cash flow and conservative capex have enabled a 16% increase in free cash flow to 
$1.3 bn.

“Proactive debt management over the year has enabled us to bring our ST debt down by 19%, and reduce our cost of financing to 3.8%.

“The company’s leverage is at an all-time low: Net debt/EBITDA decreased to 0.35x.

“NLMK Group’s high creditworthiness and the success of its business model received high acclaim from international rating agencies: NLMK’s credit ratings have been upgraded by S&P and Moody’s over the last 18 months. NLMK currently has investment grade ratings from all three international rating agencies.

“High level of free cash flow, low leverage and conservative capex enable the company to increase its dividend payments. 9M 2017 dividends totalled about $1.1 bn.”

* Consolidated financial results are prepared under IFRS. Reporting periods of the Company are 3M, 6M, 9M and 12M. Quarterly figures

are derived by computational method, including segmental results. Figures for comparable periods can differ from figures published earlier as a result of rounding off to whole numbers.

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