Presentation q3 2014 (us gaap) eng nov 2014 +

1Moscow, 11 November 2014

Q3 AND 9M’14 US GAAP CONSOLIDATED FINANCIAL RESULTS

This document is confidential and has been prepared by NLMK (the “Company”) solely for use at the presentation of the Company and may not be reproduced, retransmitted or further distributed to any other person or published, in whole or in part, for any other purpose.

This document does not constitute or form part of any advertisement of securities, any offer or invitation to sell or issue or any solicitation of any offer to purchase or subscribe for, any shares in the Company or Global Depositary Shares (GDSs), nor shall it or any part of it nor the fact of its presentation or distribution form the basis of, or be relied on in connection with, any contract or investment decision.

No reliance may be placed for any purpose whatsoever on the information contained in this document or on assumptions made as to its completeness. No representation or warranty, express or implied, is given by the Company, its subsidiaries or any of their respective advisers, officers, employees or agents, as to the accuracy of the information or opinions or for any loss howsoever arising, directly or indirectly, from any use of this presentation or its contents.

The distribution of this document in other jurisdictions may be restricted by law and any person into whose possession this document comes should inform themselves about, and observe, any such restrictions.

This document may include forward-looking statements. These forward-looking statements include matters that are not historical facts or statements regarding the Company’s intentions, beliefs or current expectations concerning, among other things, the Company’s results of operations, financial condition, liquidity, prospects, growth, strategies, and the industry in which the Company operates. By their nature, forwarding-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions you that forward-looking statements are not guarantees of future performance and that the Company’s actual results of operations, financial condition and liquidity and the development of the industry in which the Company operates may differ materially from those made in or suggested by the forward-looking statements contained in this document. In addition, even if the Company’s results of operations, financial condition and liquidity and the development of the industry in which the Company operates areconsistent with the forward-looking statements contained in this document, those results or developments may not be indicative of results or developments in future periods. The Company does not undertake any obligation to review or confirm analysts’ expectations or estimates or to update any forward-looking statements to reflect events that occur or circumstances that arise after the date of this presentation.

By attending this presentation you agree to be bound by the foregoing terms.

2

DISCLAIMER

CONTENT

1. Key results

2. Financial highlights

3. Segment results

3

OPERATING RESULTS

• GROWTH OF UTILIZATION RATES IN Q3’14:

o NLMK Group: 96% (+2 p.p. qoq), key drivers:

◦ Lipetsk site (Steel Segment): +2 p.p.

◦ NLMK USA: +10 p.p.

• Q3’14 STEEL OUTPUT GROWTH:

o 4.1 m t, +10% qoq

• SALES IN Q3’14:

o Sales to third parties: 3.6 m t (-7% qoq)

o One-off decrease in sales due to a prolonged revenue recognition period for Long Products segment products

o Sales growth in Q4 by 2-5%

4

3.0 3.1 3.1 3.2 3.1 2.9 3.2

0.5 0.5 0.6 0.7 0.7 0.70.80.2 0.2 0.2

0.2 0.2 0.20.23.7 3.8 3.9 4.1 3.9 3.84.1

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14

Steel segment Long products segment Foreign rolled product segment

* NLMK Verona production volumes excluded from total since Q4’13

STEEL OUTPUT*

m t

81%85%

98%94%

91%

85%

100%96%

50%

60%

70%

80%

90%

100%

NLMK USA NLMK Longproducts

Lipetsk site NLMK Group

Q2'14 Q3'14 Global average utilization rate

75%

UTILIZATION RATES BY SITE

Sources: global utilization rate as per WSA data

SALES

1,148 1,256 1,189

1,3311,518 1,372

1,388 1,0611,022

3,867

480

3,835

454

3,583

684

Q1' 14external

sales

Q1' 14intra-groupsales

Q2' 14external

sales


Q3' 14external

sales


Semis

Ordinaryproducts

HVA products

Slab sales tosubsidiaries

‘000 t

0.74 0.74 0.81 0.84 0.74 0.77 0.90 0.77 0.77 0.87 0.940.36 0.45 0.43 0.39 0.42 0.45

0.520.52 0.52

0.62 0.521.10 1.20 1.26 1.32 1.32 1.411.60

1.46 1.551.74 1.69

0%

10%

20%

30%

40%

50%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14

Semi-finished products Flat products

Long products TOTAL

Russian market share (r.h.)

• STABLE POSITIONS IN THE RUSSIAN MARKET

o High sales in Russia in Q3’14: 1.69 m t (+6% yoy), share: 47%, growth qoq and yoy

o 9M’14: growth of sales in Russia: +15% yoy:

◦ Flat steel, including HVA* products: +7% yoy

◦ Long products driven by NLMK Kaluga: +20% yoy

◦ Semi-finished products: +39% yoy

• INTERNATIONAL MARKETS DEVELOPMENTS

o Sales of the foreign assets grew by +11% yoy**

• TARGETED SEGMENTS DEVELOPMENT IN ACCORDANCE WITH STRATEGY 2017

o NLMK EU Strip: sales of flat products for automotive in Europe went up to 0.323 m t (+15% yoy, 42% of sales in 9M’14)

o NLMK EU Plates: sales of niche plates went up to 0.150 m t (+53% yoy, 18% of sales in 9M’14)

5

STRATEGIC MARKETS

FOREIGN ASSET SALES **

m t

NLMK SALES IN RUSSIA

Total sales

43%47%

*HVA - high value added products. HVA includes cold-rolled, galvanized, pre-painted and electrical steel** Sales of foreign assets include sales of NBH companies

62% 58%

38% 42%

737 764

0

200

400

600

800

1000

9M'13 9M'14

AutomotiveOther industries

NLMK EU STRIP

000’ t

NLMK USA

000’ t

87% 82%

13%18%

746858

0

200

400

600

800

1000

9M'13 9M'14

Q&T / niche thick platesOrdinary gradesИтого

NLMK EU PLATE

000’ t

1,3621,533

0

400

800

1200

1600

2000

9M'13 9M'14

Flat steel

45%

FINANCIAL HIGHLIGHTS

6

• Q3’14 OPERATING RESULTS

o Revenue $2,607 m (-7% qoq)

o EBITDA $693 m (+17% qoq)

o EBITDA margin 27% (+6 p.p.)

o Net debt $1,803 m (-14% qoq)

o Net debt/12M EBITDA 0.83х

• ONGOING PROFITABILITY GROWTH

• CONSISTENT IMPLEMENTATION OF OPERATIONAL EFFICIENCY PROGRAMS

o Q3’14 effect totaled $50 m (compared to 2013)

o 9M’14 cost saving reached $183 m - approximately 80% of the Strategy 2017 target (excluding the ruble weakening effect: 88%)

• 9M’14 OPERATING RESULTS

o Revenue $8,053 m (-4% yoy)

o EBITDA $1,756 m (+60% yoy)

o EBITDA margin 22% (+9 p.p. yoy)

EBITDA MARGIN, %

11%14% 14%

16%18%

21%

27%

0%

5%

10%

15%

20%

25%

30%

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14

6

9M’14 OPERATIONAL EFFICIENCY GAINS BY SEGMENT

61%

6%

11%

7%

16%Steel segment

Long products segment

Mining segment

Foreign rolled productssegment

NLMK Belgium Holdings

$183 m

CONTENT

1. Key results


3. Segment results

7

PROFITABILITY

8

• Q3’14 EBITDA: $693 M (+17% QOQ)

• Q3’14 EBITDA MARGIN: 27%

o Efficiency improvement programmes

o Widened spreads between prices for steel products and raw materials

o Weaker RUB exchange rate

• STEEL SEGMENT

o Increased demand for semi-finished products

• LONG PRODUCTS SEGMENT

o Decrease in the share of direct sales - longer period of revenue recognition

• MINING SEGMENTo Decline in iron ore prices

• FOREIGN ROLLED PRODUCTS SEGMENT

o Seasonal reduction in steel consumption in the EU market

o Stable sales in the US market

EBITDA CHANGE BY SEGMENT (QOQ)

594

+102

+25 - 40+17 - 5

693

400

500

600

700

800

Q2

'14

Stee

l seg

men

t

Lon

g p

rod

uct

sse

gmen

t

Min

ing

segm

ent

Fore

ign

ro

lled

pro

du

cts

segm

ent

Oth

er o

per

atio

ns

and

inte

rseg

men

tal

Q3

'14

$ m

SEGMENT CONTRIBUTION TO EBITDA

455

77

14536

- 20

693

200

400

600

800

Stee

l seg

men

t

Lon

g p

rod

uct

sse

gmen

t

Min

ing

segm

ent

Fore

ign

ro

lled

pro

du

cts

segm

ent

Oth

er o

per

atio

ns

and

inte

rseg

men

tal

Q3

'14

$ m

EBITDA

Working capital changes

Other non-cash operations

Income tax

Net interest *

NET OPERATING CASH FLOW

Capital expenditures **

FREE CASH FLOW TO THE FIRM

Net repayments of borrowings/attraction of funds

FREE CASH FLOW TO EQUITY

Change in deposits and financial investment

FX rate change

CHANGE IN CASH

CASH FLOW IN Q3’14

9

Q3‘14 CASH FLOW BRIDGE• ONE-OFF DECREASE IN Q3’14 OPERATING CASH FLOW TO $194 M

o Q3’14 EBITDA $693 m (+17% qoq)

o Working capital increase by $364 m due to one-off factors:

◦ Seasonal accumulation of winter stock (scrap and NLMK USA slabs)

◦ Delayed recognition of Long Products segment revenue

◦ Stock accumulation at NLMK Kaluga – preparation for mastering new types of products

◦ Impact of RUB exchange rate in terms of working capital of international assets (>$100 m)

• CONSERATIVE INVESTMENT PROGRAM

o Q3’14 capex: $158 m (+5% qoq and -44% yoy)

o 9M’14 capex: $439 m (-33% yoy)

o 2014 capex: $650-700 m

o 2015E capex: $800-900 m

o Source of investment financing – operational cash flow

$ m

-124

-19

149

-254

-290

36

-158

194

-33

-111

9

-364

693

* Including interest paid (w/o capitalized interest) of $42 m and interest received of $10 m** Including capitalized interest of $16 m

FREE CASH FLOW GROWTH

10

• STRUCTURAL GROWTH IN BUSINESS PROFITABILITY

o Sizable gains coming from operational efficiency programs

o Effects from investment projects

o Growth in free cash flow available to shareholders/creditors

• LOWER CAPITAL INTENSITY BUSINESS

• LOWER DEBT LOAD

o Target Net debt / EBITDA achieved

• POTENTIAL DIVIDENT PAYMENT GROWTH

1.8 1.81.2 1.2

-2.0

-1.5

-0.8 -0.4-0.2

0.4 0.40.8

2011 2012 2013 9М'14

Operational cash flow Capex Free cash flow to the firm

CASH FLOW DYNAMICS

$ bn

4.4 4.64.2

3.3

3.4 3.62.7 1.8

1.5

1.91.8

0.8

0.5

1.0

1.5

2.0

0

1

2

3

4

5

2011 2012 2013 9М'14

Financial debt Net Debt Net Debt/EBITDA ratio

LOWER DEBT LOAD

$ bn

2.68 2.36

1.16 -0.29-0.26 0.93

0

1

2

3

4

5

30 Jun '14 Net settlements ofdebt

FX rate changeimpact

30 Sep '14

ST debt LT debt

DEBT POSITION

11

• REDUCTION IN NET DEBT, HIGH LIQUIDITY LEVEL PRESERVED

o Net debt $1.80 bn (-14% qoq)

o Gross debt $3.29 bn (-14% qoq)

o Cash and equivalents* $1.48 bn (-14% qoq)

o Net debt / 12M EBITDA 0.83х (-0.31 p. qoq)

CHANGE IN DEBT POSITION IN Q3’14

NET DEBT CHANGE IN Q3’14MATURITY AND NET DEBT/EBITDA

$ bn

Weighted average maturity

1.93

2.15

1.87

1.80

1.39

1.14

0.83

0.0

0.5

1.0

1.5

2.0

2.5

Q1'13

Q2'13

Q3'13

Q4'13

Q1'14

Q2'14

Q3'14

Strategy 2017 target – 1.0

Net debt/EBITDA

3.3 3.4 3.63.3 3.2 3.0 2.9

0.0

1.0

2.0

3.0

4.0

5.0

Q1'13

Q2'13

Q3'13

Q4'13

Q1'14

Q2'14

Q3'14

* Cash and equivalents and short term investments

2.10

0.19 0.16 0.26

1.80

1.0

1.5

2.0

2.5

30 Jun '14 Operating cashflow

Capex FX rate and otherfactors

30 Sep '14

$ bn

3.833.29

423

748

369324

817

560

$0

$200

$400

$600

$800

$1,000

Q4 2014 2015 2016 2017 2018 2019 andonward

Other debt

Revolving credit lines for working capital financing

Eurobonds (USD)

ECA financing and investment credits

Ruble bonds

LIQUIDITY AND DEBT SETTLEMENT

12

• STRONG LIQUIDITY POSITION

• COMFORTABLE MATURITY SCHEDULE

o Short term deb $0.93 bn

◦ Ruble bonds

◦ Revolving credit lines for working capital financing

◦ ECA financing

o Long term debt $2.36 bn

◦ Eurobonds and ruble bonds

◦ Long term part of ECA financing

TOTAL DEBT MATURITY SCHEDULE***INTEREST EXPENSES**

$ m

1,483898

2,522

423173 117 185

$0

$1,000

$2,000

$3,000

$4,000

$5,000

Liquid assets Q3 '14 Q4 '14 Q1 '15 Q2 '15 12M

$ mUndrawn committed

credit lines

Cash and equivalents

LIQUID ASSETS AND SHORT-TERM DEBT MATURITY*

31 27 22 33 32 33 32

33

35 35

22 21 17 16

0%

5%

10%

15%

20%

25%

0

10

20

30

40

50

60

70

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14

Non-capitalized interest expense (lhs) Capitalized interest expense (lhs)

Interest expense to EBITDA (rhs)

* ST maturity payments without interest accrued** Quarterly figures are derived by computational method on the basis of quarterly reports*** Maturity payments do not include interest payments

$ m

Q4’14 OUTLOOK

• MARKET

o Russia – seasonal slowdown in the construction sector

o Europe – seasonal recovery in demand

o USA – stable market situation

• OPERATIONAL RESULTS

o Expected Group crude steel production: 4.0 m t

o Sales volumes will increase by 2-5%

13

CONTENT

1. Key results


3. Segment results

14

1.66 1.68

1.53 1.60 1.74 1.73

1.64

0.35 0.37 0.47 0.21

0.30 0.27 0.37

0.080.21 0.19 0.15

0.26 0.350.45

0.0

0.5

1.0

1.5

2.0

2.5

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14

Revenue from intercompany sales Revenue from sales to third parties

EBITDA

4%

10% 9%8%

13%18%

23%

EBITDA margin

24%

18%

6%5%6%5%

5%

9%

12%

9%

Iron ore materials

Coke and coal

Scrap

Ferroalloys

Other raw materials

Electricity

Natural gas

Other energy resources

Personnel costs

Other expenses and changes in inventories

Depreciation

STEEL SEGMENT

• STABLE TOTAL REVENUE IN Q3’14 QOQ

o Higher total sales volumes (+6% qoq)

o Increased slab deliveries to the Group’s foreign companies (+50%) and to NBH (+7%)

o Lower average sales prices

• EBITDA MARGIN INCREASED TO 23%

o Maximum steelmaking capacity utilization rates


o Widened spreads between prices for steel and raw materials

COST OF SALES, Q3’14SEGMENT REVENUE AND EBITDA

SALES AND REVENUE FROM THIRD PARTIES

$ bn

15

8% 8%6% 7%8% 8%17% 16%

15% 15%

26% 26% 21% 21%

36% 39% 30% 33%

7% 6%

0%

20%

40%

60%

80%

100%

SalesQ3' 14

SalesQ2' 14

RevenueQ3' 14

RevenueQ2' 14

Income from otheroperations*Pig iron

Slabs

HRC

CRC

Galvanized

Pre-painted

Dynamo

Transformer

2.351 m t $1,636 m

* Revenue from the sale of other products and services

2.459 m t $1,728 m

$1,432 m

288 314355 371 337

430 378

59

113 114102

57

101

115

20 2340

12 752

77

0

70

140

210

280

350

420

490

560

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14

Revenue from intra-group sales Revenue from third parties EBITDA

6%5%

8%

3% 2%

10%

16%

EBITDA margin

67%3%

1%

8%

9%

5%7%

Scrap

Ferroalloys

Other raw materials

Electricity

Personnel

Other expenses

Depreciation

$396 m

LONG PRODUCTS SEGMENT

• SALES VOLUME DECREASE BY 18%o Decrease in the share of direct sales – longer revenue

recognition period

o Accumulation of stock at NLMK Kaluga related to activities aimed at mastering new product types

• EXTERNAL REVENUE DECRESE BY 12%o Favourable pricing environment

• EBITDA MARGIN UP TO 16%o Sustainably high capacity utilization rates

o Widened spreads between rebar and scrap prices

SEGMENT REVENUE AND EBITDA

THIRD PARTY SALES AND REVENUE STRUCTURE

$ m

16

COST OF SALES IN Q3 ‘14

* Revenue from intra-group sales is represented mostly by ferrous scrap deliveries to the Lipetsk site

14% 12% 16% 13%

11% 11% 8% 8%

75% 77% 74% 76%

0%

20%

40%

60%

80%

100%

Sales volumeQ3 '14

Sales volumeQ2 '14

RevenueQ3 '14

RevenueQ2 '14

Other operations*

Long products

Billets

Metalware

739 ‘000 t $430 m

* Revenue from other products

$378 m608 ‘000 t

92 100 86 94 88 117

70

245 249 226

259 229 189

178 215 227

190228 209

185145

0

100

200

300

400

500

Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14Revenue from intersegmental salesRevenue from third partiesEBITDA

64%65%

61%65%

66%

60%58%

EBITDA margin

7%

23%

6%

23%

21%

19%

Raw materials

Electricity

Natural gas

Other energy resources

Personnel

Other expenses

Depreciation

MINING SEGMENT

• REVENUE DECLINE BY 19% QOQ

o Decline in iron ore prices (15-20% qoq)

o Stable iron ore sales at 4 m t, incl.:

◦ 3.2 m t (+16% qoq) – to the Lipetsk site

◦ 0.8 m t (-36% qoq) – to third parties

• EBITDA MARGIN AT 58%

o Lower global iron ore prices

o Efficiency improvement programmes and increase in equipment productivity

SALES AND REVENUE STRUCTURE

17

COST OF SALES IN Q3‘14

79% 70% 68% 60%

21% 33%26% 36%

0%

20%

40%

60%

80%

100%

SalesvolumesQ3 '14

SalesvolumesQ2 '14

RevenueQ3 '14

RevenueQ2 '14

Otheroperations*

Iron ore salesto third parties

Iron ore salesto Lipetsk site

4,004 kt $306 m$248 m3,970 kt

* Other operations include limestone and dolomite sales


$ m

$89 m

817730 750

445 471533 523

-26 -62 -35 30 23 19 36

-3%

-9%

-5%

7%5%

4%

7%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

-200

0

200

400

600

800

1,000

Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14

Revenue EBITDA EBITDA margin (r.h.)

FOREIGN ROLLED PRODUCTS SEGMENT

• SEGMENT SALES DECLINE BY 3% QOQ

o Stable NLMK USA sales volumes as favourable market conditions persist

o Seasonal decline in thick plate sales (NLMK Dansteel) by 13% qoq to 90,000 t

• REVENUE DOWN BY 2% QOQ

• SEGMENT PROFITABILITY GROWTH

o Widened spreads between prices for slabs and rolled products


NLMK USA SALES AND REVENUE STRUCTURE

18

$ m


58% 56% 51% 49%

26% 29%27% 30%

15% 14%16% 16%5% 5%

0%

20%

40%

60%

80%

100%

SalesvolumeQ3 '14

SalesvolumeQ2 '14

RevenueQ3 '14

RevenueQ2 '14

Other operations

Pre-painted

CRC

HRC

Semi-finished

540 ‘000 t $443 m$445 m534 ‘000 t

APPENDICES

19

SALES STRUCTURE

20

• GROWTH OF INTERCOMPANY SLAB SALES +50% QOQ

• INCREASE OF SLAB SALES TO NBH TO 0.46 M T (+7% QOQ)

• Q3’14: PIG IRON SALES WENT UP TO 97,000 T

• LONG PRODUCT SALES DECREASE – LONGER SALES RECOGNITION PERIOD (Q4’14)

SALES STRUCTURE BY PRODUCT

REVENUE BY PRODUCTSALES MIX CHANGE BY PRODUCT

13% 15% 13%3% 4% 3%3% 3% 3%6% 6% 6%

13% 14% 15%

22%25% 25%

34%25% 24%

Q1'14 Q2'14 Q3'14

Pig iron

Slabs

Billets

HRC

Thick plates

CRC

Galvanized

Pre-painted

Electrical

Long products

Metalware

3.87 3.84m t

3.58

10% 12% 11%5% 6% 6%5% 5% 5%7% 7% 8%

13%14% 14%

19%21% 22%

27% 20% 19%

9% 9% 8%

Q1'14 Q2'14 Q3'14

0%

20%

40%

60%

80%

100%

Other products*

Pig iron

Slabs

Billets

HRC

Thick plates

CRC

Galvanized

Pre-painted

Electrical

Long products

Metalware

$2.81 bn$2.64 bn $2.61 bn

-42%

-22%

-19%

-13%

-12%

-5%

-4%

-3%

-1%

-1%

5%

x22

NGO steel

Billets

Long products

Thick plates

Slabs

Galvanized

HRC

Metalware

CRC

Pre-painted

GO steel

Pig Iron Sales changeqoq

SALES GEOGRAPHY

21

• SALES IN Q3 ’14: 3.6 M T (-7% QOQ)

o Stable sales to the Russian market: 1.7 m t

◦ Flat steel sales 0.945 m t (+9% qoq)

o Sales to export markets: 1.9 m t (-10% qoq)

◦ Sales to Europe decreased (-5% qoq) due to seasonal factor

◦ Sales to N. America increased (+10% qoq)

• IN 9M ’14 SALES: 11.3 M T (0% YOY)

o Sales to Russia increased to 5.0 m t (+15% yoy)

o Sales to USA increased (+46% yoy)

o Sales to Europe grew (+13% yoy)

◦ Slab sales to NBH from Q4 ’13 recognized as external sales

1.55 1.74 1.69

0.740.71 0.67

0.240.24 0.22

0.75 0.64 0.70

0.52 0.36 0.13

0

1

2

3

4

Q1 '14 Q2 '14 Q3 '14

Others SE Asia N.America M. East* EU Russia

1.04 1.20 1.22

0.450.49 0.42

0.150.15 0.13

0.510.64 0.590.04

0.450.28

0.20

0

1

2

3

Q1 '14 Q2 '14 Q3 '14

Others

SE Asia

N. America

M. East*

EU

Russia

2.64$ bn 2.81

2.61

m t 3.87 3.84

Share in Q3’14

8%

2%

23%

5%

16%

47%

* Incl. Turkey

3.58

STEEL PRODUCT SALES BY REGION

REVENUE BY REGIONNLMK SALES TO THE RUSSIAN MARKET

72%

13%

14%

0%

20%

40%

60%

80%

100%

Sales by industriesin Q3'14

Pipe producers

Machine building

Construction andinfrastructure

30%

56%

14%

0%

20%

40%

60%

80%

100%

Sales by producttype in Q3'14

Semi-finished

Flat steel

Long products andmetalware

by sector by product type

450

-26

370

-28

374

-26

-100

0

100

200

300

400

500

RevenueQ1 '14

EBITDAQ1 '14

RevenueQ2 '14

EBITDAQ2 '14

RevenueQ3 '14

EBITDAQ3 '14

FOREIGN ASSETS PERFORMANCE

22

NBH FINANCIAL RESULTS

$ m

NLMK USA AND NLMK DANSTEEL ROLLED PRODUCT SALES

0.25 0.30 0.31

0.13 0.16 0.14

0.07 0.08 0.08 0.10 0.10 0.09

0.560.64 0.62

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0

0.1

0.2

0.3

0.4

0.5

Q1 '14 Q2 '14 Q3 '14

HRC CRC Coated steel Thick plates(NLMK Dansteel)

NBH ROLLED PRODUCT SALES

0.17 0.15

0.16

0.02 0.01 0.01

0.09 0.08 0.07

0.18 0.16 0.17

0.450.41 0.41

0.00

0.10

0.20

0.30

0.40

0.50

0

0.1

0.2

0.3

Q1 '14 Q2 '14 Q3 '14

HRC CRC Coated Thick plates

m t

SLAB SALES BY THE STEEL SEGMENT

0.81

0.54 0.40

0.48 0.43 0.46

0.11 0.12 0.11

0.37 0.32

0.58

1.77

1.411.54

0.00

0.50

1.00

1.50

2.00

-

0.2

0.4

0.6

0.8

1.0

1.2

1.4

Q1 '14 Q2 '14 Q3 '14

To third parties NBH NLMK Dansteel NLMK USA

m t

m t

SEGMENT RESULTS OVERVIEW

23

REVENUE FROM THIRD PARTIES BY SEGMENT

SEGMENT RESULTS CHANGE QOQ

$ m

1,728 1,636

430378

11770

533523

0

500

1,000

1,500

2,000

2,500

3,000

Q2'14 Q3'14

Steel segment Long products segment

Mining segment Foreign rolled products segment

-12%

-19%

-5%

-2%

-14%

-7%

-7%

0%Steel segment

Mining segment

Revenue

Production expenses

Revenue

Revenue

Revenue

Production expenses

Production expenses

Production expenses

Long productssegment

Foreign rolled products segment83

214 187 153 262

353 455

20

23 40 12

7

52

77

215

227 190 228

209

185

145

26

-2 -2 -14 -33 -14 -20-26

-62 -35

30 23

19

36

-$100

$100

$300

$500

$700

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14

Foreign rolled product segment Other operations including intersegmental

Mining segment Long products segment

Steel segment

$ m

409379400

318

594

468

EBITDA BY SEGMENT 2013-2014

693

24

CASH COST OF SLABS

SLAB CONSOLIDATED CASH COST STRUCTURE (AT LIPETSK SITE)

Cost item Q3 ’14 Q2 ’14 ∆, $/t

Coke and coking coal $77 $79 -$2

Iron ore $49 $56 -$7

Scrap $31 $32 -$1

Other materials $29 $30 -$1

Electricity $17 $19 -$2

Natural gas $18 $20 -$2

Personnel $27 $28 -$1

Other expenses $46 $43 +$3

Total $295 $308 -$13

CASH COST OF SLABS (AT LIPETSK SITE), 2012-2014

Period $/t

Q1 ’12 $395

Q2 ’12 $411

Q3 '12 $383

Q4 '12 $361

2012 $388

Q1 '13 $364

Q2 '13 $348

Q3 '13 $329

Q4 '13 $349

2013 $348

Q1 '14 $310

Q2 '14 $308

Q3 '14 $295

251 as of 30.09.2014

2 as of 30.06.2014

SEGMENT INFORMATION

Q3 2014

(million USD)

Revenue from external customers 1 636 523 378 70 0 2 607 2 607

Intersegment revenue 373 115 178 666 (666)

Gross profit 576 39 97 159 (1) 871 (65) 807

Operating income/(loss) 312 (67) 49 127 (1) 421 (19) 402

as % of net sales 16% (13%) 10% 51% 15%

Income / (loss) from continuing operations

before minority interest378 (165) 233 172 1 619 (282) 337

as % of net sales 19% (31%) 47% 69% 13%

Segment assets including goodwill1 11 350 1 786 2 360 2 041 138 17 674 (3 661) 14 013

Q2 2014

(million USD)

Revenue from external customers 1 728 533 430 117 0 2 808 2 808

Intersegment revenue 271 101 189 561 (561)

Gross profit 466 24 74 208 (0) 771 (44) 727

Operating income/(loss) 207 (1) 23 168 (1) 396 (14) 382

as % of net sales 10% (0%) 4% 55% 14%

Income / (loss) from continuing operations

before minority interest469 (13) (2) 99 0 555 (336) 219

as % of net sales 23% (2%) (0%) 32% 8%

Segment assets including goodwill2 12 737 1 867 2 661 2 337 121 19 724 (3 860) 15 863

Totals

Intersegmental

operations and

balances

Consolidated

Steel

Foreign

rolled

products

Long

productsMining All other Totals

Intersegmental

operations and

balances

Consolidated

Steel

Foreign

rolled

products

Long

productsMining All other

QUARTERLY DATA: CONSOLIDATED STATEMENT OF INCOME

26Reporting periods of the Company are 3M, 6M, 9M and 12M. Quarterly figures (with the exception of Q1) are derived by computational method, including for segment reporting.

Q3 2014 Q2 2014 9M 2014 9M 2013

(mln USD) + / - % + / - %

Sales revenue 2 607 2 808 (201) (7%) 8 053 8 405 (352) (4%)

Production cost (1 592) (1 869) 277 (15%) (5 286) (6 175) 889 (14%)

Depreciation and amortization (208) (212) 4 (2%) (620) (656) 37 (6%)

Gross profit 807 727 80 11% 2 147 1 573 574 37%

General and administrative expenses (80) (84) 4 (5%) (257) (339) 82 (24%)

Selling expenses (207) (225) 19 (8%) (644) (696) 52 (8%)

Taxes other than income tax (35) (35) (0) 1% (110) (97) (13) 14%

Impairment losses (83) (83) (83) (83)

Operating income 402 382 20 5% 1 053 440 613 139%

Gain / (loss) on disposals of property, plant and equipment (8) (3) (5) 155% (12) (17) 5 (27%)

Gains / (losses) on investments 38 4 34 41 23 18 80%

Interest income 11 9 2 23% 26 32 (6) (18%)

Interest expense (34) (33) (1) 2% (99) (80) (19) 23%

Foreign currency exchange loss, net 73 (62) 135 (217%) 57 21 36 174%

Other expense, net (32) (11) (21) 185% (50) (26) (25) 97%

Income from continuing operations before income tax 448 285 163 57% 1 015 393 623 159%

Income tax (111) (66) (45) 69% (242) (186) (56) 30%

Equity in net earnings/(losses) of associate (41) (60) 19 (146) 0 (146)

Net income 295 159 137 86% 627 207 420 203%

Less: Net loss / (income) attributable to the non-controlling interest (15) (0) (15) (14) 2 (16) (662%)

Net (loss) / income attributable to OJSC Novolipetsk Steel stockholders 281 158 122 77% 613 209 404 193%

EBITDA 693 594 99 17% 1 756 1 096 659 60%

Q3 2014/Q2 2014 9M 2014/9M 2013

CONSOLIDATED CASH FLOW STATEMENT

Reporting periods of the Company are 3M, 6M, 9M and 12M. Quarterly figures (with the exception of Q1) are derived by computational method, including for segment reporting. 28

Q3 2014 Q2 2014 9M 2014 9M 2013

(mln. USD) + / - % + / - %

Cash flow from operating activities

Net income 295 159 137 86% 627 207 420 203%

Adjustments to reconcile net income to net cash provided by operating activitiesDepreciation and amortization 208 212 (4) (2%) 620 656 (37) (6%)Loss on disposals of property, plant and equipment 8 3 5 155% 12 17 (5) (27%)(Gain)/loss on investments (38) (4) (34) 863% (41) (23) (18) 80%Interest income (11) (9) (2) 23% (26) (32) 6 (18%)Interest expense 34 33 1 2% 99 80 19 23%Equity in net ernings of associate 41 60 (19) (32%) 146 (0) 146Defferd income tax (benefit)/expense 0 27 (27) (100%) 20 20 (1)Loss / (income) on forward contracts 11 (4) 15 (375%) 13 (7) 20 (277%)Loss of impairment 83 83 83 83Other movements (42) 7 (49) (703%) (41) 17 (58) (348%)

Changes in operating assets and liabilitiesIncrease in accounts receivables (42) 72 (114) (158%) (198) (417) 219 (53%)Increase in inventories (366) 102 (468) (459%) (34) 152 (187) (123%)Decrease/(increase) in other current assets 3 3 0 12% (5) 6 (10) (184%)Increase in accounts payable and oher l iabilities 9 (23) 32 (140%) (17) 333 (350) (105%)Increase/(decrease) in current income tax payable 32 (10) 42 (437%) 36 21 15 73%

Cash provided from operating activities 227 1 293 1 030 263 26%Interest received 10 9 1 11% 24 24Interest paid (42) (20) (22) 107% (103) (103)

Net cash provided from operating activities* 194 618 (424) (69%) 1 213 987 226 23%

Cash flow from investing activities Proceeds from sale of property, plant and equipment (1) 3 (4) (136%) 5 3 2 77%Purchases and construction of property, plant and equipment (158) (151) (7) 5% (439) (658) 219 (33%)

Proceeds from sale / (purchases) of investments, net 45 11 33 297% (14) 19 (33)(Placement) / withdrawal of bank deposits, net 109 (139) 248 (178%) (213) (403) 190Acquisition of additional stake in existing subsidiary (10) 10 (100%)

Net cash used in investing activities (5) (276) 271 (98%) (660) (1 002) 342 (34%)0

Cash flow from financing activities

Proceeds from borrowings and notes payable 19 9 10 109% 30 1 664 (1 634) (98%)

Repayments of borrowings and notes payable (310) (144) (166) 115% (602) (1 666) 1 064 (64%)

Capital lease payments (4) (6) 2 (33%) (15) (19) 4 (22%)

Dividends to shareholders (3) (111) 108 (115) (113) (1) 1%

Net cash used in financing activities (298) (252) (46) 18% (702) (135) (567)

Net increase / (decrease) in cash and cash equivalents (108) 91 (199) (220%) (149) (150) 1

Effect of exchange rate changes on cash and cash equivalents (16) 18 (34) (187%) (7) 34 (41) (119%)

Cash and cash equivalents at the beginning of the period 939 830 109 13% 970 951 19 2%

Cash and cash equivalents at the end of the period 815 939 (124) (13%) 815 835 (21) (2%)

Q3 2014/Q2 2014 9M 2014/9M 2013

28

CONSOLIDATED BALANCE SHEETas at

30.09.2014as at

30.06.2014as at

31.03.2014as at

31.12.2013as at

31.12.2012as at

31.12.2011

(mln. USD)

ASSETS

Current assets 4 781 5 138 4 966 4 781 5 469 5 504Cash and cash equivalents 815 939 830 815 951 797Short-term investments 668 792 753 668 107 227Accounts receivable, net 1 371 1 561 1 544 1 371 1 491 1 573Inventories, net 1 822 1 735 1 731 1 822 2 827 2 828Deferred income tax assets 95 96 90 95 63 19Other current assets, net 10 16 17 10 30 59

Non-current assets 9 233 10 725 10 241 9 233 12 988 11 753Long-term investments, net 415 466 443 415 19 8Property, plant and equipment, net 8 259 9 610 9 162 8 259 11 753 10 570Intangible assets 78 93 110 78 142 159Goodwill 391 452 428 391 786 760Other non-current assets, net 55 62 39 55 38 19Deferred income tax assets 35 43 58 35 250 237

Total assets 14 013 15 863 15 206 14 013 18 458 17 257

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities 2 095 2 307 2 242 2 095 3 302 2 940Accounts payable and other l iabilities 1 113 1 125 1 068 1 113 1 462 1 623Short-term borrowings 930 1 157 1 141 930 1 816 1 306Current income tax liability 51 25 33 51 24 11

Non-current liabilities 2 997 3 329 3 361 2 997 4 065 4 212Long-term borrowings 2 355 2 676 2 743 2 355 2 816 3 074Deferred income tax liability 541 602 566 541 792 714Other long-term liabilities 101 51 52 101 457 425

Total liabilities 5 091 5 635 5 603 5 091 7 367 7 152

Stockholders’ equityCommon stock 221 221 221 221 221 221Statutory reserve 10 10 10 10 10 10Additional paid-in capital 257 257 257 257 306 306Other comprehensive income (3 621) (2 159) (2 739) (3 621) (997) (1 489)Retained earnings 12 019 11 873 11 829 12 019 11 582 11 099

NLMK stockholders’ equity 8 886 10 202 9 579 8 886 11 123 10 147Non-controlling interest 36 26 25 36 (33) (42)Total stockholders’ equity 8 922 10 228 9 603 8 922 11 090 10 105

Total liabilities and stockholders’ equity 14 013 15 863 15 206 14 013 18 458 17 257

www.nlmk.com

NLMK

Investor Relations

Russia, 115054, Moscow

18, Bakhrushina str, bldg 1

t. +7 495 915 15 75

f. +7 495 915 79 04

[email protected]

mailto:[email protected]