Mmk · RUS:MAGN
Mmk — Investor Presentation (October 2021)
77 slides from Mmk's investor presentation, October 2021
Slide 1: October 2021 Magnitogorsk, Russia
October 2021 Magnitogorsk, Russia
Slide 2: Disclaimer
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix These materials are provided for information purposes only. that could cause such differences include, among others, changing For notes business and other market
Slide 3: Contents
MMK Group at a glance 04 ESG-driven development 11 Leadership in priority markets 15 Investing in the future 33 Ensuring financial stability 47 Appendix 55 3
Slide 4: MMK Group at a glance
MMK GROUP AT A GLANCE
Slide 5: A producer carrying out every aspect of the steelmaking process
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix For more details on the asset, click its name Russia A producer carrying out every aspect of the steelmaking process… More details Self-sufficiency Output Coal mi
Slide 6: Continuous improvement across all business lines
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Continuous Partnership approach improvement to our customers across all business lines Continual development of our people, creation of opportunities for personal
Slide 7: Q2 2021 financial and operating highlights
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix 3 320 2 904 Finished products sales, Change quarter-on-quarter ths tonnes 2 223 (q-o-q) Revenue 51.8% 39.7% 41.9% Premium products,% Q2 ‘20 Q1 ‘21 Q2 ‘21 EBITDA m
Slide 8: Shareholding structure and free float
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Shareholding Free float regional structure breakdown(2) IPO in 2007 About 8.9% of share capital sold Priced at USD 12.5 per GDR 29% 26% 23% 16% 6% (about USD 1.0
Slide 9: Total shareholder return is the main KPI for senior management
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Total shareholder return is the main KPI for senior management Strong focus on capital markets Dividend policy tied to FCF ensures high dividend yield Free float
Slide 10: Distinctive features
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Distinctive features High profitability Solid dividends and the highest TSR Unique market exposure and cash flow generation ● One of the highest dividend yield in
Slide 11: ESG-driven development
ESG-DRIVEN DEVELOPMENT
Slide 12: Air emissions, greenhouse gases and discharges
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix 15,5 15,7 15,8 15,3 14,5 Total air –11% 13,4 emissions 199,3 198,2 197,0 The Russian Ministry of Natural 177,4 188,9 Resources and Environment Specific emissions,
Slide 13: Steady reduction in LTIFR
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix 1,16 The –32% industry 0,89 average (2) 0,66 Steady 0,45 reduction 0,40 in LTIFR(1) 44,16 –7% 31,24 Steady 23,62 22,08 reduction 20,00 in LTISR(3) 2016 2019 2020
Slide 14: Corporate governance principles
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Corporate governance Equal treatment of all Building trusted Transparency Company shareholders relationships and timely disclosure governance principles w
Slide 15: Leadership in priority markets
PRIORITY MA RI
Slide 16: Prime geographical location supplying Russian regions
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to the home slide Seaport Shortest distance St Petersburg 600 km The MMK strategy leverages our Peer 1 to the seaport, km Peer 2 prime geographical location
Slide 17: MMK has a 10% share of the FSU market
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix MMK’s logistical Peer 1 accessibility Peer 2 MMK has a 10% share of the FSU Other FSU Ukraine market by metal product sales volume. 1 Georgia ММК 2 Armenia 1 1,50
Slide 18: Leader in premium product shipments to the Russian market
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to home slide Leader... in Russia Investment case MMK Group is the leader in premium Premium product sales breakdown product shipments to the Russian market
Slide 19: Expanding production capacities and product ranges
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix As part of its strategy to boost sales of premium products, MMK is expanding its production capacities and product ranges New New Application areas capacities pro
Slide 20: Metal consumption expected to recover by sector
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix is expected to recover over Metal consumption, y-o-y Market share(1) the coming couple of years: 9,1% 6,6% 6,2% 2,2% 3,4% 3,4% 4% Construction % 10,9% 3,1% 4,3% E
Slide 21: Construction and machine building demand drivers to 2030
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix by 2030 in comparison with 2020 Construction Machine building • Metal shingles Low share of steel-framed • Lifting equipment More modern vessels • Siding multi-st
Slide 22: Energy and automotive demand drivers to 2030
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix by 2030 in comparison with 2020 Energy Automotive • Large diameter Major projects aimed at gas • High-strength car > % pipe for trunk infrastructure development a
Slide 23: Upside from the upcoming National Projects
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to the home slide MMK is in the best position for potential upside from the upcoming National Projects. Once executed, the National Projects could add + 1–7
Slide 24: Protection of local producers from unfair competition
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Measures taken by the Eurasian Economic Union to protect local producers from unfair competition are significantly weaker than in developed economies, creating fu
Slide 25: Flexible in redirecting sales if needed
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix But flexible in redirecting sales if needed 1 2 Protectionism is getting stronger Consequently, export sales around the globe. More and more are not a priority fo
Slide 26: Price corridor for hot-rolled coils
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to the home slide Price corridor for hot-rolled coils of MMK’s Rolling Mill No. 10 (export) 819 Price for hot-rolled coils of MMK’s Rolling Mill No. 10 753 4
Slide 27: Global iron ore market
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix China dominates the global iron ore market by consumption. Along with Brazil and Australia, the two major exporters, China is one of the most important markets an
Slide 28: Consensus forecast of iron ore prices
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Consensus forecast of iron ore prices CIF China, USD/t(1) Forecast HIGH Most forecasts agree that the period of high prices for MID iron ore is temporary. The per
Slide 29: Iron ore supply and demand in Russia and Kazakhstan
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Supply and demand statistics of key types of iron ore in Russia and Kazakhstan mln tonnes Supply in Russia and Kazakhstan Demand in Russia and Kazakhstan Iron ore
Slide 30: Global coking coal market
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix The global coking coal market has no dominant consumer as the shares of China, India, the EU and Japan are more or less equal Supply and demand balance, In 2016–2
Slide 31: Consensus forecast of coking coal spot prices
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Consensus forecast of spot prices НСС FOB Australia, USD/t(1) Forecast High According to most forecasts, there is a potential Mid for a sustained increase in glob
Slide 32: Coking coal balance in Russia
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Production and consumption balance of coking coal concentrates in Russia, Changes in market prices in Russia mln tonnes Russian prices largely follow global price
Slide 33: Investing in the future
INVESTING = IN THE FUTURE == —™ AIMOPABPUKA Nes
Slide 34: Maximising total shareholder return (TSR)
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Maximising total shareholder return (TSR) To be the best To be a leader in operational supplier excellence 1 Superior 3 Leadership in production efficiency produc
Slide 35: Key EBITDA growth drivers in 2019–2025
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Key EBITDA growth drivers in 2019–2025, USD mln To be a leader in operational excellence USD bn To be the best supplier 1 2 3 4 Superior Customer Leadership in Ex
Slide 36: Strategic pillars: best supplier
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Strategic pillars To be the best supplier Strategic Tools Strategy UN SDGs objectives 2025 Building a superior product portfolio Increasing the share of high-
Slide 37: Strategic pillars: operational excellence
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Strategic pillars To be the best supplier Strategic Tools Strategy UN SDGs objectives 2025 Excellence in production to reduce Organisational and technical E
Slide 38: Strategic pillars: responsible, sustainable business
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Strategic pillars To be the best supplier Strategic Tools Strategy UN SDGs objectives 2025 Achieve the goal of zero injuries (and Performance management syste
Slide 39: Expansion projects now fully funded
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix For more details on the project, click its name Implementation Output growth, product mix enhancement timeframe and CAPEX, USD mln Implemented projects commission
Slide 40: Output growth and product mix enhancement: IRR and impact
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix For more details on the project, click its name Output growth, product mix enhancement Implemented projects IRR Average annual impact Economic >20% on EBITDA(1) –
Slide 41: Automated business system for operational excellence initiatives
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix An automated business system that bundles operational excellence initiatives Objectives Reducing Energy Higher resource savings equipment consumption productivity
Slide 42: Economic effect of the Digitalization Strategy
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Number of Strategic Investment, Economic Strategic pillars projects objectives USD mln effect, USD mln 2020-2024 The economic effect of the implementation of the
Slide 43: Digital initiatives: estimated impact by 2025
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to home slide Strategic priorities To be the best supplier Operational excellence Sustainable development Data science Digital MRO(1) Unmanned transport Pers
Slide 44: Unmanned vehicles for efficient, safe logistics
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to the home slide An essential part of efficient, safe and eco-friendly logistics Unmanned vehicles help to: The Evocargo unmanned Cut OPEX platform Transp
Slide 45: Personnel tracking technology for safety
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to the home slide The technology prevents personnel from getting close to Detect a dangerous moving equipment, reducing the proximity between the risk of a
Slide 46: MMK's digital platform
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Development of cloud Development of data services analytics MMK’s digital platform will allow: The implementation costs of digital projects to be reduced Higher
Slide 47: Ensuring financial stability
ENSURING FINANCIAL STABILITY
Slide 48: Financial policy aims to maximise cash flow and value
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Our financial policy aims to maximise cash flow and value for investors Objective Business Working Investment Dividend performance capital rating yield More detai
Slide 49: First quartile of the cost curve and high EBITDA margins
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to home slide Financial policy objectives Investment case USD/t The Company 850 is currently in the first quartile of the cost curve USD 362/t MMK is one of
Slide 50: Strong financial profile and debt structure
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to home slide Financial policy objectives Investment case Strong financial profile, USD mln Credit ratings at or higher than Debt Net Debt Net Debt/ EBITDA t
Slide 51: Available liquidity and debt repayment schedule
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Available liquidity Debt repayment analysis schedule USD mln USD mln 2 260 average cost of debt 1 270 as of 30 June 2021 Available credit lines Significant liquid
Slide 52: Current dividend policy
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to the home slide FCF Dividend policy, % of FCF Current dividend policy(1), 2021 30% 2016 50% 2017—2018 ≥ % ≥ % if Net Debt/EBITDA if Net Debt/EBITDA < > Not
Slide 53: Dividends payout dynamics
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to home slide Financial policy objectives Investment case Dividends payout dynamics USD mln Dividends FCF Dividend per share, $ Dividend yield(¹) MMK remains
Slide 54: Q3 2021 outlook
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Q3 2021 The Group’s performance will be further boosted by: Finished products output Seasonal recovery of demand in Russia and continued favourable • Operational
Slide 55: Appendix
APPENDIX »
Slide 56: Products, production and raw materials
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Raw materials Production Products Primary Secondary Pig iron Crude steel Semi-finished Finished Premium products Scrap metal Billets Long products Metalware Galva
Slide 57: Magnitogorsk steel production
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to the home slide Location: Consumers Magnitogorsk, Chelyabinsk Region Construction industry The automotive industry Railway industry Machine building Produc
Slide 58: Metalware production
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to the home slide Location: Share of premium Magnitogorsk, products Chelyabinsk Region % Production Primary raw materials Products Highlights Capacity, ktpa
Slide 59: Iron ore mining
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to the home slide Location: Iron content in Magnitogorsk, rich iron ore Chelyabinsk Region % Production Products Iron content in Capacity, ktpa lean iron ore
Slide 60: MMK-LMZ, Lysva
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to the home slide Location: Lysva, Share of premium products Perm Territory % Production Primary raw materials Products Highlights Capacity, ktpa ММК (100%
Slide 61: MMK Metalurji, Turkey
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to the home slide Production chain Share of premium products Primary raw materials Products Capacity, ktpa and hot-rolled stock Supplied by ММК Location %
Slide 62: Coal mining, Belovo
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to the home slide Production chain Highlights Primary raw materials Products Capacity, ktpa Coal reserves Location Third parties GZh, OS, KS grades Belov
Slide 63: Key projects in 2016–2025: coke-oven battery
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to home slide Key projects in 2016–2025 Timeframe and CAPEX IRR and effects CAPEX Capacity, mtpa Payback period(1) IRR Objectives and effects Expected annual
Slide 64: Key projects in 2016–2025: galvanising
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to home slide Key projects in 2016–2025 Timeframe and CAPEX IRR and effects CAPEX Capacity, mtpa Payback period(1) IRR Objectives and effects Expected annual
Slide 65: Key projects in 2016–2025: air separation unit
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to home slide Key projects in 2016–2025 Timeframe and CAPEX IRR and effects CAPEX Capacity, m³/h Payback period(1) IRR Objectives and effects Expected annual
Slide 66: Key projects in 2016–2025: sinter plant
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to home slide Key projects in 2016–2025 Timeframe and CAPEX IRR and effects CAPEX Capacity, mtpa Payback period(1) IRR Objectives and effects Expected annual
Slide 67: Key projects in 2016–2025: hot-rolling mill
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to home slide Key projects in 2016–2025 Timeframe and CAPEX IRR and effects CAPEX Capacity, mtpa Payback period(1) IRR Objectives and effects Expected annual
Slide 68: Key projects in 2016–2025: blast furnaces
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to home slide Key projects in 2016–2025 Timeframe and CAPEX IRR and effects CAPEX Capacity, mtpa Payback period(1) IRR Objectives and effects Expected annual
Slide 69: Key projects in 2016–2025: air separation unit No. 9
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to home slide Key projects in 2016–2025 Timeframe and CAPEX IRR and effects CAPEX Capacity, m³/h Payback period(1) IRR Objectives and effects Expected annual
Slide 70: Key implemented projects and projects in progress
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Key implemented projects Incremental output, Timeframe Company Project profile Products mtpa 2012—2020 2021—2025 Construction of a new pelletisation plant (two st
Slide 71: Russian coking coal classification
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix The Russian coking coal classification differs from the international one, but is not dissimilar from the Chinese classification International coking Approximate
Slide 72: 2019-2021 quarter dynamics
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to the home slide 2019-2021 quarter dynamics ths tonnes Coal concentrate Pig iron Steel 3 401 3 312 3 300 3 194 3 091 3 070 3 022 3 mln tonnes 2 882 2 640 2
Slide 73: MMK Group revenue breakdown by segments
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to the home slide MMK Group revenue breakdown by segments USD mln 3 255 77 236 Coal mining 2 185 1 999 2 009 60 Steel Turkey 1 852 166 59 48 136 1 722 Steel
Slide 74: CAPEX quarterly and yearly dynamics
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to the home slide Quarterly 337 dynamics 254 229 248 84 USD mln 176 191 159 Maintenance 164 102 123 104 130 142 Development 87 82 69 76 51 253 69 146 131 125
Slide 75: Net Working Capital dynamics
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Back to the home slide Net Working Capital dynamics USD mln The working capital build-up in 18,8% Q2 2021 was 15,4% Target 14,5% NWC no more than 14-15% 13,8% 12,
Slide 76: Key indicators breakdown by currency
MMK Group at a glance ESG-driven development Leadership in priority markets Investing in the future Ensuring financial stability Appendix Key indicators breakdown EBITDA Cost of sales by currency sensitivity breakdown USD RUB EUR Others % Effect on Variable of change EBITDA, Fixed Revenue in price U
Slide 77: Russia, Magnitogorsk 93, Kirova street
Russia, Magnitogorsk Veronika Kryachko Ilya Nechaev Anna Andreeva 93, Kirova street Head of Investor Investor Relations Investor Relations Relations manager manager +7 (915) 380-62-66 +7 (909) 093-08-98 +7 (906) 866-66-80 kryachko.vs@mmk.ru nechaev.ia@mmk.ru andreeva.av@mmk.ru