The Russian steel producer Novolipetsk Steel (NLMK) has announced that, under US GAAP (Generally Accepted Accounting Principles), in Q3 2010 it recorded a net income of $516 million - up 13 percent quarter on quarter, with its sales revenues increasing by four percent quarter on quarter to above $2.2 billion, driven by higher sales prices and improved sales of higher value-added products.
In Q3, due to the growth of raw material costs, NLMK's EBITDA totaled $695 million, a 10 percent reduction quarter on quarter, while its EBITDA margin amounted to 31 percent compared to 36 percent in Q2.
During the period in question, NLMK was able to profit from the favorable domestic market environment, including stable purchases from its key consumers, the construction and machinery sectors. Domestic sales in Q3 accounted for a 35 percent share of total company sales - up four percentage points quarter on quarter. In addition, the company's export sales stabilized and the geographic breakdown of exports almost reached pre‐crisis levels with the bulk of its deliveries going to Europe (22 percent), North America (17 percent) and the Middle East (15 percent).
In Q4 2010, NLMK's operating performance is expected to be broadly in line with Q3 (about 3 million mt), and its revenue is expected to grow by around three percent, with steel prices expected to be up 3-5 percent compared to Q3. Meanwhile, due to the increase in production costs and the seasonal decline of demand in the local market, NLMK expects its EBITDA margin to be in the range of 20‐25 percent.