Evraz PLC · LSE:EVR
Evraz — H1 2017 Earnings Presentation
24 slides from Evraz's earnings presentation, Aug 10, 2017
Slide 1: H1 2017 Financial Results
H1 2017 Financial Results 10 August 2017
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: Core operations and distribution markets
Core operations and distribution markets No. 1 32%* No. 1 72%* No. 1 11%* No. 1 52%** among rail among rail in the rebar and among the suppliers in suppliers in construction steel Russian coking North America Russia market in Russia coal producers Consolidated revenue by segments***, % Other 16,17 o
Slide 4: Highlights
Highlights Alexander Frolov – Chief Executive Officer
Slide 5: Key themes
Key themes The global steel industry has continued to improve, mainly Global raw material prices, $/t Iron ore, Fines, 62% Fe, spot, CFR China due to the intensive capacity reduction campaign and Hard coking Iron ore, coal, fines, 62%spot, FOB CFR Fe, spot, Australia China strong property sector d
Slide 6: Safety as a base for business sustainability
Safety as a base for business sustainability Safety remains a top priority for EVRAZ Despite continued progress, tragically, we had 5 fatalities in H1 2017 LTIFR demonstrated positive dynamics due to ongoing efforts on safety improvement We remain committed to having zero fatal accidents at
Slide 7: Vertically integrated business model supported by robust cost base
Vertically integrated business model supported by robust cost base Having low-cost operations is crucial for EVRAZ Cash-cost of slabs increased amid rouble appreciation as well as iron ore and coking coal price surge Coking coal cash-cost increased mostly as a result of rouble appreciation and
Slide 8: Strategic priorities – delivering on our commitments
Strategic priorities – delivering on our commitments Key business priorities EBITDA effect* from customer focus initiatives of $48m achieved. Major effects are: Development of $16m – wheels sales volumes increase 1 product portfolio and $11m – large angles and channels sales volumes increase
Slide 9: Financial Performance
Financial Performance Nikolay Ivanov – Chief Financial Officer
Slide 10: Performance improved
Performance improved EBITDA reached $1,152m in H1 2017, up 99.7% from $577m in H1 2016 driving the EBITDA margin from 16.3% to 22.6% Increase is primarily attributable to higher coal and steel product prices, accompanied by the effects of cost-cutting initiatives Financial performance H1 2014 –
Slide 11: FCF generation
FCF generation Free cash flow for the period is a positive $549m Net cash flow from operating activities amounted to $746m in H1 2017, affected by cash outflow for working capital financing Changes in working capital are largely explained by the increase in inventories at North America (driven
Slide 12: CAPEX
CAPEX CAPEX increased to $289m vs $200m in H1 2016 mostly CAPEX breakdown, $m as a result of rouble appreciation Development, EVRAZ made good progress with two projects at Regina in Steel, North America Canada, which were ramping up during the period 14% EVRAZ NTMK continued implementing its g
Slide 13: Debt management in H1 2017
Debt management in H1 2017 YT Total debt was reduced by $392m to $5,569m via scheduled Maturity profile as of 30.06.2017*, $m YT (maturities only) Uncommitted credit lines debt repayments and liability management initiatives 2,229 2,868 Uncommitted credit lines Committed credit lines $110m of $5
Slide 14: Continuous net debt reduction
Continuous net debt reduction Deleveraging on track: net debt reduced by another $518m in H1 2017 Net debt reduced by $1.8bn since H1 2014 and reached $4.3bn in H1 2017 Net Debt/EBITDA level of 2.0x reached as of 30.06.2017 6,095 6,095 5,680 5,680 5,316 Net Leverage 1,976 2,167 1,976 2,167 3.1
Slide 15: Dividends
Dividends The Board of Directors has declared an interim dividend of $0.30 per share totaling $429.6m The decision follows a comprehensive review of EVRAZ’ financial situation, which indicates that the Group is well placed to meet its current and future financial requirements. Other factors cons
Slide 16: Looking Forward
\\ G it Mh: Looking Forward Y / YY
Slide 17: Looking forward
Looking forward EVRAZ expects its full-year results for 2017 to reflect the positive trends on the global steel market In the second half of the year, Russian steel demand is forecast to rise compared with the first Domestic prices are expected to follow international benchmarks North Americ
Slide 18: Operational update
\\ G it Mh: Operational update Y / YY
Slide 19: Significant presence in the Russian railway products market
Significant presence in the Russian railway products market Rail consumption surged by 22% in H1 2017, driven by EVRAZ’ Steel segment rail shipments, kt the expanded investment programme at Russian Railways +7% 490 457 Demand for wheels improved by 129% in H1 2017 due to the new railcar producti
Slide 20: Construction steel
Construction steel Revenues from sales of construction products to EVRAZ' construction steel sales volumes in Russia, kt third parties increased due to higher average prices H1 2016 H1 2017 1, (up 37.3%), partially offset by reduced volumes (down H1 2016 H1 2017 1,424 12.9%). 1,229 Domestic beam
Slide 21: Semi-finished steel
Semi-finished steel H1 2016 H1 2017 Revenues from external sales of semi-finished Sales volumes of slabs & billets, kt products rose by 68.2% due to higher average prices H1 2016 H1 2017 1, and sales volumes 2,536 2,393 EVRAZ has substantially increased value-added slabs and billets sales (up 38
Slide 22: Russia's largest coking coal producer
Russia’s largest coking coal producer Local coking coal prices improved in H1 2017, driven by Coal products sales by market, kt positive global benchmark trends 7,945 7,945 -5% 7,570 Sales volumes decreased by 5% YoY mainly due to 7,570 logistics constrains on the export routes 2,447 2,300 2,447
Slide 23: Recovery of OCTG and rail markets in North America
Recovery of OCTG and rail markets in North America US steel product consumption increased by 8% to 52.9 million tonnes in H1 2017 from 48.9 million tonnes in H1 2016 Oil country tubular goods (OCTG) staged a particularly strong recovery driven by limited availability of inventories in Canada and
Slide 24: Contact details
London +44 207 832 8990 Moscow +7 495 232 1370 IR@evraz.com www.evraz.com 10 August 2017