NLMK Becomes Leading Russian Steelmaker in 2012
01/30/2013 - Despite the tough conditions in the global steel markets, NLMK Group says it demonstrated high operational efficiency in 2012.
Despite the tough conditions in the global steel markets in 2012, NLMK Group says it demonstrated high operational efficiency. Steel production grew 25% to 14.9 million tonnes, with Russian assets accounting for approximately 95%. Based on year-end results, NLMK became the leading steelmaker in the country – the Group’s Russian assets produced approximately 20% of all steel in Russia.
Group sales rose 18.4% to 15.2 million tonnes, including +27% for HVA (to 5.1 million tonnes).
In Q4 NLMK Group sales totaled 3.7 million tonnes (-3% q-o-q). Responding to the slump in demand for rolled steel in the export markets, NLMK grew its sales of semi-finished products that enjoyed stable demand.
Outlook
Q4 revenue is expected to decline by c.8% q-o-q resulting from weaker market conditions and seasonal decline in sales at year end. We believe Q1 2013 steel output will remain sequentially flat. The beginning of 2013 brought a mild improvement in pricing due to finished product restocking and a corresponding revival in demand, as well as growth in raw material prices.
Q4 revenue is expected to decline by c.8% q-o-q resulting from weaker market conditions and seasonal decline in sales at year end. We believe Q1 2013 steel output will remain sequentially flat. The beginning of 2013 brought a mild improvement in pricing due to finished product restocking and a corresponding revival in demand, as well as growth in raw material prices.
Overview of NLMK Group’s operating results
2012 overview
2012 steel output of the Group hiked by 24.7% y-o-y to 14,923 million tonnes as utilization rates at steelmaking operations of the Group remained sustainably high.
2012 steel output of the Group hiked by 24.7% y-o-y to 14,923 million tonnes as utilization rates at steelmaking operations of the Group remained sustainably high.
In 2012 NLMK posted record sales of 15,203 million tonnes, +18.4% y-o-y. Finished steel sales rates significantly surpassed those of semis: finished steel sales grew by 25% y-o-y to 8.9 million tonnes, while value added grades soared by 27% y-o-y to 5.1 million tonnes. This growth was driven by the consolidation of our international rolling assets in mid-2011 and in the increase in rolled steel sales at the Novolipetsk.
Sales of semis (pig iron and slabs) grew by 12% y-o-y to 4.6 million tonnes. Slab sales to third parties (including sales in Russia) grew by 850,000 tonnes sequentially to 3,979 million tonnes.
Key export markets remained largely unchanged and included Europe, USA, M.East, S.E.Asia, Central and Latin America.
Q4 2012 overview
Crude steel production totalled 3.674 million t (-2.6% q-o-q). Steelmaking facilities of the Group operated at 93% (-3 p.p.) capacity, including over 97% at Novolipetsk, 81% (-5 p.p.) at the Long Products Division and approximately 67% at our international divisions (-10 p.p.).
Crude steel production totalled 3.674 million t (-2.6% q-o-q). Steelmaking facilities of the Group operated at 93% (-3 p.p.) capacity, including over 97% at Novolipetsk, 81% (-5 p.p.) at the Long Products Division and approximately 67% at our international divisions (-10 p.p.).
Finished steel output totalled 2.5 million tonnes (-4.5% q-o-q).
Sales totalled 3.7 million tonnes (-3.1% q-o-q), including 1.25 million tonnes of slabs (+28% q-o-q) and 2.4 million tonnes of finished steel (-8.9% q-o-q). About 0.6 million tonnes of slabs were directed to NLMK’s international rolling assets (0.5 million tonnes in Q3).
Total sales to the domestic market increased by 4.5% to 1.3 million tonnes. Long product sales were down by 9% due to the seasonal slowdown in the Russian construction sector. The share of export sales stood at 64% on the back of the overall decline in demand in international markets.
NLMK Group’s international rolling assets accounted for 22% (-2 p.p.) of total steel product sales: 11% (-2 p.p.) for NLMK Europe and 11% (flat q-o-q) for NLMK USA.
At the end of Q4 prices displayed positive trends in some regions worldwide driven by better demand supported by restocking.
NLMK is an international vertically-integrated steelmaking company with production facilities located in Russia, Europe and the U.S.
