Russian steelmaker NLMK Group has announced its financial results for the second quarter and the first half of the current year according to International Financial Reporting Standards (IFRS).
Accordingly, in the second quarter of the current year, NLMK Group's net profit decreased by 73 percent quarter on quarter and 81 percent year on year to $77 million, mainly due to the depreciation of investments into NBH (NLMK Belgium Holdings). Without taking into account this non-cash transaction into account, the net profit would have decreased by 24 percent quarter on quarter to $221 million.
The company's sales revenues in the second quarter amounted to $2.2 billion, down 12 percent quarter on quarter and 22 percent year on year. This is largely a result of the decrease in sales prices and, in particular, the drop in sales by NLMK USA and NLMK DanSteel. Additionally, revenues were affected by the increased share of semis in the product mix amid slackened demand for finished products.
In the second quarter of this year, NLMK Group's EBITDA was $582 million, falling by two percent quarter on quarter and 21 percent year on year, while its EBITDA margin increased to 27 percent compared to 26 percent in the corresponding period of the previous year.
In the first half of the current year, the company’s net profit fell by 54 percent year on year to $366 million, while its sales revenues totaled $4.6 billion, down 18 percent year on year, due to the drop in steel product prices and the increase in the share of semi-finished products in total sales to 42 percent versus 38 percent in the same period of the previous year. In the January-June period this year, the company’ EBITDA amounted to $1.2 billion, falling by 18 percent year on year.
In terms of the Covid-19 pandemic, NLMK Group was forced to adapt to the deteriorating market conditions. “In order to keep capacity utilization rates high at our flagship production site, NLMK Lipetsk, we made changes to our regional sales structure (for instance, we grew shipments to the Asian market in April and May), and diversified our product mix. At the end of April, we were already actively working on our export order book for June”, NLMK Group CFO Shamil Kurmashov commented.