Evraz PLC · LSE:EVR
Evraz — Investor Presentation (November 2014)
27 slides from Evraz's investor presentation, November 2014
Slide 1: Investor presentation
Investor presentation November 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: Overview of H1 2014 Results
Overview of H1 2014 Results
Slide 4: H1 2014 summary
H1 2014 summary US$ million unless otherwise stated H1 2014 H1 2013 Change Steel sales volumes1(‘000 t) 7,653 7,739 -1% Revenue 6,805 7,319 -7% EBITDA2 1,080 925 +17% EBITDA margin 15.9% 12.6% +3.3pp Net profit/(loss) 1 (146) n/m Capex3 365 492 -26% Free cash flow4 444 (87) n/m Total debt5 7,479 8,1
Slide 5: H1 2014 financial highlights
H1 2014 financial highlights Consolidated revenue decreased primarily due to Consolidated revenue by segment, $m lower prices in line with negative global price 7,319 465 6,805 trends and a lag in domestic steel prices in Russia 268 434 Total 900 and Ukraine in adjusting to the depreciation of 722
Slide 6: Analysis of cost of revenue
Analysis of cost of revenue H1 2014, % of H1 2013, % of Relative Item revenue revenue change Comments on changes $m $m Revenue 6,805 7,319 (7)% Cost of revenue 5,192 76% 5,886 80% (12)% Raw materials, incl. 1,731 25% 1,819 25% (5)% Iron ore 432 6% 371 5% 16% Higher external purchases following dispo
Slide 7: Efficiency improvement plan: H1 2014 progress update
Efficiency improvement plan: H1 2014 progress update Implementation of efficiency savings plan resulted in savings of $193m* Total 2014 target is $400m Efficiency improvement, $m Cost cutting initiatives at ongoing operations: $98m 36 Reduction of headcount and related G&A costs $33m Cost cuttin
Slide 8: H1 2014 FCF generation
H1 2014 FCF generation Working capital increased by $175m due to the repayment of a $312m payable to Yuzhny GOK (supplier of sinter to EVRAZ DMZP) which was offset by other improvements Interest payments were $235m compared to $273m last year due to lower debt and refinancing at lower rates Ca
Slide 9: Liquidity and Financial Position
Liquidity and Financial Position
Slide 10: H1 2014 debt bridge and net leverage
H1 2014 debt bridge and net leverage US$ million Investor presentation, November 2014 9
Slide 11: Liquidity and debt maturity profile
Liquidity and debt maturity profile Cash and short-term deposits of $1,353m as at 30 June 2014 compared to short-term debt of $1,244m Debt currency composition: USD – 96% (incl. synthetic USD); RUB – 3%, other – 1% In August 2014, EVRAZ signed a $425 million syndicated pre-export financing fac
Slide 12: Segmental and Geographical Overview
Segmental and Geographical Overview
Slide 13: Performance by regions
Performance by regions EBITDA, EVRAZ Russia, $m EBITDA, EVRAZ North America, $m 1,000 870 129 81 H1 2013 H1 2014 H1 2013 H1 2014 EBITDA, EVRAZ Ukraine, $m EBITDA, EVRAZ Europe, $m EBITDA, EVRAZ South Africa, $m 53 40 27 21 16 H1 2013 H1 2014 H1 2013 H1 2014 (12) H1 2013 H1 2014 Note. (1) Consolidate
Slide 14: Steel: Russia
Steel: Russia Russian steel operations accounted for 78% of Sales by destination EVRAZ’s total steel products output in Q3 2014 Russian steelmaking assets are low cost and well invested Major investment projects successfully completed (PCI, rail mill modernisation, EVRAZ Caspian Steel rolling
Slide 15: Steel: North America
Steel: North America No 1 producer of rail and large diameter pipe in North America Diversified product portfolio enhanced by targeted investments into quality and product expansion Strong customer relationships Increasing production on the back of improved economic indicators and outlook in
Slide 16: Coal
Coal Low risk long-term growth options underpinned by Coking coal production, kt 2.1bn tonnes of high quality P&P reserves 5,329 5,048 5,036 Efficient stable operations at Yuzhkuzbassugol 4,802 4,724 Successful ramp-up of Raspadskaya mine 2,008 1,855 1,857 2,569 2,459 Washed coking coal (con
Slide 17: Ramp-up of Raspadskaya underground mine
Ramp-up of Raspadskaya underground mine Gradual growth of production at Raspadskaya underground mine is on track with 2014 target of 4.0 mtpa and 5.2 mtpa of raw coking coal in 2015 Main achievements Raspadskaya mine’s raw coking coal production, mt 46 km of roadways built since May 2010 5.2 L
Slide 18: Iron ore
Iron ore EVRAZ KGOK is a large, stable low cost operation Map of iron ore operations in Russia organically integrated with EVRAZ NTMK Asset P&P ore reserves*, mt Evrazruda is re-emerging as a compact operation KGOK 8,225 after a major turnaround programme, feeding 40% of Evrazruda 100 EVRAZ ZSMK
Slide 19: Capex and Investment Projects
Capex and Investment Projects
Slide 20: Capex
Capex No major capital spending in 2014 as key investment projects were completed in 2013 Significantly increased capex flexibility going forward Capex is mostly channelled to maintenance Priority is given to cash cost reduction projects with projected IRR of >40% In 9 months of 2014, capi
Slide 21: Appendix
Appendix
Slide 22: EVRAZ's global business
EVRAZ’s global business Global vertically integrated steel, mining and vanadium business with strong positions in highly attractive markets 141 Russia/CIS 16 1,301 349 3,718 124 Europe 479 1,716 North America Asia 237 South America Africa Steel mills Steel sales volume breakdown (H1 2014) Iron ore m
Slide 23: Steel market in Russia – key drivers
Steel market in Russia – key drivers Rebar and sections import volumes, kt Share of buildings using steel frame in 2013 65% 65% 68% 200 175 150 48% 125 100 30% 26% 75 20% 50 12% 25 0 Jul-13 Mar-14 May-14 Jul-14 Apr-14 Oct-13 Feb-14 Aug-13 Sep-13 Nov-13 Dec-13 Aug-14 Sep-14 Jun-13 Jan-14 Jun-14 Russi
Slide 24: Unique proposition in construction long steel products
Unique proposition in construction long steel products EVRAZ benefits from wide proprietary distribution network in Russia 81% clients consider EVRAZ’s service the best in Russia (+6% y-o-y)* Loyalty level of steel traders and end users increased to 85% (+3%)* Share of permanent clients is 8
Slide 25: Cost structure by segment
Cost structure by segment Cost structure of Steel segment, % of segment revenue Cost structure of Coal segment, % of segment revenue Revenue: 6,393 5,898 Revenue: 722 665 CoR: 5,260 4,649 Other CoR: 640 557 Energy 89% Depreciation 84% 82% 79% Staff costs 23% Other 13% 22% 15% Transportation Energy 7
Slide 26: Efficiency improvement plan: update on progress
Efficiency improvement plan: update on progress Initiative H1 2014 achievements H1 2014* vs. H1 2013 actual results, $m Operating cost savings plan is Shutdown and disposal of inefficient Russian iron ore, coal mines, Restructuring of workshop at ZSMK, Central Heat and Power Plant and mill at EV
Slide 27: London, Moscow, IR@evraz.com
London +44 207 832 8990 Moscow +7 495 232 1370 IR@evraz.com www.evraz.com November 2014