NLMK
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04 July 2008 г. | 12:07
2007 RAS Financial Results for NLMK Group’s major Russian companies
Novolipetsk Steel (NLMK) (LSE: NLMK) today announces 2007 Russian Accounting Standards (RAS) financial results for the Group’s major Russian companies.
RAS accounting results differ materially from US GAAP accounting results and are not comparable to financial statements prepared in accordance with US GAAP. The RAS accounting results of the Group’s major Russian companies are not indicative of the financial condition or results of these entities under US GAAP. Reference should only be made to consolidated financial statements prepared in accordance with US GAAP for information with respect to NLMK Group’s financial condition and results of operations. US GAAP results are to be announced in April, 2008.
2007 RAS financial results NLMK Group’s Russian companies**
(in thousands of rubles, except for percentages)
| Novolipetsk steel | |||
| 2007 | 2006 | Change, % | |
| Revenue | 154 880 576 | 140 301 567 | 10.39% |
| Gross profit | 61 830 971 | 64 909 697 | - 4.74% |
| Operating profit | 49 759 429 | 55 399 449 | -10.18% |
| Net profit | 40 423 931 | 50 508 140 | -19.97% |
| VIZ-Stal * | |||
| 2007 | 2006 | Change, % | |
| Revenue | 18 219 573 | 15 680 018 | 16.20% |
| Gross profit | 11 980 828 | 9 006 057 | 33.03% |
| Operating profit | 11 524 438 | 8 591 279 | 34.14% |
| Net profit | 8 823 672 | 6 335 972 | 39.26% |
| * LLC VIZ-Stal joined the Group in August 2006 | |||
| ** LLC VIZ-Stal, OJSC Stoilensky GOK , OJSC Altai-Koks, OJSC TMPT, LLC NTK | |||
| Stoilensky GOK | |||
| 2007 | 2006 | Change, % | |
| Revenue | 21 483 106 | 15 809 998 | 35.88% |
| Gross profit | 15 356 893 | 10 370 184 | 48.09% |
| Operating profit | 14 417 756 | 9 512 617 | 51.56% |
| Net profit | 11 931 725 | 7 493 968 | 59.22% |
| Altai-koks*** | |||
| 2007 | 2006 | Change, % | |
| Revenue | 17 517 986 | 11 266 871 | 55.48% |
| Gross profit | 5 591 791 | 2 673 553 | 109.15% |
| Operating profit | 3 631 744 | 1 323 694 | 174.36% |
| Net profit | 2 476 816 | 642 655 | 285.40% |
| *** OJSC Altai-koks joined the Group in April 2006 | |||
| TMTP | |||
| 2007 | 2006 | Change, % | |
| Revenue | 1 967 909 | 2 212 148 | -11.04% |
| Gross profit | 1 164 572 | 1 382 416 | -15.76% |
| Operating profit | 1 092 556 | 1 310 557 | -16.63% |
| Net profit | 861 003 | 1 011 267 | -14.86% |
| NTK | |||
| 2007 | 2006 | Change, % | |
| Revenue | 1 803 089 | 1 004 911 | 79.43% |
| Gross profit | 678 809 | 367 771 | 84.57% |
| Operating profit | 500 705 | 222 890 | 124.64% |
| Net profit | 378 144 | 162 522 | 132.67% |
Highlights
• NLMK revenue growth due to favourable market conditions
The key driver of the Group’s 10.4% revenue growth in 2007 was an increase in prices for steel products in our core markets.
Moreover, in 2007 we changed the steel product sales structure so that commercial slab sales volumes decreased and high value-added products sales increased, but with the total sales volume remaining at 2006 level.
NLMK operating profit decreased by 10.2% due to a dramatic rise in price of basic raw materials:
coking coal, coke, iron ore and scrap. At the same time coke, iron ore concentrate and sinter ore as well as fluxes are supplied from NLMK subsidiaries. Considering our vertical integration we are expecting record consolidated financial results in 2007.
NLMK net profit decreased by 20.0% in 2007 due to a lack of the material disposals of assets which took place in 2006 (KMA Ruda, Lebedinsky GOK).
• Sustainable growth of VIZ–Stal financials as a result of price and volume increases and efficient management
VIZ-Stal sales revenue grew by 16.2 % y-o-y and is attributable to an increase in prices and transformer steel sales volumes.
The decrease in consumption ratios of transformer steel production due to the optimization of technological regulations and the production schedule significantly contributed into the production cost reduction and financial growth of VIZЃ]Stal.
• Stoilensky GOK displays strong financial results on the growing iron ore market
The significant increase in Stoilensky GOK’s key financials in 2007 versus 2006 is primarily
attributable to favourable market conditions which contributed to iron ore concentrate and sinter ore price growth.
The increase in iron ore concentrate sales volumes was due to the completion of the first stage of the fourth section of the processing factory in 2006 and in sinter ore sales volumes as the mining properties of the site had a positive influence.
• Significant growth of Altai-Koks financials due to market environment and increase in
production capacities
Altai-Koks sales revenue grew by 55.5% in 2007 compared to 2006, net profit increased 2.9 times.
2007 key financial indicators were mainly impacted by an increase in coke prices in H2 2007 and an increase in sales volumes following the commissioning of coke battery #5 in late 2006.
• TMPT (Tuapse Sea Port) financial results deteriorated due to one-off factors
The weakening of the US dollar was the key contributing factor of the decrease in OJSC “TMTP” financial results. Freight turnover tariffs are regulated by state authorities and denominated in US dollars.
TMPT results were also impacted by a decrease in bulk cargo transshipment volumes due to some discrepancies between employees and the port administration, which were settled in early 2008.
• Substantial growth of NTK financial results due to own rolling stock expansion and
increase in transportation volumes
NTK key financial indicators grew significantly in 2007 compared with 2006 due to the usage of NTK’s own rolling stock (since September 2006) and an increase in the amount of leased railcars, which enabled OJSC “NTK” to reduce railcar usage fees paid to “Russian Railways”, thus cutting transportation costs. Another reason for this growth is the expansion of transportation services.
NTK is a fully-fledged transportation company with its own fleet, which is to be extended in 2008.
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