Updated NLMK data on long products

In the third quarter of 2014, total sales in the long steel segment at NLMK decreased by 18 percent to 608,000 tonnes. This decrease in product sales in Q3 2014 is due to the end of the construction season, a decrease in the share of direct sales and an increase in the share of sales through retail chains.

By the end of Q2 2014, on the contrary, there was a significant increase in demand for NLMK long products and an increase in direct sales. In addition, the decline in sales in the third quarter was due to the formation of reserves before the resumption of operations in connection with the development of new production at NLMK in Kaluga.

Total segment revenues were down 7 percent to $ 493 million on lower sales volumes. Increase revenues from intra-group operations due to higher shipments of scrap metal at the Lipetsk site (steel segment). EBITDA in Q3 2014 increased by 48 percent to $ 77 million, EBITDA margin increased to 16 percent. Profitability improved as a result of widening the spread between the price of the product and raw materials, as well as the effect of the launch of the operational efficiency program.

In 9M 2014, the segment's revenue grew 14 percent to $ 1,418 million, driven by 36 percent YoY sales growth to 2001 million tonnes following the launch of NLMK's Kaluga facilities on the back of lower prices for long products YoY. Higher sales volumes resulted in 64% annual EBITDA growth to $ 136 million.