Evraz Plc · LSE:EVR
Evraz — FY2009 Earnings Presentation
26 slides from Evraz's earnings presentation, Mar 31, 2010
Slide 1: EVRAZ GROUP 2009 Financial and Operating Results
EVRAZ GROUP 2009 Financial and Operating Results 31 March 2010
Slide 2: Disclaimer
Disclaimer 02 This document does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of Evraz Group S.A. (Evraz) or any of its subsidiaries in any jurisdiction or an inducement to enter into investment
Slide 3: Agenda
Agenda 03 Strategy and Management Action Plan 2009 Results Summary Liquidity and Financial Position Operations by Segment Recent Market Developments Outlook Appendices
Slide 4: Sound Long-Term Strategy
Sound Long-Term Strategy 04 Long and railway product leadership in Russia and the CIS ◦ Maintained leadership in Russia’s construction steel market ◦ Rail mill reconstruction designed to produce high-speed rail and increase rail production volumes Strong presence in international flat and tubular ma
Slide 5: Management Actions in 2009
Management Actions in 2009 05 Production optimisation ◦ Closure of inefficient capacity ◦ Flexible product mix designed to maximise demand and pricing opportunities ◦ Full Russian and Ukrainian capacity utilisation since 1 July 2009 Cost savings ◦ Cash cost of one tonne of Russian semi-finished stee
Slide 6: 2009 Financial Summary
2009 Financial Summary 06 US$ mln unless otherwise stated 2009 2008 Change Revenue 9,772 20,380 (52)% Cost of revenue (8,756) (13,463) (35)% SG&A (1,268) (1,751) (28)% Adjusted EBITDA* 1,237 6,206 (80)% Adjusted EBITDA margin 13% 30% Net Profit/(loss)** (1,261) 1,859 Net Profit margin n/a 9% EPS (US
Slide 7: 2009 Financial Highlights
2009 Financial Highlights 07 ◦ Group revenue decreased by 52%, driven largely by Consolidated Revenue by Segment decrease in average prices and sales volumes of steel US$ mln products 7,000 5,133 ◦ Recovery of export demand for semi-finished steel 6,000 4,639 343 225 422 804 helped to fully utilise
Slide 8: Maintaining Cost Leadership
Maintaining Cost Leadership 08 ◦ Control of raw material costs through cost efficient Cash Cost*, Slabs & Billets vertical integration US$/t ◦ Constant review of product and resources flows to 450 402 430 identify potential efficiency gains 400 420 394 ◦ Approximately 75% of consolidated cost is rou
Slide 9: Cash Flow Generation in 2009
Cash Flow Generation in 2009 09 US$ mln 2,000 654 1,700 1,600 (141) 1,187 624 1,212 1,200 800 (671) 400 (441) 0 Adjusted Changes in Income tax CF from Interest paid CAPEX CF from Free cash EBITDA WC operating & covenant investing flow* (excl. non- activities reset activities cash items) charges (exc
Slide 10: Capital Market Developments in 2009
Capital Market Developments in 2009 10 ◦ Concurrent GDR and 5-year convertible bond offerings in July raised US$965m ◦ RUB20bn 5-year bonds issued in October (equivalent to US$700m) ◦ US$950m credit facility committed by Gazprombank in October ◦ US$225m 4-year revolving credit facility for Evraz’s U
Slide 11: Debt Maturities and Liquidity Profile
Debt Maturities and Liquidity Profile 11 ◦ Total debt of approx. US$7.9 billion, net debt of US$7.2 billion as of 31 December 2009 ◦ Short-term debt is approx. US$1.9 billion ◦ Cash and cash equivalents amounted to US$675 million as of 31 December 2009 ◦ Total liquidity as of 31 December 2009 is in
Slide 12: Increase in Export and Geographic Diversification
Increase in Export and Geographic Diversification 12 ◦ Sales to customers outside Russia increased from Steel Steel Products Products Sales Sales Volumes Volumes by by Product Product 61% to 71% of total revenues ’000 tonnes ◦ Sales of steel products to Asia exceeded sales to 6,000 5,188 5,273 5,314
Slide 13: Steel: CIS Domestic
Steel: CIS Domestic 13 ◦ Apparent domestic demand for finished steel stabilised at approximately 70% of pre-crisis volumes with some fluctuations due to destocking-restocking cycles ◦ A decrease in sales to the CIS was partially offset by an increase in export sales ◦ Prices of key products remain c
Slide 14: Steel: CIS Export
Steel: CIS Export 14 ◦ Export sales volumes increased by 15% ◦ Increasing production of billets due to more favourable pricing environment ◦ Continued growth of billet prices driven by an increase in world scrap, iron ore and coking coal prices ◦ Delayed effect of rising steel prices due to the fact
Slide 15: Steel: North America
Steel: North America 15 ◦ Volumes bottomed out in the middle of 2009 with subsequent stabilisation and some signs of recovery at the beginning of 2010 ◦ Stable demand for large diameter pipes in Canada due to long contracts ◦ Destocking is largely over with apparent demand remaining distinctly limit
Slide 16: Steel: Europe, South Africa
Steel: Europe, South Africa 16 ◦ Destocking of traders is largely over ◦ Domestic demand in Europe remains weak and mostly related to public projects ◦ Positive trend registered with public works and energy sector in Europe ◦ Increased share of production is exported to the Middle East and North Afr
Slide 17: Mining: Well-placed to Benefit from Recovery
Mining: Well-placed to Benefit from Recovery 17 ◦ Full self-coverage in raw materials enabled cash preservation during downturn ◦ Mining segment remained EBITDA positive even at the bottom of raw material prices’ cycle ◦ Sustainability of vertically-integrated model in market downturn ◦ Benefiting f
Slide 18: Vanadium
Vanadium 18 ◦ Global leader with five operating units on four continents and geographically diversified revenues ◦ Vanadium follows steel market trends, being impacted by market downturn ◦ Acquisition of Vanady-Tula, Russia’s largest ferrovanadium producer, signals further expansion of vanadium-proc
Slide 19: Key Investment Projects
Key Investment Projects 19 ◦ CAPEX in 2010 expected to be around US$800m vs. US$441m in 2009 ◦ Approximately US$450m of 2010 CAPEX to be directed to increasing productivity and development projects, key projects being: Project Total CAPEX Cum CAPEX 2010 CAPEX Project Targets by 31.12.09 Reconstructi
Slide 20: Key Market Developments
Key Market Developments 20 ◦ Recovery in prices for semi-finished steel is driven by Evraz Selling Prices growing input costs and by demand from emerging US$/t markets in Asia, the Middle East and North Africa 700 ◦ Demand in all markets improving 550 ◦ Russian domestic demand for construction steel
Slide 21: Outlook for 2010
Outlook for 2010 21 ◦ Continuation of favourable pricing trends driven by higher raw material costs, growth in emerging markets and moderate recovery in mature markets ◦ Russian and Ukrainian operations expected to continue running at full capacity, utilisation of overseas assets expected to increas
Slide 22: Summary
Summary 22 ◦ 2009 results were heavily impacted by global recession ◦ Increased geographical diversification of business helped to stabilise cash flows ◦ Vertically integrated business model demonstrated its viability through the price cycle ◦ Improved global demand for semi-finished steel allowed u
Slide 23: Appendices
EVRAZ Appendices
Slide 24: Evraz's Global Business
[| Evraz’s Global Business Key Facilities: 1 - Zapsib 2 - NKMK 3 - NTMK 4 - DMZP 5 - Evraz Inc. NA 6 - Highveld 7 - Evraz Palini e Bertoli 8 - Evraz Vitkovice Steel 9 - Delong 10 - Evrazruda 11- KGOK 12 - VGOK 13 - Sukha Balka 14 - Yuzhkuzbassugol 15 - Raspadskaya 16 - Bagley Coke 17 - Dneprodzerzhi
Slide 25: Revenue by Geography of Customers
Revenue by Geography of Customers 25 2008 2009 South Africa South Africa & RoW & RoW 4% 4% Other Asia Other Asia 13% 13% China Russia 1% 31% Middle Russia China East 37% 5% 3% Europe Middle 13% East 8% Ukraine 2% Other CIS Europe 3% Ukraine 4% 9% Other Americas CIS Americas 22% 3% 25%
Slide 26: IR@evraz.com www.evraz.com
+7 495 232-13-70 IR@evraz.com www.evraz.com