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Novolipetsk Steel

April 22, 2021

NLMK Group Q1 2021 IFRS Financial Results

NLMK Group (LSE: NLMK, MOEX: NLMK) increased its revenue by 20% qoq to $2.9 bn, EBITDA totalled $1.2 bn (+31% qoq), EBITDA margin increased to 41% (+4 p.p. qoq).

Q1 2021 key highlights

  • Revenue increased to $2.9 bn (+20% qoq; +17% yoy), supported by growing rolled steel prices.

  • EBITDA reached $1.2 bn (+31% qoq; +96% yoy), driven by the expansion of the raw materials/steel products price spreads. EBITDA margin stood at 41% (+4 p.p. qoq; +17 p.p. yoy).

  • Free cash flow doubled qoq reaching $452 m (+37% yoy), following EBITDA growth and seasonal capex reduction that was partially offset by the cash outflows for working capital replenishment amid the growing market.

  • Net profit grew by 39% qoq to $775 m (a 2.7x growth year-on-year) against the backdrop of an increase in gross profit.

Comment from NLMK Group CFO Shamil Kurmashov:

In Q1 2021, steel product prices continued to hit new highs due to limited supply coupled with strong demand from end users. Low steel product inventories in the supply chain served as an additional factor supporting price growth. China announcing its intention to reduce steel output in 2021 promoted further improvement of the pricing environment in March and April.

In this context, NLMK Group increased its revenue by 20% qoq to $2.9 bn, and its EBITDA by 31% qoq to $1.2 bn in Q1 2021. EBITDA margin grew to 41%

Higher business profitability and a seasonal decline in fixed asset investment led to a two-fold increase in free cash flow to $452 m, as compared to Q4 2020.

The Company's net debt decreased by 16% qoq to $2.1 bn, driven by an increase in free cash flow. Net debt/EBITDA ratio declined to 0.65x (vs. 0.94x at the end of 2020).

A significant liquidity cushion and a strong balance sheet allowed the management to recommend to the NLMK Board of Directors to pay $600 m as Q1 2021 dividends.

 

 

 

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