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In Q3, NLMK Group sales remained stable at 3.8 million tonnes (+0.2% q-o-q). NLMK grew its finished product sales in the domestic market to 1.283 million tonnes (+5% q-o-q), capitalising on demand from its key consumers, i.e. Russian construction and machine-building sectors. The share of domestic sales increased to 34% (+2 p.p.). As demand for flat steel in the export markets weakened, NLMK grew its slabs sales as these enjoyed stable demand.

In 9M 2012, NLMK Group produced 11.2 million tonnes of steel, up 24% y-o-y. Around 95% of all steel was produced domestically.

Outlook

In Q4, the Groups steel production is expected to remain unchanged at 3.8 million tonnes. NLMK Group confirms its previously announced steel production forecast for 12M 2012 at 15 million tonnes.

NLMK, the LSE-listed leading steel producer, today announces its consolidated US GAAP results for Q2 and 6 months of 2012.

Despite challenging market conditions NLMK delivered a set of strong operating and financial results. s Q2 sales remained largely flat at 3.8 million tonnes. Q2 revenue grew by 5% q-o-q to US$3.3 billion, driven by the better product mix and hence the slight strengthening of prices. An improved operating performance and reduced costs enabled a 38% increase in our Q2 EBITDA to US$596 million. The Q2 EBITDA margin was around 18%, 4 p.p. up q-o-q.

Outlook:

Due to weaker market conditions globally Q3 revenue could decrease 5-10%, while the sales volume will remain stable for the entire Group. At the same time, the effect of decreasing steel prices will be partially offset by the decrease in raw material prices. The EBITDA margin is expected to be in the range of 16-18%.

In Q2, NLMK Groups steelmaking capacity utilisation rates continued to improve. Crude steel production amounted to 3.842 million t (+5.7% q-o-q), of which 93.6% was produced domestically. The production of finished steel increased to 4 million t (+7% q-o-q).
Total sales remained largely in line with the previous quarters level at 3.8 million t (-1.6% q-o-q). High seasonal demand from the domestic construction segment partially offset the softening in consumer activity in the export markets. Sales of long products and metalware increased substantially (by over 20% q-o-q). Q2 domestic sales accounted for 37% of total steel product sales (+3 p.p. q-o-q). The share of finished steel in total sales increased
3 p.p. q-o-q to 74%. Sales of slabs to the Groups EU and US operations increased to 0.753 million t (+5.5%).
OUTLOOK
In Q3, NLMKs crude steel production is expected to remain stable despite the price softening in the steel market that started in the second half of Q2.
We expect Q2 consolidated financial results to be stronger than Q1 results. Sales revenue is expected to be around $3.2 billion, and EBITDA margin may reach around 18%.

The Group's steel output increased 14% q-o-q to 3.6 million t, which corresponds to over 90% utilisation rate, as the new BF-7 at Novolipetsk (NLMK’s main production site in Lipetsk) gradually increased its capacity load and the second EAF at NLMK Long Products was re-launched following transformer repairs in January 2012.

Total sales in Q1 2012 sales grew 6.4% q-o-q to 3.8 million t. Flat steel sales increased by almost 14%, and long steel sales, including metalware, grew 16.7%. NLMK continued to increase its presence in the domestic market growing its sales by 2% sequentially to 1,3 million t which corresponds to 35% of total sales for the quarter.

Slab sales to the Group’s international rolling operations in Q1 increased 57% to 0.7 million t as they replenished inventory following the destocking that occurred in the previous quarter.

Exports accounted for 65% of our sales, with the bulk going to our traditional markets, i.e. Europe, the US, the Middle East and South-East Asia.

Outlook
We expect Q2 sales volumes to increase, supported by the seasonal upturn in demand. We are keeping our previous crude steel production forecast for 2012 unchanged: the output will total about 15 million t.
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The Board of Directors of NLMK has recommended that the General Shareholders' Meeting declare dividends for 2011 on ordinary issued shares in the amount of RUR2.0 in cash per ordinary share (1 GDS = 10 ordinary shares). Taking into account the previously paid interim dividends for the first half of 2011 of RUR1.40 per ordinary share, additional payment will amount to RUR0.60 per ordinary share. (The dividend payout ratio is ~30% of 2011 US GAAP consolidated net income).
AGM participation is based on the NLMK Shareholders’ Register as of midnight April 10/11th, 2012
For more information, please contact Investor Relations Department:
Sergey Takhiev
+7 495 915 1575
st@nlmk.com
you may also follow us on Twitter at @NLMK_IR

Board of Directors of NLMK took the decision to hold the Annual General Shareholders' Meeting on 30 May 2012. The agenda for the AGM includes
Approval of the Company's 2011 annual report; annual financial statements, including income statement; allocation of profit (including dividend declaration) for the financial year 2011;
Election of members to the Company's Board of Directors;
Election of the President of the Company (Chairman of the Management Board);
Election of members to the Company's Internal Audit Commission;
Approval of the Company Auditor;
Approval of the compensation to the members of the Board of Directors of NLMK.
AGM participation is based on the NLMK Shareholders’ Register as of midnight April 10/11th, 2012
For more information, please contact Investor Relations Department:
Sergey Takhiev
+7 495 915 1575
st@nlmk.com
you may also follow us on Twitter at @NLMK_IR
Thank you.