WOOD Flash – NLMK: 3Q18 financial results – large beat on EBITDA, 3.8% quarterly dividend
NLMK released its 3Q18 financial results this morning (25 October). EBITDA rose 11% qoq (9% above the consensus), but FCF rose 122% qoq, driven by a stabilisation in working capital vs. the USD 356m build up in 2Q18. This was much better than expected, in our view, and should get a positive share price reaction. NLMK’s EBITDA has held up much better than Severstal’s, which saw a decline in EBITDA in its recent 3Q18 results, given NLMK’s higher proportion of export sales, where realised prices lag indices by longer periods. In addition, NLMK Group's board of directors has recommended NLMK shareholders approve a 3Q18 dividend of RUB 6.04/share (USD 0.92/GDR) vs. the RUB 5.24/share (USD0.84/GDR) in 2Q18. This is equivalent to approximately 86% of the company's free cash flow in 3Q18. The 3Q18 dividend yield is 3.8%, 11.2% for the first nine months of 2018, c.15% annualised. Severstal yielded 13.3% in 9M18, based on the current share price, so NLMK’s dividend yield remains below Severstal’s.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
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