OREANDA-NEWS. August 25, 2011. NLMK is due to release its 2Q11 US GAAP results tomorrow morning (25 Aug) with an analyst call scheduled for 17:00 (Moscow time). We expect 2Q11 revenue to come in 17% higher QoQ, at USD 2.85bn, thanks to higher selling prices, which offset the reduction in HVA product sales in favour of lower margin slab. As a result we forecast EBITDA to rise 28% QoQ, to USD 785mn, resulting in an increase in the EBITDA margin to 27.5% from 24.8% in 1Q11. Our forecast is broadly in line with management guidance (revenue of USD 2.9bn, EBITDA margin of 25-30%). However, our EBITDA estimate is around 5% below consensus of USD 823mn.

We also expect a healthy QoQ increase in net income to USD 518mn, although we are about 6% below consensus of USD 551mn. The reported number may however be affected by a number of factors, including forex differences, net interest charges, and other income items.

While we do not anticipate any major differences vs our estimates, management’s guidance for 3Q11 and FY11 will be key to determining how realistic our (and consensus) forecasts for 2011 remain, or if further downgrades to the market expectations should be expected in the near future.