Slide 1: IFRS financial statements for Q4 and FY 2016
IFRS financial statements for Q4 and FY 2016 15 February 2017
Slide 2: Key highlights for MMK Group
KEY HIGHLIGHT FOR MMK GROUP 2 Q4 2016 Financial results Dividends Revenue USD 1,550 mln up 4.9% q-o-q USD 1,039 mln up 7.8% q-o-q • As the management sees that the Cost of sales EBITDA USD 456 mln down 30.2% q-o-q Company is able to generate strong free EBITDA margin 29.4% down 14.8 p.p. q-o-q cash
Slide 3: High capacity utilisation
HIGH CAPACITY UTILISATION 3 Key production indicators, ths tonnes Q4 ‘16 Q4 ‘16 % FY ‘16 FY ‘15 % • MMK Group’s finished steel products output in FY 2016 was Cast iron 2,370 2,424 -2.2% 9,652 10,132 -4.7% up 3.4% y-o-y. Crude steel 3,157 3,179 -0.7% 12,544 12,236 2.5% • Despite lower sales of thick
Slide 4: MMK Group sales structure on the Russian and CIS market
MMK GROUP SALES STRUCTURE ON THE RUSSIAN AND CIS MARKET 4 Sales structure on the Russian and CIS market, ths • Total sales volume on the Russian and CIS market in Q4 2016 was 2,131 ths tonnes, up 139 ths tonnes, or 7.0% q-o-q. This was due to the recovery of domestic tonnes demand on the back of ant
Slide 5: MMK Group position on key international markets
MMK GROUP POSITION ON KEY INTERNATIONAL MARKETS 5 Sales structure on international markets, ths tonnes • Sales on international markets in Q4 2016 amounted to 752 ths tonnes, down 117 ths tonnes, or 16.5% q-o-q. This decline was due to 869 752 uncharacteristic recovery in the domestic demand on the
Slide 6: Key financial highlights of MMK Group: segment revenue
KEY FINANCIAL HIGHLIGHTS OF MMK GROUP 6 • Revenue for Q4 2016 amounted to USD 1,550 mln, up 4.9% q-o-q. This was primarily due to maintained finished products sales volumes in the steel segment (Russia) amid higher prices and improved results in other Group’s segments. Steel segment revenue (Russia)
Slide 7: Key financial highlights of MMK Group: EBITDA
KEY FINANCIAL HIGHLIGHTS OF MMK GROUP 7 • Average sales price in Q4 2016 increased by 6.5% q-o-q due to maintained high steel prices on the international markets on the back of higher coking Quarterly EBITDA* dynamics, mln USD coal prices and an increase in iron ore prices which started at the end o
Slide 8: Analysis of key financial highlights
ANALYSIS OF KEY FINANCIAL HIGHLIGHTS 8 Analysis of revenue, 2016 y-o-y, mln USD • Key factors impacting revenue in FY 2016 were higher steel prices and sales volumes. 6 000 224 142 -343 -189 -5 -38 • In FY 2016, the Company’s profit amounted to USD 1,111 mln (up more than 2.5x y-o-y). The Company ma
Slide 9: Depreciation and capex dynamics
DEPRECEATION AND CAPEX DYNAMICS 9 Quarterly depreciation dynamics, mln USD • MMK Group’s CAPEX in Q4 2016 amounted to USD 185 mln. The increase q-o-q corresponds to the company’s investment projects implementation 250 schedule and was partly due to the weakening of the ruble versus the US dollar. 20
Slide 10: Sustainable generation of positive free cash flow (FCF)
SUSTAINABLE GENERATION OF POSITIVE FREE CASH FLOW (FCF) 10 Net working capital dynamics, mln USD Operational Free Cash Flow (FCF), mln USD 1 400 2 000 As of the end of Q4 2016 -57 working capital / revenue ratio amounted to 15.8% 1 200 -708 1 500 1 000 800 1 000 1 956 -463 1 262 1 245 600 1 214 1 20
Slide 11: High operational performance supports efficient decrease of the debt load
HIGH OPERATIONAL PERFORMANCE SUPPORTS EFFICIENT DECREASE OF 11 THE DEBT LOAD, mln USD • MMK Group’s net debt as of the end of 2016 decreased by USD 932 mln from 31.12.2015 to USD 192 mln. • This decrease supported a further reduction in the net debt/ EBITDA ratio to 0.1x. • In accordance with the co
Slide 12: MMK Group's debt profile
ММК GROUP’S DEBT PROFILE 12 Debt and cash funds structure by currency, mln USD • The share of debt which is denominated in foreign currencies (USD+EUR) Debt Cash & Cash Equivalents amounted to 67% as of 31.12.2016. 2 000 1 847 800 723 1 • The volume of cash funds and short-term deposits in the MMK G
Slide 13: Structure of operating costs and cash costs
STRUCTURE OF OPERATING COSTS AND CASH COSTS 13 MMK Group operating costs, mln USD • In Q4 2016, the share of coal increased in the structure of OJSC MMK’s material costs, due to higher purchase prices amid speculative growth in Q4 2016 Q3 2016 +/- % global prices for coking coal. Cost of sales 1,039
Slide 14: Comment on market situation
COMMENT ON MARKET SITUATION 14 • In early 2017, given seasonally weaker demand for steel on the domestic market, the Company has scheduled maintenance of a blast furnace and converter. • Financial performance in Q1 2016 is expected to come under pressure from the high base of coking coal prices and
Slide 15: Disclaimer
DISCLAIMER 15 • THIS PRESENTATION IS FOR INFORMATION ONLY. • THIS PRESENTATION IS FOR DISTRIBUTION IN UK ONLY AMONG THE PEOPLE HAVING PROFESSIONAL SKILL IN THE ISSUES RELATED TO INVESTMENTS WITHIN THE MEANING OF ARTICLE 19(5) OF • DIRECTIVE ON FINANCIAL ADVERTISEMENT APPROVED IN 2005 ON THE BASIS OF