The Russian steelmaker Novolipetsk Steel (NLMK) has released its financial results for the first half of 2009 under US GAAP (Generally Accepted Accounting Principles).
Accordingly, during the period in question NLMK's sales revenue decreased by 56 percent to $2.586 billion, its gross profit went down by 74 percent to $693.7 million, its operating profit declined by 90 percent to $204.6 million and its EBITDA slid by 81 percent to $431 million, all compared to H1 2008. Meanwhile, the company's net loss in the first six months of 2009 amounted to $242.9 million, compared to a net profit of about $1.531 billion in the same period last year. NLMK's net debt was $736.5 million at the end of the second quarter, down from $915.1 million three months earlier.
In H1 2009, NLMK saw a 19 percent decrease in its crude steel production to 4.8 million mt and a 19 percent drop in its steel product sales to 4.6 million mt, with the major declines registered in pig iron sales - down 78 percent year on year, and in high value-added product sales - with galvanized steel down 45 percent and transformer steel down 61 percent year on year. In Q2 2009, the company's average sales prices declined by a further seven percent quarter on quarter to $475/mt, while its H1 average sales prices fell to $492/mt.
During the first half of 2009, NLMK's sales in the Russian domestic market in physical terms fell to 26 percent, i.e. about 1.218 million mt, caused by reduced market demand despite a seasonal revival of the construction sector. Meanwhile, its sales to Southeast Asia and the EU jumped from eight percent and 17 percent in H1 2008 to 27 percent and 21 percent respectively.
NLMK said that in the third quarter this year it expects to see a significant improvement in its financial and operating performance following the stabilization and positive dynamics of prices, which started at the end of Q2 2009. "We believe that our Q3 2009 steel production will reach 2.9 million mt, representing eight percent growth quarter on quarter. In FY 2009 our production is expected to reach 10.5 million mt, the same level as last year, and four percent higher than we previously planned," reads the company's statement.
"In the second half of 2009 our financial performance will improve primarily driven by increased sales volumes and the improved pricing environment as well as by resumed sales positions in high value-added products," NLMK CFO Ms Galina Aglyamova said.