NLMK Group (LSE, MOEX: NLMK) reports that in Q4 2021 its EBITDA totalled $1.8 bn, with EBITDA margin reaching 38%. Free cash flow (FCF) reached $0.8 bn. The Board of Directors recommended approving Q4 2021 dividends in the amount of 12.18 RUB/share (113% of FCF).

Q4 2021 key highlights

• Revenue grew by 2% qoq to $4.6 bn (+94% yoy) following an increase in steel product sales.

• EBITDA decreased by 23% qoq to $1.8 bn (+98% yoy) due to narrower steel product/raw material price spreads. EBITDA margin was 38% (-12 p.p. qoq; +1 p.p. yoy).

• Free cash flow went down by 26% qoq to $0.8 bn (+3.6õ yoy) driven by a decrease in EBITDA.

• Net profit was $1.3 bn (+2.3õ yoy).

12M 2021 key highlights

• Revenue grew by 75% yoy to $16.2 bn amid higher average sales prices and an increase in the share of finished products in the sales portfolio.

• EBITDA grew by a factor of 2.7 yoy to $7.3 bn due to the widening of steel product/raw material price spreads and the implementation of Strategy 2022 projects. EBITDA margin was 45% (+16 p.p. yoy)

• Free cash flow increased by a factor of 2.9 yoy to $3.3 bn driven by strong financial performance. This was partially offset by working capital increase amid growing steel and raw material prices.

• Net profit increased by a factor of 4.1 yoy to $5.0 bn driven by gross profit growth.

Comment from NLMK Group CFO Shamil Kurmashov:

“In Q4 2021, we saw steel demand normalize on the US and European markets, accompanied by growing stocks. This caused a slowdown in consumer activity and, consequently, a reduction in steel prices. The decrease of internal and export prices in China amid low demand in the construction segment also contributed to the downward price trend.

The Q4 2021 growth in steel product shipments by 8% qoq to 4.5 m t supported an increase in Group revenue to $4.6 bn (+2% qoq) despite lower sales prices. EBITDA decreased to $1.8 bn (by 23% qoq) due to narrower steel product/raw material price spreads and introduction of export duties in Russia. EBITDA margin was 38% (- 12 p.p. qoq). Free cash flow decreased by 26% qoq to $0.8 bn due to lower EBITDA and higher capital expenditure in line with the annual forecast.

Net debt increased by 7% qoq to $2.9 bn due to the dividends payout in Q4 2021. Net debt/EBITDA went down to 0.40õ (0.43õ in Q3 2021).

In line with the Group’s Dividend Policy, the management recommended the NLMK Board of Directors to pay $0.9 bn in Q4 2021 dividends.”