Novolipetsk Iron And Steel Corp reports 58.8% CAPEX growth in 2019 while 12.4% Revenue decline
12 Feb 2020 • About Novolipetsk Iron And Steel Corp (
$NLMK) • By InTwits
Novolipetsk Iron And Steel Corp reported 2019 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Novolipetsk Iron And Steel Corp has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.4%. At the same time it's a lot of higher than industry average of 8.7%.
- CAPEX is quite volatile: 2,272 PLNm in 2019, 2,282 PLNm in 2018, 1,933 PLNm in 2017, 5,169 PLNm in 2016, 1,998 PLNm in 2015
- The company has highly profitable business model: ROIC is 23.4%
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 dropped on 12.4%. During 2015-2019 Revenue growth topped in 2017 at 31.8% and was decelerating since that time. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 5.5 pp from 29.8% to 24.3% in 2019. During the last 5 years EBITDA Margin topped in 2018 at 29.8%.
Gross Margin decreased on 5.4 pp from 36.2% to 30.8% in 2019. SG&A as a % of Revenue increased slightly on 0.85 pp from 10.5% to 11.3% in 2019.
Net Income margin decreased on 5.9 pp from 18.6% to 12.7% in 2019. During the last 5 years Net Income margin topped in 2018 at 18.6%.
Investments (CAPEX, working capital and M&A)
In 2019 the company had CAPEX/Revenue of 10.2%. Novolipetsk Iron And Steel Corp showed CAPEX/Revenue growth of 2.9 pp from 7.3% in 2016 to 10.2% in 2019. It's average CAPEX/Revenue for the last three years was 7.3%. During the last 5 years CAPEX as a % of Revenue bottomed in 2018 at 5.6%.
Return on investment
The company operates at high and attractive ROIC (23.4%) and ROE (22.8%). ROIC dropped on 11.2 pp from 34.5% to 23.4% in 2019. ROE dropped on 13.2 pp from 36.0% to 22.8% in 2019. During the last 5 years ROIC topped in 2018 at 34.5%.
Leverage (Debt)
Debt level is 0.7x Net Debt / EBITDA and 1.0x Debt / EBITDA. Net Debt / EBITDA jumped on 0.4x from 0.2x to 0.7x in 2019. Debt jumped on 28.9% while cash dropped on 26.5%. During the last 5 years Net Debt/EBITDA bottomed in 2018 at 0.2x.
Novolipetsk Iron And Steel Corp has no short term refinancing risk: cash is higher than short term debt (224.8%).
Valuation and dividends
The company's trades at EV/EBITDA 0.7x and P/E 0.1x.
Management team
Grigori Fedorishin is a the company's CEO. Grigori Fedorishin is a founder and has spent 1 year with the company.
Financial and operational results
FY ended 31 Dec 2019
Novolipetsk Iron And Steel Corp ($NLMK) key annual financial indicators| mln. $ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 8,008 | 7,636 | 10,065 | 12,046 | 10,554 | -12.4% |
| Gross Profit | 2,513 | 2,563 | 3,267 | 4,366 | 3,251 | -25.5% |
| SG&A | 1,063 | 1,021 | 1,159 | 1,261 | 1,195 | -5.2% |
| EBITDA | 1,948 | 1,941 | 2,655 | 3,589 | 2,564 | -28.6% |
| EBIT | | | | 3,012 | | |
| Interest expence | | | | 77 | | |
| Tax | | | | 486 | | |
| Net Income | 967 | 935 | 1,450 | 2,238 | 1,339 | -40.2% |
Balance Sheet
|
|---|
| Cash | 343 | 610 | 301 | 1,184 | 870 | -26.5% |
| Inventory | | | | 1,816 | | |
| Short Term Debt | 560 | 468 | 380 | 321 | 387 | 20.6% |
| Long Term Debt | 2,116 | 1,801 | 1,901 | 1,677 | 2,188 | 30.5% |
Cash flow
|
|---|
| Capex | 619 | 559 | 592 | 680 | 1,080 | 58.8% |
| Dividends | | | | 1,888 | | |
Ratios
|
|---|
| Revenue growth | -23.0% | -4.6% | 31.8% | 19.7% | -12.4% | |
| EBITDA growth | -14.1% | -0.4% | 36.8% | 35.2% | -28.6% | |
|
|---|
| Gross Margin | 31.4% | 33.6% | 32.5% | 36.2% | 30.8% | -5.4% |
| EBITDA Margin | 24.3% | 25.4% | 26.4% | 29.8% | 24.3% | -5.5% |
| EBIT Margin | | | | 25.0% | |
| SG&A, % of revenue | 13.3% | 13.4% | 11.5% | 10.5% | 11.3% | 0.9% |
| Net Income Margin | 12.1% | 12.2% | 14.4% | 18.6% | 12.7% | -5.9% |
| CAPEX, % of revenue | 7.7% | 7.3% | 5.9% | 5.6% | 10.2% | 4.6% |
|
|---|
| ROIC | 15.7% | 17.5% | 22.3% | 34.5% | 23.4% | -11.2% |
| ROE | 16.9% | 16.4% | 22.4% | 36.0% | 22.8% | -13.2% |
| Net Debt/EBITDA | 1.2x | 0.9x | 0.7x | 0.2x | 0.7x | 0.4x |
| Interest expence / Average debt | | | | 3.6% | | |
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 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Norsk Hydro Asa ($NHY) | | -6.5% | 33.3% | 45.9% | -6.0% |
| Base Resources Ltd ($BSE) | 444.2% | 16.2% | -3.9% | 22.4% | |
| First Quantum Minerals ($FQM) | -29.1% | 6.5% | 23.8% | 19.8% | |
| Severstal PJSC ($SVST) | | -7.5% | 32.7% | 9.3% | -4.9% |
| Posco ($PIDD) | | -8.8% | 14.3% | 7.1% | -0.9% |
| |
|---|
| Median (7 companies) | -11.6% | -3.6% | 29.5% | 9.3% | -4.9% |
|---|
| Novolipetsk Iron And Steel Corp ($NLMK) | | -4.6% | 31.8% | 19.7% | -12.4% |
Top companies by Gross margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Severstal PJSC ($SVST) | 40.4% | 39.6% | 39.7% | 42.7% | 39.8% |
| Base Resources Ltd ($BSE) | 21.2% | 21.0% | 35.9% | 39.7% | |
| First Quantum Minerals ($FQM) | 11.4% | 12.7% | 10.1% | 24.7% | |
| Posco ($PIDD) | 11.2% | 12.6% | 13.8% | 12.3% | 9.7% |
| Aluminium Bahrain Bsc ($ALBH) | 13.5% | 12.3% | 15.7% | 9.3% | |
| |
|---|
| Median (6 companies) | 13.5% | 16.8% | 19.9% | 18.5% | 24.8% |
|---|
| Novolipetsk Iron And Steel Corp ($NLMK) | 31.4% | 33.6% | 32.5% | 36.2% | 30.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Base Resources Ltd ($BSE) | 37.7% | 35.8% | 50.9% | 54.9% | |
| First Quantum Minerals ($FQM) | 17.8% | 36.1% | 32.5% | 42.2% | |
| Severstal PJSC ($SVST) | 32.4% | 31.2% | 32.6% | 36.1% | 34.0% |
| Posco ($PIDD) | 9.7% | 11.4% | 13.1% | 13.6% | |
| Aluminium Bahrain Bsc ($ALBH) | 17.3% | 18.4% | 18.4% | 11.2% | |
| |
|---|
| Median (7 companies) | 14.6% | 16.8% | 18.4% | 13.6% | 20.3% |
|---|
| Novolipetsk Iron And Steel Corp ($NLMK) | 24.3% | 25.4% | 26.4% | 29.8% | 24.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| First Quantum Minerals ($FQM) | 72.5% | 56.0% | 60.9% | 65.2% | |
| Aluminium Bahrain Bsc ($ALBH) | 6.3% | 16.1% | 54.2% | 57.7% | |
| Base Resources Ltd ($BSE) | 6.3% | 2.9% | 4.5% | 55.8% | |
| Severstal PJSC ($SVST) | 6.4% | 8.4% | 7.1% | 7.6% | 14.2% |
| Norsk Hydro Asa ($NHY) | 6.0% | 8.4% | 6.7% | 4.5% | 5.8% |
| |
|---|
| Median (7 companies) | 6.3% | 5.9% | 6.3% | 7.6% | 10.0% |
|---|
| Novolipetsk Iron And Steel Corp ($NLMK) | 7.7% | 7.3% | 5.9% | 5.6% | 10.2% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Severstal PJSC ($SVST) | 30.3% | 29.7% | 38.8% | 49.5% | 39.4% |
| Base Resources Ltd ($BSE) | 2.9% | 2.7% | 13.2% | 17.1% | |
| Posco ($PIDD) | 3.3% | 4.0% | 6.6% | 8.0% | |
| Norsk Hydro Asa ($NHY) | 8.7% | 6.6% | 11.8% | 7.6% | 0.4% |
| First Quantum Minerals ($FQM) | -0.4% | 1.6% | 1.1% | 4.3% | |
| |
|---|
| Median (11 companies) | 5.4% | 4.9% | 8.3% | 6.0% | 0.4% |
|---|
| Novolipetsk Iron And Steel Corp ($NLMK) | 15.7% | 17.5% | 22.3% | 34.5% | 23.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Aluminium Bahrain Bsc ($ALBH) | -0.2x | -0.1x | 2.5x | 7.4x | |
| First Quantum Minerals ($FQM) | 10.5x | 4.5x | 5.2x | 3.9x | |
| Posco ($PIDD) | 3.6x | 3.4x | 2.3x | 2.0x | |
| Norsk Hydro Asa ($NHY) | 0.0x | -0.1x | 0.3x | 0.6x | 1.3x |
| Base Resources Ltd ($BSE) | 4.4x | 3.7x | 1.4x | 0.5x | |
| |
|---|
| Median (7 companies) | 1.0x | 0.6x | 1.4x | 0.6x | 0.9x |
|---|
| Novolipetsk Iron And Steel Corp ($NLMK) | 1.2x | 0.9x | 0.7x | 0.2x | 0.7x |
