Severstal · RUS:CHMF
Severstal — UBS Annual Investment Conference 2008
12 slides from Severstal's conference presentation, Oct 30, 2008
Slide 1: Severstal UBS Annual Investment Conference
Severstal UBS Annual Investment Conference Russia/CIS: to prosperity through partenrship 30 October 2008
Slide 2: Disclaimer
Disclaimer These materials may contain projections and other forward-looking statements regarding future events or the future financial performance of OAO Severstal (Severstal). You can identify forward looking statements by terms such as “expect,” “believe,” “anticipate,” “estimate,” “intend,” “wil
Slide 3: An International, Vertically Integrated Steel Player
An International, Vertically Integrated Steel Player y Leading crude steel producer – 25m tonnes of capacity by end of 2008 y 2nd largest producer of steel and steel products, iron ore pellets and coking coal in Russia y 4th largest integrated steel producer in the US y Record 1H08 – revenue up over
Slide 4: New Corporate Structure
New Corporate Structure Severstal Severstal Russian Steel Severstal Resources Severstal International (2007 Revenue: $8.9bn) (2007 Revenue $2.2bn) (2007 Revenue $5.4bn) Russian Steel Mining Severstal North America Metalware European Operations Izhora Pipe Mill Transparency, accountability and best p
Slide 5: Robust Corporate Governance
Robust Corporate Governance International recognition of governance standards – awarded ‘The Best Progress in Corporate Governance’ by the Investor Protection Association in December 2007 y 5 out of 10 Directors, including the Chairman of the BoD, are independent as defined by the UK Combined Code –
Slide 6: Low-cost Business Model
Low-cost Business Model … Average HRC Full Production Cost, USD/tonne (Sep 2008) y Integrated steel and mining business model worldwide – Availability of local raw materials 1 000 830 840 850 y Low-cost business model to address cost inflation 800 750 780 pressures 735 740 720 690 – Vertical integra
Slide 7: With Vertical Integration Globally
… With Vertical Integration Globally … Iron Ore Prices ($/tonne) y Unprecedented increases in iron ore, coking coal and 120 scrap prices in H1 2008 106 110 100 92 y High degree of self-sufficiency in raw materials 77 80 73 89 – 95% in coal in Russia 57 58 76 76 60 65 – 115% in iron ore in Russia 40
Slide 8: And Step-up in 2008 Steel Prices
… And Step-up in 2008 Steel Prices HRC pricing dynamics in 2003-2008 y Substantial price increases in all regions in 1H 2008 ($/metric tonne) – Based on high capacity utilization and 1,400 sustained demand 1,200 – Full pass-through of raw material cost increases – More consolidated markets – Russia,
Slide 9: Strong EBITDA Growth, Low Gearing
Strong EBITDA Growth, Low Gearing 4,0 2,0 3,7 3,5 3,0 3,0 2,8 2,8 1,5 2,5 2,1 $bn Multiple 2,0 1,0 1,5 1,0 0,5 0,3 0,3 0,3 0,5 0,1 0,0 0,0 2005 2006 2007 H107 H108 EBITDA Net Debt/EBITDA (right axis) y Positive developments in 3Q08 y Diversified, proactive financing policy Note: 1H07 Net Debt / EBIT
Slide 10: Short-term Debt Schedule
Short-term Debt Schedule 600,0 500,0 142 400,0 223 $million 300,0 280 200,0 394 255 247 233 100,0 119 0,0 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 To be repayed To be refinanced y M&A’s postponed y Capex would be cut substantially in 4Q08 and trough 2009 Source: Company 9
Slide 11: Short-term Outlook
Short-term Outlook y Demand in Russia is weak on liquidity problems – Low visibility for November and December – Traders and service centers have estimated 4-5 months of inventories – Further production cuts are not excluded to prevent prices from further sliding down – GDP growth may slow down from
Slide 12: Summary
Summary y An international, vertically-integrated steel player y Leading crude steel producer – 25m tonnes of capacity by end of 2008 y 2nd largest producer of steel and steel products, iron ore pellets and coking coal in Russia y 4th largest integrated steel producer in the US y Record 1H08 – Reven