In its financial results according to International Financial Reporting Standards (IFRS) for the first quarter of the current year, Russian steelmaker NLMK Group's net profit rose by 45 percent quarter on quarter and decreased by 24 percent year on year to $289 million.
The company's sales revenues amounted to $2.46 billion in the first quarter this year, down by 14 percent from the corresponding period of 2019, while increasing by six percent compared to the last quarter of the previous year owing to the increase in sales despite the slowdown of steel demand in the global markets amid the coronavirus outbreak.
In the first quarter this year, NLMK Group's EBITDA was $594 million, falling by 15 percent year on year and up 24 percent quarter on quarter. Besides, in the given period, the company’s EBITDA margin increased to 24 percent compared to 21 percent in the last quarter of the previous year, while remaining unchanged from the first quarter of the previous year.
NLMK’s CEO Grigory Fedorishin stated that its capital expenditure guidance for 2020 was reduced to $900-950 million from the previously announced $1.2 billion.
Mr. Fedorishin noted that steel demand in the EU and the US could drop by double digit rates year on year in the second quarter this year and that they also expect consumer activity in Russia to decline, while he added that there is a high level of uncertainty in terms of the rate at which demand for steel is going to recover across different regions.
Fedorishin said, “During early April, we were looking for opportunities in various export markets to make sure we are able to redirect the volumes from our traditional geographies to other destinations. As a result, the export share in our shipments from Russian assets will increase from about 50 percent in February and March to more than 70 percent in May. We have already closed our export books for May and are in the process of booking June deliveries. Most of our steel in April and May will go to places such as China, Southeast Asia, the Middle East, including Turkey.”
According to the NLMK CEO, the company plans to commence the second stage of its planned major repairs at its NLMK Lipetsk BF and BOF operations, which will allow the company to increase its steel production by one million mt next year. However, NLMK expects its steel production and sales to decline on quarter-on-quarter basis in the second quarter this year due to the maintenance works. Fedorishin stated that all the company’s production sites currently continue operating.