Mechel · RUS:MTLR
Mechel — FY2005 Earnings Presentation
16 slides from Mechel's earnings presentation, May 18, 2005
Slide 1: 2005 Full Year Results Presentation
2005 Full Year Results Presentation May 18, 2005
Slide 2: Disclaimer
Disclaimer This presentation 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 Mechel OAO (Mechel) or any of its subsidiaries in any jurisdiction or an inducement to enter into investment acti
Slide 3: Introduction and Overview
“ MECHEL ——e Introduction and Overview
Slide 4: Compelling investment case
Compelling investment case Low-cost vertically Strong mining business: integrated company, 2nd largest coking coal almost fully self- producer and the largest sufficient in key raw exporter materials NYSE-listed, Strong platform for Commitment to highest growth supported by corporate governance cons
Slide 5: Highlights
Highlights Net income was $381.18 million in 2005 on revenues of $3.80 billion Consolidated EBITDA margin of 19.1% Continuing high profitability of the mining segment Efficiency improvement programs in the steel segment yielding first results Maintained leadership in core products — 2nd la
Slide 6: 2005: Mining Segment
2005: Mining Segment Operating income of $401.25 million on revenues of Revenue breakdown by product, 2005 $1.09 billion Other Iron ore concentrate — Operating income growth of 4.5% 4% 15% — Revenue growth of 24.6% Steam coal 25% EBITDA margin of 42.5%. Mining segment EBITDA represented 64.1% of
Slide 7: 2005: Steel Segment
2005: Steel Segment Revenue by region, 2005 Revenues of $2.71 billion in 2005 CIS Middle East 5% Steel segment EBITDA constituted 35.9% of 5% Asia consolidated EBITDA 8% Efficiency and cost-saving programs stabilized margins Russia 4% Other through price downfalls of 2005 48% $350 million of
Slide 8: 2006: Strategy
2006: Strategy Management focus on profitability of operations Mining Expand the mining segment, both through organic growth and acquisitions Maintain control over costs Steel Focus on improving profitability of steel operations through cost control and efficiency gains as primary goals going
Slide 9: Changes in shareholder's structure
Changes in shareholder’s structure Mr. Zyuzin, Chairman of the Board, has agreed to purchase a 42.2% stake from Mechel’s CEO, Mr. Iorich Freefloat increased to 23% As of May 1st Mr. Zyuzin holds 47.1% with a goal to retain at least a 51% stake During 2006, current CEO Mr. Iorich will gradual
Slide 10: Financial Review
“ MECHEL Financial Review
Slide 11: 2005: Financial performance
2005: Financial performance Revenues EBITDA* 4,000 3,805 3,636 1,000 908 30% 3,000 800 726 (US$m) 2,028 (US$m) 2,000 600 1,314 341 20% 1,020 400 207 1,000 200 106 0 0 10% 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 EBITDA EBITDA margin Net profit * Total assets 600 543 44% 4,000 3,678 3,600 38
Slide 12: Segment operations
Segment operations Mining segment Steel segment 1 400 60% 3 000 60% 75 57 337 1 200 50% 2 500 50% 1 000 322 40% 2 000 40% 800 42 (US$m) (US$m) 30% 1 500 30% 2 758 2 710 600 1 095 39 186 20% 1 000 20% 878 400 1 614 70 10% 500 1 012 10% 200 414 340 303 680 0 0% 0 0% 2001 2002 2003 2004 2005 2001 2002
Slide 13: Strong balance sheet to support growth
Strong balance sheet to support growth Sound cash flow generation Operating cashflow Strong balance sheet 80 0 16.3% 20% US$123m net debt position provides 60 0 619 15% significant financial flexibility to: 40 0 8.1% 10% 6.2% 5.9 % — Fund capex program 20 0 3.4% 296 5% 35 119 81 — Pursue value
Slide 14: Disciplined approach to spending
Disciplined approach to spending 2006-2010 Capex program 2006-2010 Capex breakdown US$m Comments Mining Coal 680 Mine development: Olzherassky, Erunakovskaya-1, Mining Steel Sibirginsky 68% 32% Construction of Sibirginsky washing plant Mining equipment Iron ore 70 Mine development: Krasnoyar
Slide 15: Appendix
“ MECHEL Appendix
Slide 16: Compelling investment case
Compelling investment case Low-cost vertically Strong mining business: integrated company, 2nd largest coking coal almost fully self- producer and the largest sufficient in key raw exporter materials NYSE-listed, Strong platform for Commitment to highest growth supported by corporate governance cons