Evraz PLC · LSE:EVR
Evraz — FY2010 Earnings Presentation
31 slides from Evraz's earnings presentation, Mar 31, 2011
Slide 1: 2010 Financial and Operating Results
EVRAZ GROUP 2010 Financial and Operating Results 31 March 2011
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 2010 Financial Highlights Liquidity and Financial Position Operations by Segment Growth Strategy Key Market Developments and Outlook Appendices
Slide 4: 2010 Summary
2010 Summary 04 US$ mln unless otherwise stated 2010 2009 Change Revenue 13,394 9,772 37% Gross profit 3,075 1,648 87% Adjusted EBITDA* 2,350 1,237 90% Adjusted EBITDA margin 18% 13% Net Profit/(Loss)* 532 (292) EPS (US$ per GDR) 1.32 (0.73) Net Debt** 7,127 7,230 (1.4)% Short-term Debt** 714 1,992
Slide 5: 2010 Financial Highlights
2010 Financial Highlights 05 Consolidated Revenue by Segment ◦ Significant growth in revenues and EBITDA as a result US$ mln of strong market recovery 18,000 13,394 ◦ Both prices and volumes contributed to revenue 15,000 9,772 815 566 2,507 growth 12,000 765 363 ◦ Steel products remain the predomina
Slide 6: Group Cost Dynamics
Group Cost Dynamics 06 Cash Cost*, Slabs & Billets ◦ EVRAZ’s high level of vertical integration into iron ore US$/t and coking coal helped to partially mitigate negative 500 441 459 411 impact of escalating prices of input materials on 354 364 350 378 400 steelmakers’ costs 317 298 371 265 369 ◦ Con
Slide 7: FCF Generation
FCF Generation 07 ◦ Positive free cash flow generation despite significant CAPEX ◦ Increase in working capital due to higher level of activity and higher prices US$ mln 3,000 2,500 2,382 2,000 (379) 1,662 1,500 (341) 1,000 (623) 500 75 282 (832) 0 EBITDA (excl. Changes in Income tax paid CF from Int
Slide 8: Liquidity and Debt Maturity Profile
Liquidity and Debt Maturity Profile 08 Recent refinancing steps significantly strengthened EVRAZ’s liquidity profile and demonstrated EVRAZ’s ready access to debt markets ◦ Two RUB bond issues in March and October 2010 ◦ New pre-export facility of US$950m arranged with leading international banks in
Slide 9: Steel: CIS
Steel: CIS 09 Steel Product Sales, Domestic vs. Export ◦ Full utilisation of Russian and Ukrainian steelmaking ‘000 tonnes capacities maintained throughout the year 11,084 12,000 ◦ In 2010 domestic steel sales accounted for 58% of Evraz’s 10,737 Russian and Ukrainian mills’ steel sales compared to 4
Slide 10: Steel: North America
Steel: North America 10 ◦ Gradual recovery in demand driven by economic improvements and the onset of regional governments’ infrastructure spending ◦ Shale gas exploration projects generate strong demand for small diameter pipe ◦ Sales volumes of steel products increased by 26% ◦ Flat-rolled steel v
Slide 11: Steel: Europe, South Africa
Steel: Europe, South Africa 11 Steel Product Sales Volumes, ◦ EVRAZ’s European mills sales volumes increased by ‘000 tonnes European Operations 36% 1,400 ◦ Flat-rolled product sales registered 35% volume rise 1,200 1,206 155 and 61% increase, largely reflecting improvement in 1,000 885 the European
Slide 12: Coal Mining
Coal Mining 12 ◦ Volumes of coking coal mined in 1H 2010 decreased due to lengthy repositioning of longwall at Ulyanovskaya mine ◦ 3Q 2010 volumes were also depressed due to the implementation of additional workplace safety measures; 4Q 2010 volumes returning to normalised levels ◦ Cash cost in 2Q-3
Slide 13: Iron Ore Mining
Iron Ore Mining 13 ◦ Iron ore production increased from 18.8 million tonnes in 2009 to 19.8 million tonnes in 2010 ◦ Self-coverage in iron ore was maintained at around 100% ◦ Cash costs increased in line with general cost inflation ◦ Investment in mine development to maintain or improve self-coverag
Slide 14: Vanadium
Vanadium 14 Vanadium Prices, FeV, LMB ◦ Significant improvement in global demand for US$/kg V vanadium 40 ◦ Acquisition in 2009 of Vanady-Tula, Russia’s largest ferrovanadium producer, signals further expansion of 30 vanadium processing capacity ◦ Sales of finished vanadium products increased vs. 20
Slide 15: Growth Strategy
Growth Strategy 15 Enhancement of raw material base ◦ Development of a coal deposit in Yerunakovsky region of Kuzbass ◦ Exploration of the Mezhegey coal deposit ◦ Increase ‘in-house’ iron ore production and supplementary exploration at existing sites Increase in steel production volumes ◦ Reconstruc
Slide 16: CAPEX Dynamics
CAPEX Dynamics 16 ◦ Return to investment in modernisation projects and mine development in 2010 ◦ Further growth budgeted for 2011 US$ mln 1,500 1,240 1,200 1,103 900 832 600 441 300 0 2008 2009 2010 2011F Investment projects* Iron ore mine development Coal mine development ** Maintenance, Steel and
Slide 17: Recent Market Developments
Recent Market Developments 17 Evraz Selling Prices ◦ Volumes in key products and markets are stable US$/t 1,100 ◦ Current steel-making capacity utilisation: 1,000 ◦ Russia and Ukraine - 100% 900 800 ◦ North America - 90-95% 700 ◦ Czech Republic - 75% (Temporarily for 600 500 destocking) 400 ◦ South
Slide 18: Consumption of Construction Steel in Russia
Consumption of Construction Steel in Russia 18 12,0 120 11,0 100 10,0 9,0 80 million square meters 8,0 million tpa 7,0 60 11,1 10,7 6,0 10,1 10,2 9,5 9,2 8,3 40 5,0 4,0 6,2 20 3,0 2,0 0 2007 2008 2009 2010 2011(f) 2012(f) 2013(f) 2014(f) Consumption of Construction Steel in Russia (Rebar, Beams, Ang
Slide 19: Russian Government Infrastructure Spending
19 Russian Government Infrastructure Spending RF Capital Investments in 2011 The Russian Government plans to spend US$30bn on capital investments in 2011, including US$23bn on construction, US$bn thereby significantly impacting demand for construction steel 35 30 Ongoing programmes include: 26 26 ○
Slide 20: Outlook
Outlook 20 High input prices and growing demand should provide support for steel prices across our operations 1Q 2011 EBITDA is expected to be in the range of US$725-800 million Net debt/LTM EBITDA expected in the range of 2.4-2.9 on 30 June 2011, further reduction expected by year end
Slide 21: Summary
Summary 21 The markets for our products continued to recover in 2010, particularly the Russian construction steel market EVRAZ was able to benefit from enhanced steel prices with limited exposure to rising raw material prices Much improved liquidity position following refinancing focus in 2010, furt
Slide 22: Appendices
Appendices
Slide 23: Evraz's Global Business
(_] Evraz’s Global Business 23 5 - Evraz Inc. NA 6 - Evraz Highveld Steel 7 - Evraz Palini e Bertoli 8 - Evraz Vitkovice Steel 9 - Evrazruda 10 - KGOK 11 - VGOK 12 - Sukha Balka 13 - Yuzhkuzbassugol 14 - Raspadskaya 15 - Bagley Coke © - Stee! 16 - Dneprodzerzhinsk Coke @ <lren‘Ore 17 - Dnepropetrovs
Slide 24: 2010 Consolidated Revenue and EBITDA
2010 Consolidated Revenue and EBITDA 24 ’000 tonnes 4,000 3,665 3,409 3,350 3,500 2,970 3,000 2,500 2,000 1,500 1,000 730 612 584 424 500 0 1Q 2Q 3Q 4Q Revenue EBITDA
Slide 25: Steel Products: Sales by Market
Steel Products: Sales by Market 25 ’000 tonnes US$ mln 6,000 4,000 5,665 5,543 3,641 3,500 5,000 4,424 3,000 4,123 2,802 4,000 2,364 2,500 2,299 2,147 2,147 3,000 2,000 2,662 1,500 2,073 2,000 1,472 1,018 1,000 1,215 872 602 696 1,000 406 642 500 343 376 563 533 0 0 Russia CIS Europe Americas Asia A
Slide 26: Revenue: Geographic Breakdown
Revenue: Geographic Breakdown 26 2009 2010 Other Africa & RoW Other Africa&RoW Asia 3% 4% Philippines Asia Philippines 5% 2% 4% 3% Taiwan Taiwan 3% 2% Thailand Thailand Russia 4% 3% 31% Russia China 34% China 3% 5% Middle East 5% Middle East 8% Europe Ukraine 2% 10% Other CIS Europe 3% Ukraine 9% 4%
Slide 27: Cost Structure by Segment
Cost Structure by Segment 27 Cost Cost Structure Structure of of Steel Steel Segment Segment Cost Cost Structure Structure of of Mining Mining Segment Segment 13% 13% 9% 8% 4% 19% 6% 24% 8% 9% 5% 7% 4% 15% 16% 9% 10% 21% 17% 11% 15% 13% 14% 28% 25% 9% 19% 9% 9% 14% 8% 9% 2009 2010 2009 2010 Iron ore
Slide 28: Domestic Steel Sales and Price Dynamics
Domestic Steel Sales and Price Dynamics 28 kt $/t 1,600 1,500 1,200 1,200 900 800 600 400 300 0 0 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 Flat Products (lhs) Long Products (lhs) HRC Domestic Rebar Domestic Price (rhs) Sources: Metal Courier, Morgan Stanley
Slide 29: Key Investment Projects
Key Investment Projects 29 Project Total Cum CAPEX 2011 Project Targets CAPEX by 31.12.2010 CAPEX Reconstruction of rail mill at $485m $225m $130m ◦ Capacity of 950k tonnes of high-speed rails, including NKMK 450k tonnes of 100 metre rails ◦ On-stream by 2013 Reconstruction of rail mill at $60m $40m
Slide 30: Adjusted EBITDA
Adjusted EBITDA 30 Year ended 31 December (millions of US dollars) 2010 2009 Consolidated Adjusted EBITDA reconciliation Profit from operations 1,330 195 Add: Depreciation, depletion and amortisation 925 979 Impairment of assets 147 180 Loss on disposal of property, plant & equipment 52 39 Foreign e
Slide 31: IR@evraz.com www.evraz.com
+7 495 232-13-70 IR@evraz.com www.evraz.com