NLMK Announces 1Q 2014 US GAAP Results

NLMK, a leading steel producer, announces 1Q 2014 consolidated results in accordance with US GAAP. The Group's steelmaking capacity was operating at 92 percent. Steel sales reached 3.866 million tonnes (+ 8 percent qoq); revenue was $ 2,638 million (+5 percent qoq); net income was $ 174 million. Net debt was $ 2.301 million, down 15 percent qoq.

The share of Russian sales, including slabs and billets, various types of rolled products, rebar and other steel products, amounted to 40 percent. Sales in North America increased by 12 percent qoq to 0.75 million tonnes. NLMK USA's sales in the region accounted for 61 percent. 19 percent of the Group's total sales were sold to the EU countries. Significant sales were redirected from Asia to other regions, including Central and South America. Sales in the Middle East accounted for 6 percent of the total.

With regard to NLMK's outlook for the second quarter of 2014, steel production is expected to remain stable QoQ. Further growth of the Group's profitability and income is expected. Grigory Fedorishin, Chief Financial Officer of NLMK, said that the soft decline in steel production was due to the development of a new product at NLMK Kaluga. Industrial production of this product is scheduled to begin within a year.

He added: “In the first quarter, investments were $ 131 million, down 15 percent year on year. Free cash flow increased to $ 271 million. This reduced net debt by 15 percent to $ 2.3 billion. We expect that seasonal improvements in demand and efforts to optimize costs will allow us to demonstrate further improvements in financial results in the second quarter of 2014. "