Mmk · RUS:MAGN
Mmk — Investor Presentation (October 2012)
27 slides from Mmk's investor presentation, October 2012
Slide 1: Magnitogorsk Steel (MMK)
October 2012 Magnitogorsk Steel (MMK)
Slide 2: MMK – Russian Steel Leader
MMK – Russian Steel Leader Largest single-site steelmaker in Russia with current crude steel capacity of 14 mln tonnes HVA products share currently expected to reach 45% of total production volumes by 2013 Import substitution strategy: favorable geographical location to meet strong demand from the m
Slide 3: MMK Geography
ММК Geography Interkos-IV Profit Metals service center Covers 100% of MMK and stamped-product scrap needs. factory with 250 th. tpy capacity. 67% Belon 4.2 mln tonnes of coking coal mined in Prioskolsky GОК 2011. Covers 40% of 6% MMK needs. Largest iron-ore deposit, more than 2 21% 3% bn tonnes of r
Slide 4: Global Steel Industry Highlights
Global Steel Industry Highlights World Steel Production, mln tonnes Crude Steel Capacity Utilization, % 1 000 89% 873 86% 830 845 83% 83% 791 80% 82% 715 745 79% 80% 79% 80% 750 683 76% 627 74% 75% 500 60% 59% 250 58% 55% 0 50% 2010 2011E 2012E 2013E ROW China 2010 2011 2012E 2013Е Russia United Sta
Slide 5: MMK Growth Prospects
MMK Growth Prospects Russian Import Structure, mln tonnes Russian Steel Consumption by Industry, mln tonnes 7 Russia sees solid import 8,0 7,1 7,3 7,5 volumes, mostly of HVA HVA products 6,7 7,0 6 products 2,1 2,0 6,0 5 2,7 4,8 1,7 4,4 4 1,7 1,9 0,8 3,7 3,8 4,1 0,9 4,0 3 0,6 0,7 0,5 1,0 1,3 1,35 0,7
Slide 6: MMK Growth Prospects
MMK Growth Prospects Crude Steel Growth Drivers, th. tonnes Finished Steel Products Structure Evolution, th. tonnes 20 000 18 000 HVA share ≈ 45% by 2013 16 000 15 000 14 000 12 000 10 000 10 000 8 000 45 % 5 000 6 000 34 % 4 000 0 2 000 2010 2011 2012E 2013E 2014Е 0 ММК, currently run capacities MM
Slide 7: Competitive Cost Position
Competitive Cost Position Slab Cash-cost and Raw-material Price, USD/tonne Slab Cash-Cost Sensitivity, Q2 2012, USD/tonne 500 Iron Ore Price Change 459 220 442 200 -50% -40% -30% -20% -10% 0% 10% 20% 414 180 Coking Coal Price Change 400 160 -30% 300 318 337 355 374 392 410 429 140 -20% 308 326 344 3
Slide 8: Competitive Cost Position (Continued)
Competitive Cost Position (Continued) Integration in Coking Coal, mln tonnes Integration in Iron Ore, th. tonnes 7 4 000 Coal concentrate production to grow by 6,2 6 more than 40% by 2017 compared to 2011 -19 5,1 5,1 4,6 3 000 5 4,5 4,2 4,2 3,9 3,9 3,7 3,7 4 3,6 3,4 3,2 2 000 3,0 2,8 2,8 3 2,5 2 1 0
Slide 9: Leading Positions in the Russian Steel Industry
Leading Positions in the Russian Steel Industry Leader in Finished Steel Production, th. tonnes MMK Share of Russian Steel Market, % ММК; 18% 12 000 MMK retains leadership in Russia while drastically changing its 11 000 product mix Others; 25% Severstal; 17% 10 000 9 000 NKMK; 2% 8 000 NLMK; 15% Che
Slide 10: MMK’s Dominating Domestic Market Position
MMK’s Dominating Domestic Market Position MMK Domestic and Export Sales, mln tonnes Domestic Sales Structure, 2011 8 MMK organically grows its share in 7,3 7,2 C/r steel H/r steel Russian market as demand in export 11% 40% 7 markets remains sustainable HVA 6 Products, 4,9 42% 5 3,7 4 3,5 Coated & Do
Slide 11: Strong Presence on Export Markets
Strong Presence on Export Markets Share of Export Sales in Shipments, % Export Sales Structure, 2011 100% Slabs and Thick plate billets 2% 28% 31% 33% 5% 39% 34% 36% 46% 41% 75% Long products 5% Downstream 50% products 72% 1% 66% 64% 69% 67% 59% 61% Cold-rolled 25% 54% steel Hot-rolled steel 6% 81%
Slide 12: Building Value
Building Value MMK (TURKEY) Mill 5000 (RUSSIA) Investments USD 2.1 bn CAPEX USD 1.5 bn Market Middle East, EU, Africa Russian oil&gas infrastructure, ship and Market bridge building state-of-the-art full-cycle steel Profile Profile HVA rolling facilities production Capacity, mtpy finished steel 2.3
Slide 13: Plate Mill 5000
Plate Mill 5000 ММК is one of 10 producers of premium quality thick plates globally Use of Thick Plate in Russia by Sector, th. tonnes Specifications LDP Bridge building 120% 6 000 Boiler building Ship building Start-up 2009 Other MMK market share (RHS) Capacity, mln tpy 1,5 90% Max Plate Width, mm
Slide 14: Mill 5000 - Strengthening Positions in Pipe Sector
Mill 5000 - Strengthening Positions in Pipe Sector Growth in LDP Consumption in Russia, th. tonnes Key Steel Suppliers to Pipe-builders in Russia, 2011 4 000 MMK produces 35% of Demand for LDP remains MMK; 36% strong steel, used for pipe-making 3 000 in Russia 2 000 1 000 0 Others; 48% -1 000 Import
Slide 15: Strengthening Position in Auto Industry
Strengthening Position in Auto Industry Mill 2,000 Complex Private Car Ownership, vehicles per 1,000 people Key Mill 2,000 specifications 800 765 Capacity, th. tpa 2,000 700 Russia is on the way to diminish the lag to 600 565 Sheet width, mm 850-1,880 519 developed countries Sheet thickness, mm 0.28
Slide 16: Mill 2000 Cold Rolled Steel Complex
Mill 2000 Cold Rolled Steel Complex Russian Cold-rolled Automotive Steel Consumption, % Car-making Projects in Russia by 2015E, % 100% 2% 3% 12% 7% 10% Volga federal region 25% 22% 17% 75% 49% 13% 40% 60% North-west federal 24% region 50% 75% 10% Central federal region High strength steel 25% 51% Ot
Slide 17: Entry to Growing Turkish Market
Entry to Growing Turkish Market Locations of Key Markets Turkish Flat Steel Market Structure, % Pipe Europe production; Other; 12% 25% Istanbul Boiler making; 6% Iskenderun Metal Service Packaging; 7% Centers; 19% Middle East Priority export markets MMK will focus on flat steel in Important export m
Slide 18: Project Ramp-up and Growth Plans
Project Ramp-up and Growth Plans 600 538 Ramp-up schedule 505 • Key production line (Iskenderun) – 2.3 million tons per year 500 • Two service centers: Iskenderun & Istanbul 400 • Output: hot-rolled steel, galvanized and color-coated steel products 300 • Production launch: 2010 • Investments in the
Slide 19: MMK METALURJI Sea Port
MMK METALURJI Sea Port Key characteristics • The port has 1800 meters of berthing length • Total 12 vessels can be berthed simultaneously • Ships Berthing Capacity: 600 Ships / Year • Cargo Handling Capacity: 12 million tons per year • Main and auxiliary handling equipment is in place • On April 5,
Slide 20: Financials
Financials Consolidated IFRS Summary Financial Highlights, USD mln H1 2012 2011 2010 2009 11 500 10 550 9306 Crude steel output, kt 6,711 12,195 11,419 9,618 9 500 7 719 Finished steel, kt 6,082 11,158 10,245 8,764 7 500 Revenues, $ mln 4,941 9,306 7,719 5,081 5 081 5 500 EBITDA, $ mln 662 1,336 1,6
Slide 21: Investment Highlights
Investment Highlights • Growing volumes and share of HVA products (≈45% by 2013) to secure sustainably high efficiency • Focus on specialty steel products to replace imports in Russia and to capture domestic market price premium • Access to lucrative Turkish flat steel market with high-quality steel
Slide 22: Appendices
Appendices IA . = Ms Magnitogorsk Steel (MMK) MMK Group Q2 and 1H 2012 Consolidated IFRS Results
Slide 23: Growth Output Driven by HVA Products
Growth Output Driven by HVA Products • MMK Group finished products output in H1 Key operational indicators 2012 rose 14% y-o-y and amounted to 6.1 mln tonnes Q2 '12 Q1 '12 % H1 12 H1 11 % Cast iron 2 557 2 479 3% 5 037 4 780 5% • H1 2012 MMK Group HVA products output Crude steel incl. 3 294 3 417 -4
Slide 24: MMK Key Performance Indicators Analysis
MMK Key Performance Indicators Analysis MMK Group EBITDA structure, USD mln • Q2 2012 revenue increased q-o-q mainly due to sales USD 369 m 400 volumes growth at the Magnitogorsk site, MMK Metiz and USD 293 m 5 MMK Metalurji, and also due to some growth of selling 2 300 26% prices 42 200 • MMK Group
Slide 25: MMK Debt Profile
MMK Debt Profile Debt structure breakdown by maturity profile Debt maturity profile, USD mln 30.06.2012 1260 1200 1041 1000 34% 800 587 600 498 400 291 66% 200 0 3,696 USD mln* 1-st year 2-nd year 3-rd year 4-th year 5-th year and Long-term debt beyond Short-term debt and current portion of long-ter
Slide 26: MMK Cash Flow
MMK Cash Flow, USD mln Capex in Q2 2012 amounted to USD 135 mln Main investment projects for 2012 are c/r mill 2000, modernization of h/r mill 2500 and Belon’s investment programme Working capital decreased by USD 432 mln, including USD 253 mln or 14% in inventories reduction 1 500 432 -9 -101 1 000
Slide 27: Contacts
Contacts MMK (Magnitogorsk Iron & Steel works) Tickers Ordinary shares listed at MICEX and RTS in June 2006. MICEX, RTS: MAGN GDRs listed at LSE in April 2007 LSE: MMK ISIN / СUSIP US5591892048/559189105 Bloomberg: MMK:LI Contacts at MMK Andrey Serov Head of IR Tel +7 (3519) 24 52 97 serov.ae@mmk.ru
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