Evraz PLC · LSE:EVR

Evraz — VTB Capital Investment Forum RUSSIA CALLING! 2015

25 slides from Evraz's conference presentation, Oct 13, 2015

  1. Slide 1: Investor Presentation - VTB Capital Investment Forum RUSSIA CALLING!

    Investor Presentation VTB Capital Investment Forum RUSSIA CALLING! 13-14 October 2015, Moscow

  2. 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.)

  3. Slide 3: EVRAZ Highlights

    EVRAZ Highlights One of the largest vertically integrated steel and mining companies in the Top-25 steel producer in the world world based on crude steel Leader in the Russian production of 15.5 mt in 2014 construction and railway product markets The largest coking coal producer in Russia No 1 produ

  4. Slide 4: Market Outlook

    Market Outlook

  5. Slide 5: Russian economy is expected to restore growth in 2016-2017 after reaching bottom in 2015

    Russian economy is expected to restore growth in 2016-2017 after reaching bottom in 2015  Russian GDP growth rate is to face a strong decline Real GDP growth, % 15% in 2015, however is expected to recover by 2017  Construction operations were demonstrating 10% negative growth since Q3 2014, althou

  6. Slide 6: Low housing stock provides huge opportunities for Russian steel industry

    Low housing stock provides huge opportunities for Russian steel industry  Russia is lagging behind developed countries (more than 2 times) in terms of housing per capita that creates great potential for long steel demand for the next 5-10 years  However, steel consumption per capita is comparable

  7. Slide 7: Lack of steel-frame buildings in Russia can lead to consumption increase of construction steel

    Lack of steel-frame buildings in Russia can lead to consumption increase of construction steel Share of steel-frame multi-storied buildings Steel-frame 68% 65% 65% Steel buildings <10% 48% 13% Concrete Concrete Russia Great USA Sweden Norway Concrete Britain Source: Steel construction Institute, Ros

  8. Slide 8: Strategic Overview

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  9. Slide 9: Strategic goals 2015 – H1 2015 deliverables

    Strategic goals 2015 – H1 2015 deliverables Key business priorities  EBITDA effect* from customer focus initiatives of $38m achieved, target for Creating additional FY2015 - c.$75m 1 value for our  Expanding product portfolio and sales geography to better serve current and customers future custome

  10. Slide 10: Product line strategies

    Product line strategies Market Product line Strategy Rails  Expand product portfolio and client base Construction  Maintain market share steel Russia Semi-finished  Adjust volumes and mix in response to external factors products Coking coal  Maximise domestic shipments secured by long-term contr

  11. Slide 11: EVRAZ has specific product answers to market challenges

    EVRAZ has specific product answers to market challenges Revenue, Product line H1 2015, $m Strategy Semi-finished  Production and sales increase of the high-value $1,035m micro-alloyed pipe grade slabs products  Penetrating new markets Construction $895m  Sales of H-beams to UAE, UK and USA steel

  12. Slide 12: Semi-finished. EVRAZ showed flexibility in managing volumes between Russia and export markets

    Semi-finished. EVRAZ showed flexibility in managing volumes between Russia and export markets  Export growth of semi-finished products, which peaked in EVRAZ semi-finished products shipments, kt Q4 2014 and Q1 2015, allowed us to maintain full capacity 1,423 1,386 utilisation 1,161  In Q2 2015 goi

  13. Slide 13: Construction steel. Gradual recovery of domestic market after Q4'14 and Q1'15 decline

    Construction steel. Gradual recovery of domestic market after Q4’14 and Q1’15 decline EVRAZ construction steel products shipments, kt  EVRAZ construction products shipments are gradually increasing in 2015 1135 1066  We expect construction products shipments to recover by 1005 57 997 932 982 121 5

  14. Slide 14: Railway products. EVRAZ aims to be a global leader in NPD and quality

    Railway products. EVRAZ aims to be a global leader in NPD and quality EVRAZ railway products shipments, kt Rail production by type  EVRAZ railway products shipments declined by c.20% in H1 2015 vs H1 2014 2014 310 28%  However, the share of premium rails in our portfolio 282 significantly increase

  15. Slide 15: We reinforce our leadership in rails by introducing new products and penetrating new markets

    We reinforce our leadership in rails by introducing new products and penetrating new markets 100 meter rails New high quality rails to supply high-speed railroads in Russia Re115 New rails for supplying North and Latin American markets New rails for supplying 60E1/E2 European and Middle East markets

  16. Slide 16: Development of industrial steel products

    Development of industrial steel products EVRAZ industrial steel products shipments, kt  EVRAZ shipments of industrial steel products (incl. grinding balls and pit props) increased by c.27% in H1 2015 vs 85 H1 2014 80 72 72 63  In support of our strategic focus, EVRAZ is planning to 58 increase pro

  17. Slide 17: Coal

    Coal Washed coking coal (concentrate) production and consumption, kt *  All steam coal mines have been closed or sold  H1 2015 coking coal sales decreased due to 8,000 185% optimisation of the production programme 7,000 6,711 Production 6,384 180% Consumption  Cash cost of washed coking coal drop

  18. Slide 18: North America: Steel

    North America: Steel Steel product sales (totals shown net of intracompany), kt  Tubular products: performance of large diameter (LD) pipe and the OCTG subsegments diverged 1,301 (8)% Tubular significantly: 1,192 products 199 195  LD pipes: strengthening volumes as Flat-rolled 275 products infrast

  19. Slide 19: Financial Priorities

    Vy Financial Priorities Y \\ i MO)

  20. Slide 20: Delivering on commitments in H1 2015

    Delivering on commitments in H1 2015 Up 2.9 pp EBITDA margin Cost cutting  19%   $149m of savings  CAPEX Net Leverage  $251m  2.6x Down 31% Free Cash Flow Return to shareholders  $372m   $336m in a tender offer at US$3.10 per share (10% premium*) Down 16% *Based on the exchange rate, the te

  21. Slide 21: H1 2015 FCF generation

    H1 2015 FCF generation  Free cash flow for the period is a positive $372m  Net cash flow from operating activities amounted to $804m in H1 2015  Proceeds from sale of disposal groups amounted to $40m  On 31 March 2015, the Board resolved to announce a return of capital to be effected by a tender

  22. Slide 22: H1 2015 debt bridge and net leverage

    H1 2015 debt bridge and net leverage  Deleveraging on track: net debt reduced to $5,680m  We remain focused on continued debt reduction Net debt bridge, $m VTB Capital Investment Forum RUSSIA CALLING! 22

  23. Slide 23: Maturity profile

    Maturity profile  Total debt was $6.7bn as of 30 June 2015  Focus on proactive refinancing of short-term maturities and cost-efficient use of cash for total debt reduction:  In April 2015, we partially repurchased below par 9.95% notes due October 2015 with principal of RUB 4,150m - total cash ou

  24. Slide 24: Debt structure

    Debt structure Cost of borrowings  Weighted average cost of debt as of 30.06.2015 remains at the level of 6.4% 8 5 7  In the current market EVRAZ continues to replace 6 capital market facilities with bank debt 4 5  Refinancing interest rate is close to our weighted 4 average cost of debt hence no

  25. Slide 25: Contact

    London +44 207 832 8990 Moscow +7 495 232 1370 IR@evraz.com www.evraz.com

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