Novolipetsk Iron And Steel Corp Net Income surged on 54.3% and Revenue jumped on 19.7%
07 Feb 2019 • About Novolipetsk Iron And Steel Corp (
$NLMK) • By InTwits
Novolipetsk Iron And Steel Corp reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is expanding: 29.8% in 2018 vs. 26.4% in 2017 vs. 21.8% in 2014
- Novolipetsk Iron And Steel Corp has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.4%. At the same time it's a lot of higher than industry average of 4.1%.
- CAPEX is quite volatile: 226 TRYm in 2018, 164 TRYm in 2017, 180 TRYm in 2016, 240 TRYm in 2015, 717 TRYm in 2014
- The company has highly profitable business model: ROIC is 34.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 19.7%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 1.4 pp from 24.6% to 26.0% in 2018. EBITDA Margin grew at 1.8 pp per annum in the last 5 years.
Gross Margin increased on 3.8 pp from 32.5% to 36.2% in 2018. Gross Margin grew at 1.7 pp per annum in 2014-2018. SG&A as a % of Revenue decreased slightly on 1.0 pp from 11.5% to 10.5% in 2018. During the last 5 years SG&A as a % of Revenue topped in 2016 at 13.4% and was declining since that time.
Net Income margin increased on 4.2 pp from 14.4% to 18.6% in 2018. Net Income margin followed a growing trend at 2.3 pp per annum in 2014-2018. The efficient tax rate was 17.8% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 the company had CAPEX/Revenue of 5.6%. CAPEX/Revenue decreased on 2.1 pp from 7.7% in 2015 to 5.6% in 2018. Average CAPEX/Revenue for the last three years was 6.3%. During 2014-2018 CAPEX as a % of Revenue topped in 2015 at 7.7% and was declining since that time.
Return on investment
The company operates at high and attractive ROIC (34.5%) and ROE (36.0%). ROIC jumped on 12.2 pp from 22.3% to 34.5% in 2018. ROE surged on 13.5 pp from 22.4% to 36.0% in 2018. ROIC grew at 5.2 pp per annum in 2014-2018. ROE followed a growing trend at 5.7 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is 0.2x Net Debt / EBITDA and 0.6x Debt / EBITDA. Net Debt / EBITDA dropped on 0.5x from 0.7x to 0.2x in 2018. Debt dropped on 12.4% while cash jumped on 293%. During 2014-2018 Net Debt/EBITDA topped in 2015 at 1.2x and was declining since that time.
Novolipetsk Iron And Steel Corp has good short term financial stability: Interest coverage ratio (ICR) is 39.1x. Novolipetsk Iron And Steel Corp has no short term refinancing risk: cash is higher than short term debt (368.8%).
Average interest expence paid by the company was 3.9% in 2018.
Valuation and dividends
Novolipetsk Iron And Steel Corp's trades at EV/EBITDA 0.3x and P/E 0.1x.
The company paid 84.4% of Net Income as dividends in 2018.
Management team
Novolipetsk Iron And Steel Corp's CEO Grigori Fedorishin has spent 1 year with the company.
Financial and operational results
FY ended 31 Dec 2018
Novolipetsk Iron And Steel Corp ($NLMK) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 10,396 | 8,008 | 7,636 | 10,065 | 12,046 | 19.7% |
| Gross Profit | 2,937 | 2,513 | 2,563 | 3,267 | 4,366 | 33.6% |
| SG&A | 1,203 | 1,063 | 1,021 | 1,159 | 1,261 | 8.8% |
| EBITDA | 2,269 | 1,948 | 1,941 | 2,655 | 3,589 | 35.2% |
| EBIT | | | | | 3,012 | |
| Interest expence | | | | | 77 | |
| Tax | | | | | 486 | |
| Net Income | 845 | 967 | 935 | 1,450 | 2,238 | 54.3% |
Balance Sheet
|
|---|
| Cash | 549 | 343 | 610 | 301 | 1,184 | 293.4% |
| Inventory | | | | | 1,816 | |
| Short Term Debt | 804 | 560 | 468 | 380 | 321 | -15.5% |
| Long Term Debt | 1,964 | 2,116 | 1,801 | 1,901 | 1,677 | -11.8% |
Cash flow
|
|---|
| Capex | 560 | 619 | 559 | 592 | 680 | 14.9% |
| Dividends | | | | | 1,888 | |
Ratios
|
|---|
| Revenue growth | -4.7% | -23.0% | -4.6% | 31.8% | 19.7% | |
| EBITDA growth | 50.7% | -14.1% | -0.4% | 36.8% | 35.2% | |
|
|---|
| Gross Margin | 28.3% | 31.4% | 33.6% | 32.5% | 36.2% | 3.8% |
| EBITDA Margin | 21.8% | 24.3% | 25.4% | 26.4% | 29.8% | 3.4% |
| EBIT Margin | | | | | 25.0% |
| SG&A, % of revenue | 11.6% | 13.3% | 13.4% | 11.5% | 10.5% | -1.0% |
| Net Income Margin | 8.1% | 12.1% | 12.2% | 14.4% | 18.6% | 4.2% |
| CAPEX, % of revenue | 5.4% | 7.7% | 7.3% | 5.9% | 5.6% | -0.2% |
|
|---|
| ROIC | 12.0% | 15.7% | 17.5% | 22.3% | 34.5% | 12.2% |
| ROE | 10.2% | 16.9% | 16.4% | 22.4% | 36.0% | 13.5% |
| Net Debt/EBITDA | 1.0x | 1.2x | 0.9x | 0.7x | 0.2x | -0.5x |
| Interest expence / Average debt | | | | | 3.9% | |
Peers in Industrial Metals & Mining
Below you can find Novolipetsk Iron And Steel Corp benchmarking vs. other companies in Industrial Metals & Mining industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Ezz Steel ($AEZD) | -8.9% | -14.2% | 39.3% | 80.0% | |
| Zibao Metals Recycling Hldgs Ltd ($ZBO) | | -9.0% | 23.1% | 62.8% | 6.0% |
| Magnitogorsk Iron & Steel Works ($MMK) | | -26.6% | -3.6% | 34.0% | |
| Norsk Hydro Asa ($NHY) | | 12.6% | -6.5% | 33.3% | 45.9% |
| Severstal PJSC ($SVST) | | -22.9% | -7.5% | 32.7% | 9.3% |
| |
|---|
| Median (13 companies) | 3.3% | -10.6% | -3.6% | 29.5% | 8.2% |
|---|
| Novolipetsk Iron And Steel Corp ($NLMK) | | -23.0% | -4.6% | 31.8% | 19.7% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Mmc Norilsk Nickel ($MNOD) | 52.2% | 55.7% | 49.9% | 49.7% | |
| Severstal PJSC ($SVST) | 34.4% | 40.4% | 39.6% | 39.7% | 42.7% |
| Base Resources Ltd ($BSE) | 11.8% | 21.2% | 21.0% | 35.9% | 39.7% |
| Magnitogorsk Iron & Steel Works ($MMK) | 21.9% | 30.6% | 32.2% | 30.2% | |
| Cheliabinsk Elektrolit Zink Plant ($CHZN) | 28.6% | 24.8% | 29.4% | 27.9% | |
| |
|---|
| Median (11 companies) | 18.0% | 13.5% | 16.8% | 19.9% | 12.3% |
|---|
| Novolipetsk Iron And Steel Corp ($NLMK) | 28.3% | 31.4% | 33.6% | 32.5% | 36.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Base Resources Ltd ($BSE) | -2.0% | 37.7% | 35.8% | 50.9% | 54.9% |
| Mmc Norilsk Nickel ($MNOD) | 46.8% | 47.0% | 46.5% | 41.2% | |
| Severstal PJSC ($SVST) | 26.4% | 32.4% | 31.2% | 32.6% | 36.1% |
| First Quantum Minerals ($FQM) | 39.9% | 17.8% | 36.1% | 32.5% | |
| Magnitogorsk Iron & Steel Works ($MMK) | 19.5% | 28.3% | 34.5% | 26.5% | |
| |
|---|
| Median (13 companies) | 12.6% | 14.6% | 16.8% | 18.4% | 12.4% |
|---|
| Novolipetsk Iron And Steel Corp ($NLMK) | 21.8% | 24.3% | 25.4% | 26.4% | 29.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| First Quantum Minerals ($FQM) | 81.7% | 72.5% | 56.0% | 60.9% | |
| Aluminium Bahrain Bsc ($ALBH) | 6.2% | 6.3% | 16.1% | 54.2% | 57.7% |
| Mmc Norilsk Nickel ($MNOD) | 10.8% | 19.0% | 20.2% | 21.2% | |
| Magnitogorsk Iron & Steel Works ($MMK) | 6.3% | 6.0% | 8.2% | 8.8% | |
| Severstal PJSC ($SVST) | 8.4% | 6.4% | 8.4% | 7.1% | 7.6% |
| |
|---|
| Median (13 companies) | 6.4% | 6.3% | 5.9% | 6.3% | 6.1% |
|---|
| Novolipetsk Iron And Steel Corp ($NLMK) | 5.4% | 7.7% | 7.3% | 5.9% | 5.6% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Severstal PJSC ($SVST) | 17.7% | 30.3% | 29.7% | 38.8% | 49.5% |
| Cheliabinsk Elektrolit Zink Plant ($CHZN) | 25.6% | 24.4% | 24.3% | 31.0% | |
| Magnitogorsk Iron & Steel Works ($MMK) | 9.1% | 18.1% | 26.7% | 24.4% | |
| Mmc Norilsk Nickel ($MNOD) | 34.1% | 31.7% | 28.7% | 23.8% | |
| Base Resources Ltd ($BSE) | -2.3% | 2.9% | 2.7% | 13.2% | 17.1% |
| |
|---|
| Median (14 companies) | 5.9% | 5.4% | 4.9% | 8.3% | 7.6% |
|---|
| Novolipetsk Iron And Steel Corp ($NLMK) | 12.0% | 15.7% | 17.5% | 22.3% | 34.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| First Quantum Minerals ($FQM) | 4.0x | 10.5x | 4.5x | 5.2x | |
| OAO TMK ($TMKS) | 3.8x | 4.3x | 5.2x | 4.8x | |
| Ezz Steel ($AEZD) | 19.4x | 13.3x | 7.8x | 4.5x | |
| Aluminium Bahrain Bsc ($ALBH) | 0.4x | -0.2x | -0.1x | 2.5x | 7.4x |
| Posco ($PIDD) | 3.7x | 3.6x | 3.4x | 2.3x | 2.0x |
| |
|---|
| Median (13 companies) | 1.1x | 1.0x | 0.6x | 1.4x | 0.6x |
|---|
| Novolipetsk Iron And Steel Corp ($NLMK) | 1.0x | 1.2x | 0.9x | 0.7x | 0.2x |
