Evraz PLC · LSE:EVR
Evraz — FY2007 Earnings Presentation
24 slides from Evraz's earnings presentation, Apr 2, 2008
Slide 1: EVRAZ GROUP 2007 Preliminary Results
EVRAZ GROUP S.A. FY 2006 01 Preliminary Results EVRAZ GROUP 2007 Preliminary Results April 2, 2008
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: Strategy Implementation Highlights
Strategy Implementation Highlights 03 Advance long product leadership in Russia and CIS ◦ Strong growth by 69% in construction products sales in Russia and CIS ◦ 11% increase of rails shipments in Russia ◦ De-bottlenecking at Russian plants ◦ Acquisition of Dnepropetrovsk Metal Works in Ukraine Expa
Slide 4: FY2007 Financial Summary
FY2007 Financial Summary 04 US$ mln unless otherwise stated 2007 2006 Change Revenue 12,808 8,292 54% Cost of revenue (7,875) (5,163) 53% SG&A (1,220) (737) 66% EBITDA* 4,254 2,642 61% EBITDA margin 33% 32% Net Profit** 2,144 1,377 56% Net Profit margin 17% 17% EPS (US$ per GDR) 6.05 3.92 54% Sales
Slide 5: 2007 Financial Highlights
2007 Financial Highlights 05 Sales Volumes, FY07 vs. FY06 ◦ Favourable pricing and improved sales mix delivered 20,000 ‘000 tonnes strong growth on marginally higher sales volumes 15,918 473 16,426 1,711 16,000 ◦ Last year acquisitions (Evraz OSM, Highveld, 12,000 (1,586) (90) Yuzhkuzbassugol and ot
Slide 6: Prudent Balance Sheet Management
Prudent Balance Sheet Management 06 ◦ Net Debt (1)/EBITDA stays within the long-term stated target ◦ Current credit ratings reaffirmed: BB by Fitch; Ba3 by Moody’s; BB- by S&P ◦ Growing leverage in line with general business growth ◦ Consistently solid ROCE (2) at 35% and RoA (3) at 18% ◦ Short-term
Slide 7: FY2007 Cash Flow Generation
FY2007 Cash Flow Generation 07 ◦ Record high net cash flow from operating activities of US$2,957 mln ◦ EBITDA to Net Operating Cash Flow conversion at 70% ◦ Cash balance, including US$25 mln in short-term deposits, amounted to US$352 mln ◦ US$740 mln used to finance capital investment programme incl
Slide 8: Going Global
Going Global 08 ◦ Russia remains key market with revenue up 41% fuelled by domestic construction boom and strong pricing ◦ European sales advanced by 34% driven by better prices, a 9% steel volume increase and vanadium sales ◦ Strong growth in sales in North America to US$2,140 mln or 17% of total r
Slide 9: Enhancing Steel Product Mix
Enhancing Steel Product Mix 09 ◦ Average steel price grew by 43% to US$668 per tonne with mix shift in favour of higher margin products ◦ Sales volumes of semis fell by 28% ◦ Construction products revenues expanded by 72% on the back of a 22% increase in sales volumes ◦ Railway products: revenues gr
Slide 10: Vanadium: Capturing Market Momentum
Vanadium: Capturing Market Momentum 010 ◦ Vanadium business contributed US$583 mln to revenues ◦ Russian vanadium slag sales volumes increased by 9% to 10,840 tonnes* ◦ Volumes of vanadium in alloys & chemicals sold amounted to 11,290 tonnes* ◦ Recent spike in prices will further drive business grow
Slide 11: Mining: Hedging Steel Segment Costs
Mining: Hedging Steel Segment Costs 011 Mining Segment Performance US$ mln ◦ EBITDA increased by 52% to US$633 mln 2,000 ◦ 18.8 mln tonnes iron ore output covered 1,500 1,901 87% of total ore consumption ◦ Coking coal production fully covered* steel 1,000 1,147 segment requirements for coal 500 633
Slide 12: Yuzhkuzbassugol
Yuzhkuzbassugol 012 ◦ 50% stake acquired in June 2007 for US$871 mln or US$123 per tonne of FY08 production ◦ FY08 production is expected to increase by 18% to 14.2 mln tonnes ◦ 1Q08 average cash cost is estimated at US$33 per tonne of raw coal mined ◦ Detailed development programme in place to ramp
Slide 13: Ukraine: Diversifying into One of the Lowest Cost Producing Regions
Ukraine: Diversifying into One of the 013 Lowest Cost Producing Regions Dnepropetrovsk Coke Bagley Coke Dneprodzerzhinsk Coke Dnepropetrovsk Metal Works Sukha Balka Steel Mill Iron Ore Mine Coke Production
Slide 14: Sukha Balka
Sukha Balka 014 ◦ 2 underground iron ore mines ◦ 30 years of estimated reserve life: ◦ Iron ore reserves (A+B+C) – 107 mln tonnes ◦ Magnetite quartzite reserves (A+B+C) – 215 mln tonnes ◦ 2007 production of 2.85 mln tonnes of lumpy ore (57.7% of Fe) ◦ FY08 expected cash cost is US$32 per tonne of lu
Slide 15: Dnepropetrovsk Metal Works
Dnepropetrovsk Metal Works 015 ◦ Integrated steel mill, located in the proximity to iron ore resources and key markets ◦ 3 blast furnaces with annual capacity of 1.8 mln tonnes of hot iron ◦ 3 converters with 2007 crude steel production of 1.3 mln tonnes ◦ Total sales in 2007 amounted to 1.4 mln ton
Slide 16: Coke Production Plants
Coke Production Plants 016 Bagley Coke ◦ 3 coke ovens with annual capacity of 1.5 mln tonnes reconstructed in 1986-1987 and 2005 Dneprodzerzhinsk Coke ◦ 2 coke ovens with annual capacity of 1.03 mln tonnes, built and reconstructed in 1989-1992 Dnepropetrovsk Coke ◦ 4 coke ovens with annual capacity
Slide 17: North American Operations: Exposure to Infrastructure and Energy Markets
North American Operations: Exposure to 017 Infrastructure and Energy Markets EOSM Red Deer Regina Calgary EOSM EOSM Claymont Steel Steel Mills Stratcor Pipe mills Vanadium Assets
Slide 18: Claymont Steel
Claymont Steel 018 ◦ In January 2008, Evraz acquired shares in Claymont Steel for US$414 mln ◦ Leading integrated producer of custom steel plate on the East Coast of the USA ◦ 450 thousand tonnes of finished plate capacity per year ◦ Merger with EOSM creates substantial synergies and eases integrati
Slide 19: IPSCO Canada
IPSCO Canada 019 ◦ In March 2008, Evraz signed an agreement to acquire IPSCO's Canadian plate and pipe business for US$2.3 bln ◦ 1 mln tonnes of crude steel capacity with two EAFs and own scrap collecting facilities ◦ 3 ERW and DSAW tubular mills with annual capacity of 1.2 mln tonnes of OCTG and LD
Slide 20: Delong Holdings
Delong Holdings 020 ◦ In February 2008, Evraz signed an agreement to acquire up to 51% of Delong Holdings ◦ 3.0 mln tonnes integrated modern HRC mill located in Hebei province in 400 km from Beijing and from the sea ports ◦ 850 mm and 1,250 mm wide strip coils used mostly in pipemaking ◦ Second lowe
Slide 21: FY2008 Outlook
™ FY2008 Outlook =EVRAZ
Slide 22: Outlook
Outlook 022 ◦ Consolidated revenues are expected to increase in 1H08 by 60-65% vs. US$6,053 mln in 1H07 EBITDA is expected to grow to apx. US$3,050 mln in 1H08 vs. US$2,050 mln in 1H07 ◦ FY08 capital investments are budgeted at US$1,070 mln ◦ Investment capex: US$545 mln Maintenance capex:US$523 mln
Slide 23: Evraz's Global Business
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Slide 24: IR@evraz.com www.evraz.com
024 +7 495 232-1370 IR@evraz.com www.evraz.com