PRINT
THIS PAGE
BUILD YOUR
OWN REPORT
DOWNLOAD
CENTRE
EPUB BOOK VIDEO
LIBRARY
CHART
GENERATOR

Annual Report & Accounts 2012

Key performance indicators

NLMK Group has a unique vertically integrated value chain, with sites located on three continents and a presence in all key markets. Alongside growth in the scale of business, our leading position has important quality characteristics, namely high efficiency and the stability of results. Efficiency is our core value. It characterizes every single one of our business processes, including production, sales, procurement, staff training, finances and decision-making. By analysing the trends in our key performance indicators, we can evaluate the efficiency of our business as a whole, including how well it uses its resources and to what extent it is integrated with the external environment.

Oleg Bagrin

President and Chairman of the Management Board

The Group uses several key financial indicators, as well as indicators of operational results and progress towards corporate responsibility goals, to evaluate how effectively the current strategy is being implemented. These indicators are evaluated both annually and quarterly throughout the year. The results are assessed by analysing the indicators over time, with the definition of a target for the reporting period, as well as by comparing them with the average industry indicators.

Strategy

The key performance indicators are used to evaluate the achievement of strategic goals and are published annually.

For more information on our strategy

Risk

The indicators may be influenced by various categories of risks, including commercial, industry-related, investment, operational, and corporate responsibility risks.

For more information on our risk management

 

Key financial performance indicators

Revenue (US$ bn)

12.2 +4%

Download graph

Definition

Funds obtained by NLMK through sales of products and services.

Comments

The total amount of revenue varied due to the influence of certain factors, including:

An 18% year-on-year sales volume increase.

A 20% rise in high value added product sales.

An upturn in the share of sales on the Russian market experiencing more favourable market conditions.

Outlook for 2013

Variations in revenue will depend largely on the market situation.

NLMK plans to increase the manufacture of high value added products and expand its presence on the Russian market, which should have a positive influence on sales revenues.

Strategic objectives

Develop promising segments Maintain efficient and sustainable growth

EBITDA per tonne (US$)

125 -29%

Download graph

Definition

Company profit per tonne of product sold.

Comments

The main cause of the decrease in this indicator was a decline in product prices not entirely compensated for by a fall in the prices of raw and other materials.

Outlook for 2013

We expect that in 2013, the Group will maintain a high level of profit per unit, although this will depend to a great extent on the market situation in the industry.

Strategic objectives

Improve cost-effectiveness Develop promising segments Maintain efficient and sustainable growth

Slab cash cost (US$/t)

388 -2%

Download graph

Definition

Financial expenditure borne by the Company to produce 1 tonne of Basic Oxygen Furnace (BOF) steel in Russia (on a consolidated basis).

Comments

NLMK is one of the lowest-cost steel producers in the world. The Group’s leading position is based on the fact that it is largely self-sufficient in key raw materials and that it uses modern technological equipment. The main reason for the decrease in production costs in 2012 was the optimization of our technology and the fall in raw material prices in comparison with 2011.

Outlook for 2013

The average level of this indicator may be subjected to downward pressure due to rising raw materials prices. Nevertheless, the Company will retain its status as one of the most cost-efficient steel producers in the world.

Strategic objectives

Maximise cost-efficient upstream integration into key resources Improve cost-effectiveness

EBITDA margin (%)

16 -3.6 p.p.

Download graph

Definition

This indicator characterizes the Group’s profitability before deduction of interest, profit tax, and amortization.

Comments

The decrease in cost-effectiveness occurred as a result of the decline in steel product prices, which was partially offset by the rise in sales volumes and the reduction in production costs.

Outlook for 2013

We expect that, in 2013, NLMK will maintain a high level of profitability, although this will depend to a great extent on the market situation in the industry.

Strategic objectives

Improve cost-effectiveness Develop promising segments Maintain efficient and sustainable growth

Net income per share (US$)

0.10 -56%

Download graph

Definition

Group income per share.

Comments

Net profit decreased, by and large, due to the downturn in the profitability of the core business as a result of unfavourable conditions on key sales markets.

Outlook for 2013

Market conditions will influence the trend of this indicator in 2013. However, we do not expect a sharp decline in income per share.

Strategic objectives

Improve cost-effectiveness Maintain efficient and sustainable growth

Net debt/EBITDA

1.88 +26%

Download graph

Definition

Debt ratio, corrected according to the level of funds and annual EBITDA.

Comments

The rise in this indicator was linked to the fall in the EBITDA, owing to the disadvantageous market situation in 2012.

Outlook for 2013

The management will strive to maintain a low level of debt in order to preserve a stable financial situation. Following the end of the production capacity build-up phase, the Company anticipates a decrease in capital investment. We predict that this will allow us to use funds to reduce the Company’s debt burden.

NLMK has established the target level for this indicator to be around 1.

Strategic objectives

Improve cost-effectiveness Maintain efficient and sustainable growth

The Group also regularly monitors many operational and non-financial indicators. In combination with the financial indicators, these allow us to evaluate the extent to which our strategic priorities and long-term goals – including the goal of sustainable development – are being implemented.

Key operational performance indicators

Steel product sales (mt)

15.2 +18%

Download graph

Definition

Total consolidated sales volume for steel products.

Comments

The increase in this indicator was the result of the installation of new equipment and a rise in capacity utilization, including at the Company’s foreign assets.

Outlook for 2013

We expect the high sales volumes to continue; however, the conditions on the global steel products market may influence this indicator.

Strategic objectives

Develop promising segments Maintain efficient and sustainable growth

Specific energy intensity (Gcal/t)

5.74 -6%

Download graph

Definition

Total energy consumption at the Lipetsk site to the volume of BOF steel produced.

Comments

As a result of the implementation of energy efficiency measures, the specific energy intensity level has been falling consistently.

Outlook for 2013

The implementation of the measures planned as part of the Technical Upgrade Programme will in future allow us to approach the levels of the leading world steel producers in specific energy intensity.

Strategic objectives

Maximise cost-efficient upstream integration into key resources Improve cost-effectiveness

Key non-financial performance indicators

Labour productivity (t/person)

239 +20%

Download graph

Definition

Steel production volume per employee.

Comments

The positive change in this indicator was the result of an increase in production efficiency.

Outlook for 2013

We expect a continuation of the positive trend in labour productivity due to an increase in the plant workload and continued implementation of headcount optimization measures.

Strategic objectives

Improve cost-effectiveness Maintain efficient and sustainable growth

Number of accidents

80 +4

Download graph

Definition

Number of accidents at the Group’s Russian assets per year.

Comments

The rise in this indicator is related to the substantial growth in production volumes and construction and assembly work associated with the commissioning of new facilities.

Outlook for 2013

The Group will continue to improve its occupational health and safety system. The Group’s management makes every effort to minimize the number of accidents on the production floor.

Strategic objectives

Operate in a safe, socially and environmentally responsible manner

Specific emissions (kg/t)

22.6 -19%

Download graph

Definition

Atmospheric emissions per tonne of steel.

Comments

The decrease in atmospheric emissions is due to the installation of new, environmentally safe equipment, the implementation of new technologies, and consistent investments in environmental safety.

Outlook for 2013

In 2013, environmental projects and measures to improve technological processes will be maintained, enabling the Company to continue to reduce its negative impact on the environment, including the reduction of specific atmospheric emissions.

Strategic objectives

Operate in a safe, socially and environmentally responsible manner

Growth in productivity at Novolipetsk

The ongoing upgrade of our main production assets and the implementation of new large-scale capex projects at Novolipetsk have enabled the Group to achieve a substantial increase in productivity at the plant. Over the past ten years, productivity at the Group’s key facilities has increased 2.2 times, from 185 tonnes of steel/person in 2002 to 406 tonnes in 2012.

This significant increase is also explained by the implementation of a programme to improve production efficiency coupled with efforts to optimize both the headcount and the company’s structure. NLMK is striving to become one of the world’s leading steelmakers in terms of productivity.

Significant decrease in air emissions at Novolipetsk

Since 2000, when the technical upgrade plans were initiated at the main production site in Lipetsk, more than 280 projects to reduce atmospheric emissions have been implemented, at a cost of nearly RUB 17 billion. As a result, our environmental footprint has been reduced by 22% and specific emissions decreased by almost 50% to 22.7 kg/t. The total amount spent on implementing environmental protection measures was approximately RUB 22.5 billion.