12:22, 15 April 2019

Q1 2019 NLMK Group Trading Update

NLMK Group a vertically integrated steelmaker, a Metal-Expo regular exhibitor, has published today its preliminary Q1 2019 operating results.

Q1 2019 highlights: 

- Steel output decreased by 4% qoq to 4.2 m t due to the overhauls at the Russian sites and seasonal factors. A 3% yoy steel output reduction is also due to the overhauls in Q1 2019.

- Steel capacity utilization remained high at 96% (-2 p.p. qoq).

- Sales remained almost flat qoq totalling 4.6 m t (-1% qoq) supported by the sales of inventories accumulated in the end of 2018. Group sales grew by 11% yoy on the back of low base effect, which was due to higher slab sales to captive rolling facilities in Q1 2018.

- Sales in home markets grew by 5% qoq (flat yoy) to 2.6 m t backed by higher slab sales in the Russian market. The share of Group sales in home markets increased to 56% (+1 p.p. qoq, -7 p.p. yoy).

- Group sales in export markets totalled 2.0 m t (-2% qoq; +32% yoy). The quarter-on-quarter export reduction was due to lower pig iron sales. Year-on-year export sales growth is mainly attributable to higher slab sales to third parties.

NLMK Group's Q1 2019 operating performance.
Steel output decreased by 4% qoq (-3% yoy) to 4.18 m t driven by overhauls in NLMK’s blast furnace operations as well as seasonally lower steel output at NLMK Russia Long.
Sales remained almost flat qoq. Higher sales of flat steel and slabs accumulated in ports in late 2018 offset the seasonal reduction in long product sales and lower pig iron exports due to overhauls. Year-on-year sales grew by 11% on the back of low base effect, which was due to high slab sales to captive rolling facilities in Q1 2018. The growth was also supported by higher demand for flat steel in the pipe, machine building, and white goods sectors and construction industry.
Sales breakdown. Finished steel sales grew by 8% qoq to 2.83 m t (+13% yoy), mainly due to the growth of hot-rolled steel sales post the completion of repairs at NLMK’s hot-rolling mill. Sales of high value added (HVA) products increased 6% qoq to 1.29 m t (+10% yoy). Sales of semi-finished steel to third parties went down by 7% qoq to 1.3 m t (+28% yoy) amid lower pig iron sales. Slab deliveries to NBH went down by 24% qoq (-26% yoy) to 0.44 m t following lower slabs demand from European sites (Appendix 2).
Sales in home markets rose 5% qoq (flat yoy) to 2.64 m t: the growth in Russia was 3% qoq (+8% yoy) thanks to higher demand for slabs from oil & gas pipe manufacturers; in the US the sales increased by 19% qoq (+9% yoy) driven by higher demand for flat steel. The sales of the Group’s European companies decreased by 3% qoq (-20% yoy) due to the strike at NLMK Clabecq and lower demand amid expectations for lower slab and finished steel prices (Appendix 1).
Sales in export markets went down by 2% qoq due to lower pig iron exports of NLMK Russia Flat, which was partially offset by an increase in finished steel exports. Year-on-year sales growth was 32%, mainly due to slab sales increase.

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