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Evraz Group reports NTMK full year 2004 results

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Evraz Group reports NTMK full year 2004 results

Moscow, July 19, 2005 – Evraz Group S.A. (LSE: EVR), one of the leading vertically integrated steel production and mining businesses with operationas mainly in Russia, today announces audited financial results for Nizhny Tagil Iron and Steel Plant (“NTMK”, RTS: NTMK) for the year ended 31 December 2004. The results were prepared in accordance with International Financial Reporting Standards (IFRS).

FY2004
FY2003
Change,
Y-on-Y,%
Revenues, US$ thousand
2,055,113
1,036,028
98.4
Operating profit, US$ thousand
568,997
134,758
322.2
Operating margin,%
27.7
13.0
Adjusted EBITDA , US$ thousand
673,491
234,852
186.8
EBITDA margin, %
32.8
22.7
Net income, US$ thousand
391,448
80,671
385.2
Net income margin, %
19.0
7.8

Commenting on the results, Alexander Frolov, Managing Director Corporate of Evraz Group, said:

“NTMK has demostrated impressive operating and financial performance in 2004 which benefited from a strong steel market environment and efficiency gains. Bottom-line growth was underpinned by tight control over costs and a change in mix towards highly profitable products. Our major capex initiatives at NTMK resulted in sizeable yield improvements, for example, a new slab caster put on stream last September enabled us save about US$30 per tonne of slab. These improvements further enhanced NTMK’s profitability with the EBITDA margin reaching 32.8% from 22.7% and net margin improving to 19.0% from 7.8%”.

Results of operations

In 2004, net revenue rose 98.4% to US$2,055 million from US$1,036 million in 2003. This revenue growth was driven by increased average selling prices for NTMK products and increased output.

Product
2004
(‘000 tonnes)
2003
(‘000 tonnes)
Change, Y-o-Y, %
Coke
3,033
2,919
3.9
Pig iron
4,782
4,804
-0.5
Steel
5,482
5,467
0.3
Rolled products
4,903
4,782
2.5


In 2004, NTMK generated operating profit of US$568.9 million, a 186.8% increase over 2003. This represented an improvement in the operating profit margin to 27.7% from 13% in 2003. The main drivers of increased profitability were higher sales volumes and improved yields as a result of ongoing modernisation capex. In 2004, NTMK completed reconstruction of a blast furnace which enabled significant yield improvements and associated cost savings on the 1.7 million tonnes of pig iron produced annually. 1.5 million tonnes per annum of new continuous slab casting capacity brought on line in 2004 increased yields from 82% to 96%.

In 2004, Adjusted EBITDA was US$673.5 million, a 186.8% increase on 2003. This represented an improvement in the Adjusted EBITDA margin to 32.8% from 22.7% in 2003.

Net income reached US$391.4 million in 2004, compared with US$80.7 million in 2003.

Financial position

Last year, as part of Evraz’s strategy of further vertical intergration and expansion of its mining segment NTMK spent US$160.76 million to acquire 50.58% of Kachkanarsky Ore Mining and Processing Enterprise “Vanadiy” (“KGOK”). Subsequently NTMK obtained a controlling interest with the acquisition of an additional 7.10% ownership interest for US$16.1 million. The results of operations at KGOK have been consolidated in NTMK’s consolidated financial statements from November 11, 2004. KGOK’s net profit for the period from November 11, 2004 amounted to US$ 8.646 million.

In 2004, payments for plant, property and equipment amounted to US$186.5 million.

In 2004, NTMK repaid its liabilities under the Settlement Agreement ahead of schedule. Payments under the Settlement Agreement amounted to US$125.1 million.

As of December 31, 2004 total debt (short-term and long-term loans and borrowings) was US$272.6 million. Cash and cash equivalents amounted to US$30.9 million.

As of December 31, 2004 total assets amounted to US$1.756 billion compared with US$999 million as of December 31, 2003.


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For further information:

Evraz Group
Corporate Affairs and Communications
Irina Kibina
Alexander Karlashov
Tel: +7 095 234 4629
IR@eam.ru

Merlin
Michael Rummel
Lachlan Johnston
Peter Otero
Maria Suleymanova
Tel: +44 207 653 6620
msuleymanova@merlinpr.com.