DJ 1Q 2017 NLMK GROUP TRADING UPDATE
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Novolipetsk Steel / Miscellaneous - Urgent Priority 1Q 2017 NLMK GROUP TRADING UPDATE 14-Apr-2017 / 13:00 CET/CEST Dissemination of a Regulatory Announcement, transmitted by EquityStory.RS, LLC - a company of EQS Group AG. The issuer is solely responsible for the content of this announcement. Press release 14 April 2017 *1Q 2017 NLMK GROUP TRADING UPDATE** *In 1Q 2017, NLMK Group sales grew by 1% qoq to 3.7 m t. Steel output** totaled 4.2 m t (flat qoq), with facilities running at 96% capacity* *1Q 2017 highlights:* · Group sales grew by 1% to 3.68 m t (-11% yoy), the growth in flat steel sales by NLMK Group's Russian and international divisions offsetting the fall in long steel sales caused by the seasonal slowdown in demand. · Finished product sales increased by 7% to 2.44 m t (-5% yoy), driven by the growth in flat product sales from the Lipetsk site to export markets and a high level of demand in NLMK USA and NBH sales markets. · Steel output** totaled 4.21 m t (flat qoq and +4% yoy). · Market shares in NLMK Group total sales: - share of product sales by Group companies in regions where products are manufactured (hereinafter referred to as 'home markets') totaled 63% (-2 p.p. qoq and +1 p.p. yoy) due to the seasonal drop in sales in Russia by 26% qoq (-35% yoy) - share of sales to third parties in markets external to countries where products are manufactured (hereinafter referred to as 'export markets') totaled 37% (+2 p.p. qoq and -1 p.p. yoy) * Hereinafter 1Q 2017 output and sales figures are preliminary and can be updated. ** Hereinafter taking into account NBH performance *Media contact info:* *IR contact info: * Sergey Babichenko Sergey Takhiev +7 (916) 824 6743 +7 (495) 504 0504 babichenko_sy@nlmk.com st@nlmk.com *NLMK Group's 1Q 2017 operating performance* · Steel output (with NBH):4.21 m t - flat qoq (+4% yoy) against the backdrop of strong sales in markets outside Russia. This offset the seasonal drop in demand in Russia. Group's steelmaking capacity utilization rate grew to 96% (+1 p.p. qoq and +3 p.p. yoy), including 100% at NLMK Lipetsk. · Sales:3.68 m t - growth by 1% qoq due to the increase in export sales by NLMK Russia Flat (+24% qoq), and growth of sales by NLMK's facilities in Europe and the US (to +33% qoq). The year-on-year drop (-11% yoy) was associated with the delay in the recognition of NLMK Russia Flat export sales and lower sales of long products. · Sales breakdown:sales of finished steel increased by 7% qoq to 2.44 m t (-5% yoy), driven by the 16% qoq (-1% yoy) growth of flat steel deliveries. The share of finished products increased to 66% (+3 p.p. qoq and +4 p.p. yoy). Intragroup slab deliveries (including NBH) grew by 29% qoq and 54% yoy to 1.18 m t. Together with the decrease in export billet sales, sales of semis to third parties decreased by a 32% qoq to 0.59 m t (-46% yoy). · Sales in home marketsdecreased by 7% qoq to 2.23 m t (-15% yoy) against the backdrop of the seasonal slowdown in demand from the Russian construction sector, coupled with high stock levels maintained by traders, that accounted for a 28% qoq drop in sales to the Russian market, to 1.01 m t (-35% yoy). Delayed recognition of export sales (about 250,000 t) served as an additional factor. Meanwhile, sales of our international assets in their respective home markets of Europe and the USA increased by 23% qoq to 1.22 m t (+16% yoy), supported by strong demand from automotive, shipbuilding and infrastructure sectors. Sales in home markets accounted for 63% (-2 p.p. qoq and +1 p.p. yoy) in Group's total sales. · *Sales in external markets *grew to 1.39 m t (+10% qoq and -12% yoy), accounting for 37% of the Group's total sales (with NBH), against the backdrop of higher export sales by the NLMK Russia Flat segment, due to, among other factors, delayed recognition of 4Q 2016 sales in external markets. Key export destinations included the Middle East (incl. Turkey), the EU and Latin America. · *Price trends:* Raw material prices throughout the quarter followed mixed trends: global coal prices eased by 30% qoq (2x growth yoy), while iron ore prices climbed by 20% qoq (+78% yoy). Average prices for steel products grew by 10-20% qoq (+50-90% yoy) in the home markets of the US, Europe and Russia against the backdrop of growing Chinese prices and contracting exports from China. The strengthening of the ruble exchange rate also supported the growth in internal Russian prices in dollar terms. Export prices (FOB Black Sea) also climbed by 5-12% qoq (+40-80% yoy). *Segmental performance * *NLMK Russia Flat 1* · *Steel output* at NLMK Lipetsk (with facilities running at full capacity) grew by 1% qoq (+5% yoy) to 3.35 m t, driven by the increase in equipment productivity as a result of operational efficiency programme. · *Sales* grew by 6% qoq to 3.07 m t (-5% yoy), driven by the increase in finished product exports to 0.7 m t (+65% qoq and +13% yoy) due to restocking by traders, growth of intragroup slab sales to the US and Europe, and the delay in 4Q 2016 sales recognition. · *Sales breakdown: *Sales in Russia eased by 26% qoq to 0.79 m t (-29% yoy) due to seasonally weaker demand from construction, high inventory levels at steel traders and pipe manufacturers as well as the high yoy base of 1Q 2016 sales. The 24% qoq growth to 2.29 m t (+7% yoy) in sales to external markets was driven by a stronger demand for finished products in the Middle Eastern, European and Asian markets, and the growth in intragroup slab deliveries. 1 NLMK Russia Flat companies include NLMK Lipetsk, VIZ-Steel, and Altai-Koks. NLMK Lipetsk and VIZ-Steel sales are calculated including the corresponding share of trading companies. *NLMK Russia Long*2 · *Steel output* totaled 0.62 m t (-16% qoq and -2% yoy). This decrease was associated with the seasonal drop in demand for long products. · *Sales*: the 30% qoq and 24% yoy drop was associated with steel product stocks accumulated by consumers and traders in 4Q 2016. In addition to this, NLMK Long Products companies decreased their export deliveries (mainly billet) vs. 4Q in response to the drop in profitability in external markets. · *Sales breakdown:* Sales to external markets totaled 0.25 m t (-25% qoq and +43% yoy), accounting for 53% (+4 p.p. qoq and +25 p.p. yoy) of Segment sales. Key export destinations for long products in 1Q 2017 were the Middle East (incl. Turkey) and North Africa. · *Scrap:* Scrap sales decreased by 41% qoq (+21% yoy) to 0.74 m t against the backdrop of the seasonal decrease in scrap collection. Intragroup scrap sales accounted for 98%. 2 NLMK Russia Long companies include NLMK Ural, NLMK Metalware, NLMK Kaluga and scrap collecting facilities. Export long product sales are calculated including the corresponding share of trading companies *Mining and processing of raw materials* · *Output* of iron ore decreased by 3% qoq (-6% yoy) to 4,09 m t, due to the change in Fe content requirements for concentrate further used in the production of pellets. Pellet output reached 1.1 m t, including 0.4 m t in March. · *Sales of iron ore raw materials* totaled 4.13 m t (-5% qoq and -4% yoy), including 1.13 m t of pellets. · *Sales breakdown: *Over 99% of Stoilensky products were supplied to NLMK Lipetsk (78% in $Q 2016, 76% in 1Q 2016). *NLMK USA3* · *Steel output* increased by 53% qoq to 0.18 m t (+15% yoy); flat steel output increased by 27% qoq to 0.53 m t (+16% yoy) against the backdrop of strong demand for the Division's products in its home market. · *Sales* grew by 33% qoq to 0.56 m t (+20% yoy), driven by the uptick in demand from OCTG and construction sectors. · *Slab deliveries* from NLMK Lipetsk increased by 37% qoq to 0.39 m t (+146% yoy). 3 NLMK USA includes NLMK Indiana, NLMK Pennsylvania, and Sharon Coating. Data for NLMK USA is presented in metric tonnes *NLMK Dansteel* · *Sales *of thick plates grew by 10% qoq to 0.13 m t (+10% yoy) against the backdrop of stable demand from shipbuilding and infrastructure sectors, and successful competition with imports and other European manufacturers. *Associated companies - NLMK Belgium Holdings (NBH)4* · *NBH sales* grew by 16% qoq to 0.60 m t (+14% yoy), driven by the recovery in demand in the European market. · *Sales of flat steel* grew to 0.39 m t (+17% qoq and +19% yoy), due to the increase in deliveries to the automotive and machine-building sectors, as well as import restrictions imposed on similar products. · *Sales of thick plates* grew by 15% qoq to 0.19 m t (+10% yoy), driven by stable demand from machine-building, shipbuilding and infrastructure sectors. · *Slab deliveries* from NLMK Lipetsk in 1Q 2017 increased by 35% qoq to 0.65 m t (+43% yoy). 4 NBH assets include producers of thick plates NLMK Clabecq (Belgium), NLMK Verona (Italy) and producers of flat steel NLMK La Louvière (Belgium) and NLMK Strasbourg (France) *Appendices* Appendix 1. NLMK Group operating highlights *Output, m t* *1Q 2017* *4Q 2016* *QoQ* *1Q 2016* *YoY* Steel output 4,152 4,172 0% 3,995 4% (without NBH) Steel output (with 4,210 4,223 0% 4,044 4% NBH) Capacity 96% 95% +1 p.p. 93% +3 p.p. utilization, % *Consolidated sales* Semi-finished 1,236 1,352 -9% 1,556 -21% steel 5 Finished steel 2,441 2,283 7% 2,570 -5% _Flat steel_ 2,028 1,746 16% 2,054 -1% _Long steel and 0,413 0,537 -23% 0,516 -20% metalware_ *Total *3,677* *3,635* *1%* *4,126* *-11%* consolidated sales* Sales to home 63% 65% -2 p.p. 62% +1 p.p.
(MORE TO FOLLOW) Dow Jones Newswires
April 14, 2017 07:00 ET (11:00 GMT)
markets of the
Group6
Sales to external 37% 35% +2 p.p. 38% -1 p.p.
markets
For information: 1,180 0,915 29% 0,768 54%
slab sales to
foreign
subsidiaries and
affiliates
*Segment sales*
Russia Flat 3,072 2,896 6% 3,242 -5%
Russia Long 0,473 0,678 -30% 0,625 -24%
Mining 4,127 4,345 -5% 4,303 -4%
Foreign Rolled 0,695 0,543 28% 0,590 18%
Products
*For information: *0,603* *0,518* *16%* *0,526* *14%*
NBH sales*
5 Including commercial pig iron, slabs and billets
6 Home markets: Russia for the Russian assets of NLMK Group, North America
for NLMK USA and the EU market for NLMK Dansteel and NBH
Appendix 2. NLMK Russia Flat sales by product
*Sales, m t* *1Q 2017* *4Q 2016* *QoQ* *1Q 2016* *YoY*
Pig iron 0,056 0,086 -35% 0,150 -63%
Slabs incl. 1,651 1,605 3% 1,625 2%
Slab sales to foreign 1,180 0,915 29% 0,768 54%
subsidiaries
and affiliates, incl.
to NLMK USA, NLMK 0,533 0,436 22% 0,315 69%
Dansteel
to NBH 0,647 0,479 35% 0,453 43%
Hot-rolled steel 0,653 0,504 30% 0,747 -13%
Cold-rolled steel 0,356 0,300 19% 0,386 -8%
Galvanized steel 0,146 0,162 -10% 0,112 30%
Pre-painted steel 0,075 0,112 -32% 0,091 -17%
Dynamo steel 0,082 0,075 10% 0,058 41%
Transformer steel 0,055 0,054 2% 0,072 -24%
incl. from VIZ-Steel 0,036 0,031 17% 0,042 -13%
*Total products* *3,072* *2,896* *6%* *3,242* *-5%*
Coke sales from 1,012 1,044 -3% 0,875 16%
Altai-Koks5
incl. to NLMK Lipetsk 0,810 0,814 -1% 0,703 15%
Appendix 3. NLMK Russia Flat sales by region and product
*Sales, m t* *1Q 2017* *4Q 2016* *QoQ* *1Q *YoY*
2016*
*Russian market* *0,788* *1,058* *-26%* *1,114* *-29%*
Semi-finished 0,120 0,278 -57% 0,266 -55%
products
Hot-rolled steel 0,273 0,306 -11% 0,452 -40%
Cold-rolled steel 0,167 0,189 -12% 0,178 -6%
Galvanized steel 0,134 0,151 -12% 0,108 24%
Pre-painted steel 0,071 0,109 -35% 0,091 -22%
Dynamo steel 0,013 0,014 -7% 0,011 17%
Transformer steel 0,009 0,010 -9% 0,009 3%
*Export markets* *2,285* *1,838* *24%* *2,128* *7%*
Semi-finished 1,586 1,413 12% 1,510 5%
products
Hot-rolled steel 0,380 0,198 92% 0,296 28%
Cold-rolled steel 0,188 0,110 71% 0,208 -10%
Galvanized steel 0,012 0,011 12% 0,004 > 100%
Pre-painted steel 0,005 0,002 > 100% 0,001 > 100%
Dynamo steel 0,069 0,061 13% 0,047 47%
Transformer steel 0,046 0,043 5% 0,063 -28%
*Total sales* *3,072* *2,896* *6%* *3,242* *-5%*
Appendix 4 NLMK Russia Long sales by product
*Sales, m t* *1Q 2017* *4Q 2016* *QoQ* *1Q 2016* *YoY*
Commercial billet 0,060 0,141 -58% 0,109 -45%
Rebar 0,297 0,412 -28% 0,413 -28%
Sections 0,003 0,003 7% 0,015 -79%
Wire rod 0,055 0,058 -5% 0,028 97%
Metalware 0,059 0,065 -10% 0,060 -3%
*Total steel *0,473* *0,678* *-30%* *0,625* *-24%*
products*
*Ferrous and *0,741* *1,265* *-41%* *0,615* *21%*
non-ferrous scrap,
incl.*
to NLMK Ural 0,267 0,371 -28% 0,178 50%
to NLMK Kaluga 0,213 0,377 -43% 0,214 0%
to NLMK Lipetsk 0,243 0,500 -51% 0,209 17%
Appendix 5. Mining Division sales
*Sales, m t* *1Q *4Q *QoQ* *1Q *YoY*
2017* 2016* 2016*
*Iron ore *2,630* *3,709* *-29%* *3,829* *-31%*
concentrate*
incl. to NLMK Lipetsk 2,620 2,808 -7% 2,934 -11%
*Pellets* *1,134* *0,236* *> 100%* *0,000* *-*
incl. to NLMK Lipetsk 1,134 0,236 > 100% 0,000 -
*Sinter ore* *0,364* *0,400* *-9%* *0,473* *-23%*
incl. to NLMK Lipetsk 0,364 0,365 0% 0,323 13%
Appendix 6. NLMK USA sales
*Sales, m t* *1Q 2017* *4Q 2016* *QoQ* *1Q 2016* *YoY*
Hot-rolled steel 0,311 0,213 46% 0,242 28%
Cold-rolled steel 0,135 0,114 19% 0,142 -5%
Galvanized steel 0,111 0,093 20% 0,082 35%
*Total NLMK USA7* *0,562* *0,421* *33%* *0,469* *20%*
7 NLMK USA also sells non-significant volumes of merchant slabs not included
into total rolled steel sales. In 1Q 2017 slab sales totaled 4,000 t
Appendix 7. Dansteel sales
*Sales, m t* *1Q 2017* *4Q 2016* *QoQ* *1Q 2016* *YoY*
Thick plates 0,134 0,121 10% 0,121 10%
Appendix 8. NBH (associated companies) sales
*Sales, m t* *1Q 2017* *4Q 2016* *QoQ* *1Q 2016* *YoY*
Hot-rolled steel 0,282 0,226 25% 0,225 25%
Cold-rolled steel 0,015 0,017 -9% 0,014 9%
Coated steel 0,092 0,090 2% 0,087 5%
*Total flat steel* *0,389* *0,333* *17%* *0,326* *19%*
Semi-finished (ingots) 0,020 0,018 15% 0,026 -21%
Thick plates 0,193 0,167 15% 0,175 10%
*Total steel products, *0,603* *0,518* *16%* *0,526* *14%*
including flats*
Appendix 9. NLMK Group steel output
*Output, m t* *1Q 2017* *4Q *QoQ* *1Q *YoY*
2016* 2016*
NLMK Lipetsk 3,352 3,319 1% 3,202 5%
NLMK Long Products 0,619 0,735 -16% 0,634 -2%
incl. NLMK Kaluga 0,271 0,347 -22% 0,301 -10%
NLMK Indiana (NLMK USA) 0,181 0,118 53% 0,158 15%
*NLMK Group (without *4,152* *4,172* *0%* *3,995* *4%*
NBH)*
_for information_
NBH, NLMK Europe (EAF) 0,059 0,051 14% 0,049 20%
*NLMK Group (with NBH)* *4,210* *4,223* *0%* *4,044* *4%*
Appendix 10. NLMK Group steel product output
*Output, m t* *1Q 2017* *4Q 2016* *QoQ* *1Q 2016* *YoY*
Merchant pig iron 0,029 0,080 -64% 0,159 -82%
Merchant slabs 1,179 1,337 -12% 1,291 -9%
Flat steel 2,117 1,918 10% 2,013 5%
Merchant billets 0,093 0,140 -34% 0,169 -45%
Long products 0,421 0,513 -18% 0,402 5%
Metalware 0,059 0,066 -10% 0,059 -1%
*Total steel products* *3,897* *4,054* *-4%* *4,094* *-5%*
Appendix 11. NLMK Russia Flat steel product output
*Output, m t* *1Q 2017* *4Q 2016* *QoQ* *1Q 2016* *YoY*
Merchant pig iron 0,029 0,080 -64% 0,159 -82%
Merchant slabs 1,711 1,773 -3% 1,606 7%
Hot-rolled steel 0,688 0,626 10% 0,691 -1%
Cold-rolled steel 0,370 0,329 12% 0,402 -8%
Galvanized steel 0,176 0,174 1% 0,116 51%
Pre-painted steel 0,106 0,122 -13% 0,099 7%
Dynamo steel 0,077 0,080 -4% 0,060 28%
Transformer steel 0,058 0,042 37% 0,067 -14%
*Total steel products* *3,215* *3,227* *0%* *3,201* *0%*
Appendix 12. Output of main raw materials
*Output, m t* *1Q 2017* *4Q 2016* *QoQ* *1Q 2016* *YoY*
*Coke (dry weight)* *1,632* *1,651* *-1%* *1,498* *9%*
NLMK Lipetsk 0,606 0,613 -1% 0,613 -1%
Altai-Koks 1,027 1,038 -1% 0,885 16%
*Iron ore* *4,085* *4,208* *-3%* *4,336* *-6%*
Iron ore concentrate 2,610 3,518 -26% 3,931 -34%
Sinter ore 0,379 0,402 -6% 0,405 -6%
Pellets 1,096 0,288 > 100% 0,000 0%
*Ferrous scrap* *0,334* *0,539* *-38%* *0,278* *20%*
Appendix 13. NLMK Group steel product sales
*Sales, m t* *1Q *4Q 2016* *QoQ* *1Q 2016* *YoY*
2017*
*Semi-finished* *1,236* *1,352* *-9%* *1,556* *-21%*
Pig iron 0,054 0,041 32% 0,135 -60%
Slabs 1,122 1,170 -4% 1,313 -15%
Billets 0,060 0,141 -58% 0,109 -45%
*Flat steel* *2,028* *1,746* *16%* *2,054* *-1%*
Thick plates 0,134 0,121 10% 0,121 10%
Hot-rolled steel 0,964 0,717 34% 0,990 -3%
Cold-rolled steel 0,461 0,413 12% 0,528 -13%
Galvanized steel 0,257 0,255 1% 0,194 32%
Pre-painted steel 0,075 0,112 -32% 0,091 -17%
Transformer steel 0,055 0,054 2% 0,072 -24%
Dynamo steel 0,082 0,075 10% 0,058 41%
*Long products* *0,413* *0,537* *-23%* *0,516* *-20%*
Long steel 0,355 0,472 -25% 0,456 -22%
Metalware 0,059 0,065 -10% 0,060 -3%
*Steel product sales* *3,677* *3,635* *1%* *4,126* *-11%*
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Language: English
Company: Novolipetsk Steel
40, Bolshaya Ordynka str, bldg 3
119017 Moscow
Russia
Phone: +7 (495) 504 05 04
E-mail: info@nlmk.com
Internet: nlmk.com/eu
ISIN: US67011E2046
Listed: Foreign Exchange(s) London, Moscow
Category Code: MSCU
TIDM: NLMK LI
Sequence No.: 4066
End of Announcement EquityStory.RS, LLC News Service
565033 14-Apr-2017
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