The NLMK group’s EBITDA growth in the first quarter of 2018 reached three percent quarter-on-quarter to a record of USD812 million. In the first quarter of 2018, free cash flow increased three-fold quarter-on-quarter to USD599 million, driven by strong performance. The group’s revenue in the first quarter of 2018 declined by one percent to USD2.79 billion (plus 30 percent year-on-year), due to a seasonal drop in sales (minus five percent quarter-on-quarter), which was offset by the growth in prices.

The EBITDA grew to USD812 million (plus three percent quarter-on-quarter), driven by increases in steel prices and new operational efficiency programs.

The first quarter of the current year saw free cash flow increase three-fold quarter-on-quarter to USD599 million, largely attributable to profitability growth, a partial release of working capital, and lower investment.

NLMK’s net income grew by 17 percent quarter-on-quarter (plus 56 percent year-on-year), driven by higher operating profit.

The net-debt-to-EBITDA ratio decreased to 0.31х due to a reduction in net debt and profitability growth.

According to NLMK group’s acting CFO Sergey Karataev, “The growth in sales within the group’s home markets of Europe and the U.S., and an improvement in the pricing environment in international markets enabled NLMK to maintain its revenue practically flat compared to the strong fourth quarter 2017 results (minus one percent quarter-on-quarter), despite a seasonal five-percent drop in sales quarter-on-quarter.

Mr. Karataev went on to say, “The widening of steel products to raw material price spreads, gains from completed capex projects, and operational efficiency gains were the key drivers behind the growth of the EBITDA to a ten-year high of USD812 million (plus three percent quarter-on-quarter). The EBITDA margin was 29 percent (plus one percentage point quarter-on-quarter).” NLMK’s executive continued, “It’s important to note that operational efficiency gains in the first quarter of 2018 totaled USD57 million, with the annual target set at USD130 million. Investments in the first quarter decreased against the high levels seen at year-end 2017 and amounted to USD131 million.

Business profitability growth, conservative capex and the reduction in working capital supported a three-fold quarter-on-quarter increase in the company’s free cash flow to USD599 million, resulting in a net-debt-to-EBITDA reduction.

“A significant liquidity cushion and a strong balance create favorable conditions for high dividend payments, while maintaining financial stability and conditions for further business development,” Mr. Karataev concluded.