Evraz Plc · LSE:EVR
Evraz — FY2013 Earnings Presentation
36 slides from Evraz's earnings presentation, Apr 9, 2014
Slide 1: 2013 Financial Results
2013 Financial Results 9 April 2014
Slide 2: Disclaimer
Disclaimer 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 plc (“EVRAZ”) or any of its subsidiaries in any jurisdiction (including, without limitation, EVRAZ Group S.A.)
Slide 3: Highlights
Highlights Overview of 2013 Results Liquidity and Financial Position Segmental and Geographical Results Capex and Investment Projects Summary 2013 Financial Results 2
Slide 4: Overview of 2013 Results
Overview of 2013 Results
Slide 5: HSE Performance
HSE Performance Safety remains the key priority: strategic target of Lost Time Injury Frequency Rate (LTIFR)* zero fatality incidents 2.23 18 employee and 6 contractor fatalities recorded 1.95 in 2013 Trips, falls and injuries – from contact with or struck by moving, rotating parts of equipmen
Slide 6: 2013 summary
2013 summary US$ million unless otherwise stated 2013 2012 Change Revenue 14,411 14,726 (2)% EBITDA1 1,821 2,027 (10)% EBITDA margin 12.6% 13.8% (1.1)% Net loss (572) (425) 71% Operating cash flow 1,900 2,143 (11)% Capex 902 1,261 (28)% Cash and short-term deposits2 1,611 2,064 (22)% Free cash flow3
Slide 7: 2013 financial highlights
2013 financial highlights Consolidated revenue decreased primarily due to Consolidated revenue by segment, $m lower steel sales prices, in line with general trends 1,046 14,726 14,411 928 in the global steel industry, with Raspadskaya 520 550 2,650 adding $418m 3,120 Other operations 2013 EBITDA
Slide 8: Analysis of cost of revenues
Analysis of cost of revenues The consolidation of Raspadskaya added $463m to cost of revenues in 2013 2013, % of 2012, % of Relative Item revenue revenue change Comments on changes $m $m Revenue 14,411 14,726 (2)% Cost of revenue 11,468 80% 11,803 80% (3)% Raw materials, incl. 3,539 25% 4,026 27%
Slide 9: Cost cutting effort: 2013 results and 2014 plans
Cost cutting effort: 2013 results and 2014 plans Additional savings of c.$350-400m to be implemented in 2014* G&A expenses to be reduced by c.$100m on an annualised basis from 2015, with c.$50m to be achieved in 2014 already 2013 gain, No Initiative 2013 achievements US$ million Reduction in iro
Slide 10: 2013 FCF generation
2013 FCF generation Cash flows from operating activities after changes in working capital fell by 11.3% in 2013 to US$1,900m reflecting lower product prices compared to 2012 Working capital release of $365m reflected lower product prices, better inventory management and debts collection efforts
Slide 11: Liquidity and Financial Position
Liquidity and Financial Position
Slide 12: 2013 debt bridge and net leverage
2013 debt bridge and net leverage Increase in net debt due to consolidation of Raspadskaya ($558m) US$ million 2013 Financial Results 11
Slide 13: Liquidity and debt maturity profile
Liquidity and debt maturity profile In April 2013, 7-year $1bn Eurobonds were issued with a record low coupon of 6.50% Maintenance covenant non-compliance risk has been pro-actively managed: Outstanding balance on the $950m structured credit facility containing maintenance covenant was prepaid
Slide 14: Financial strategy
Financial strategy The directors recommend a dividend of 6 cents per share to be consistent with their intention of distributing, where appropriate, a proportion of the margin on disposals as dividends, and as an indication of confidence in the Company’s position. The $90.4m represents the approxi
Slide 15: Segmental and Geographical Results
Segmental and Geographical Results
Slide 16: Performance by regions
Performance by regions EBITDA, EVRAZ Russia, $m EBITDA, EVRAZ North America, $m 1,954 1,796 353 148 2012 2013 2012 2013 EBITDA, EVRAZ Ukraine, $m EBITDA, EVRAZ Europe, $m EBITDA, EVRAZ South Africa, $m 71 3 31 (2) (67) (11) 2012 2013 2012 2013 2012 2013 Note. (1) Consolidated EBITDA also includes Un
Slide 17: Steel: CIS
Steel: CIS Steel products sales volumes: CIS vs. export, kt Facilities operated at close to full economic capacity during 2013 11,600 10,983 Sales of semi-finished products rose by 16% supported by stable demand from export markets 33% 34% Construction industry remains the key driver of demand
Slide 18: Steel: North America
Steel: North America Stable production sales volumes with revenues affected by weaker pricing environment and competition from imports, offset by operational improvements and introduction of new products to the market Stronger performance of the Tubular product group mostly due to growth in sale
Slide 19: Mining: iron ore
Mining: iron ore Disposal of high cost VGOK and closure of Evrazruda’s Irba Iron ore products sales volumes excluding Mapochs*, kt mine led to lower total sales volumes of iron ore products, as well as decreased intersegment sales in 2013, however a 18,637 17,834 stronger performance of low cost R
Slide 20: Mining: coking coal
Mining: coking coal Coking coal product sales volumes, including intragroup, Coking coal products sales volumes*, kt increased by 152% to 14.1 mt, due to consolidation of Raspadskaya (+5.4 mt) since 16 January 2013 6,133 Raw coking coal, Yuzhkuzbassugol’s sales rose by 47% mostly as a result int
Slide 21: Capex and Investment Projects
Capex and Investment Projects
Slide 22: Capex
Capex Delivering on major investment programme with a number of key investment projects completed in 2013 Significantly increased capex flexibility going forward Further expansion plans revised and adjusted in response to the current market environment Only projects with IRR > 40% are being
Slide 23: Key investment projects
Key investment projects Cumulative Estimated Total capex by Capex in capex in capex*, 31/12/2013*, 2013, 2014, Project $m $m $m $m Project targets Completed 997 906 122 72 Yerunakovskaya VIII mine Ramp-up completed in Q1 2014. Production of 2.5 million tonnes 302 244 66 41 construction of raw coki
Slide 24: Summary
Summary
Slide 25: Current trading and market outlook
Current trading and market outlook Seasonal improvement in long steel consumption in Russia Long products consumption, kt with domestic prices of rebars and sections increasing Improved market balance due to falling imports of 6000 construction products mostly from Ukraine 5000 EVRAZ is well p
Slide 26: Summary
Summary 2013 sales volumes were broadly flat, while 2013 financial results reflected weaker steel and steel raw materials price environment Cost of revenue marginally decreased despite the consolidation of Raspadskaya Significant cost cutting programme was launched with effect already seen in
Slide 27: Appendix
Appendix
Slide 28: EVRAZ's Global Business
EVRAZ’s Global Business Global Vertically Integrated Steel, Mining and Vanadium Business with Strong Positions in Highly Attractive Markets Russia/CIS 233 2,627 658 7,641 818 Europe 246 554 3,147 North America Asia 450 South America Africa Steel mills Steel Sales Volume Breakdown (2013) Iron ore min
Slide 29: Steel: Europe, South Africa
Steel: Europe, South Africa Steel products revenues, $m Steel products sales volumes: European operations, kt 1,009 75 846 Revenue, Revenue per tonne, 89 $m $ Other Products 2012 2013 2012 2013 European Operations 934 Flat-rolled 757 Flat-rolled 704 514 754 679 Other 72 81 960 911 TOTAL 776 595 769
Slide 30: Vanadium
Vanadium Vanadium segment revenues increased by 5.8% to Ferrovanadium prices (FeV), $/kg contained V $550m in 2013 compared to $520m in 2012 on the back of stronger sales volumes Sales volumes increased by 10%, mostly as a result 31.15 31.0 31.6 of growth in sales of vanadium slag which doubled
Slide 31: Cost structure by segment
Cost structure by segment Cost structure of Steel segment, % of segment revenue Cost structure of Mining segment, % of segment revenue Revenue: 13,543 12,541 Revenue: 2,650 3,120 CoR: 11,164 10,235 Other CoR: 2,302 2,496 Energy 82% 82% 87% Depreciation 80% 14% 13% 19% Other Staff costs 7% 7% 20% 3%
Slide 32: EBITDA
EBITDA US$ million Consolidated EBITDA reconciliation 31 December 2013 31 December 2012 Profit from operations 19 258 Add: Depreciation, depletion and amortisation 1,051 1,259 Impairment of assets 446 413 Gain on disposal of property, plant & equipment 47 56 Foreign exchange (gain) loss 258 41 Conso
Slide 33: Free cash flow
Free cash flow US$ million Free cash flow calculation 31 December 2013 EBITDA 1,821 Changes in working capital 365 Income tax paid (249) Other (37) Cash flows from operating activities 1,900 Net interest and similar payments (501) Capital expenditures (902) Purchases of subsidiaries (net of cash acq
Slide 34: Total debt
Total debt US$ million Total debt calculation 31 December 2013 31 December 2012 Long-term loans, net of current portion 6,039 6,373 Short-term loans and current portion of long-term 1,816 1,783 loans Add back: Unamortised debt issue costs and fair value adjustment to liabilities assumed in business
Slide 35: Net debt
Net debt US$ million Net debt calculation 31 December 2013 31 December 2012 Total Debt 8,166 8,440 Short-term bank deposits - (674) Cash and cash equivalents (1,576) (1,320) Cash of assets classified as held for sale (35) (70) Collateral under swaps (21) - Net Debt 6,534 6,376 2013 Financial Results
Slide 36: Contact details
London +44 207 832 8990 Moscow +7 495 232 1370 IR@evraz.com www.evraz.com 9 April 2014