Evraz PLC · LSE:EVR
Evraz — JP Morgan Annual EMEA Equity Conference 2006
22 slides from Evraz's conference presentation, January 2006
Slide 1: Investor Presentation
Investor Presentation January 2006 PDF created with pdfFactory Pro trial version www.pdffactory.com
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 Group S.A. (Evraz) or any of its subsidiaries in any jurisdiction or an inducement to enter into investment act
Slide 3: Evraz Highlights
Evraz Highlights n Among the 15 largest steel producers in the world n Russia’s largest producer of steel and steel products n Vertically integrated steel and mining business n Recent acquisitions of Palini e Bertoli and Vitkovice Steel n Produced 13.9mn t of crude steel in 2005 n Consolidated reven
Slide 4: Top Russian steel producer
Top Russian steel producer Evraz’s main locations Top Russian steel producers Output1 (million tons) Russian Main ranking Company 2003 2004 1H05 products 1 Evraz Group 13.9 13.7 7.0 Long 2 MMK 11.5 11.3 5.5 Flat/long 3 Severstal 9.9 10.4 5.1 Flat/long 4 NLMK 8.9 9.1 4.1 Flat 5 Mechel 4.6 5.5 2.7 Lon
Slide 5: An integrated steel and mining platform
An integrated steel and mining platform (1) Mastercroft 100% Steel NTMK Zapsib NKMK Palini e Bertoli Vitkovice Steel 92.4% 95.4% 100% 75%+1 99% Neryungri Coal Raspadskaya Mine 12 Yuzhkuzbassugol 47.8%(2) Ugol 100% 50%(2) 100% Iron Ore KGOK Evrazruda VGOK 97.6% 100% 87.4% Distribution Nakhodka Ferrot
Slide 6: Russia's leading steel producer
Russia’s leading steel producer Top Russian steel producers in 1H05 (mn t) Evraz 7.0 MMK 5.5 Severstal 5.1 NLMK 4.1 Total steel output Mechel 2.7 Long Products (inc. billets) Source: Chermet, Metall Expert Diversified production mix, 1H05 Domestic market share by volume, 1H05 19.4% 21.0% 100% 100% 8
Slide 7: Russia's growing construction industry
Russia’s growing construction industry n Russian steel consumption remains below global benchmarks n Construction sector output is forecasted to exceed GDP growth by 37% between 2004 and 2008 n Significant downstream capacity flexibility to capture migration to higher margin products for domestic ma
Slide 8: Unique position in rail products
Unique position in rail products The Russian Railways (RZD) opportunity n Railway products contributed 13% to Evraz’s revenues in 1H05 n RZD, Evraz’s major customer, is among the biggest railway operators globally n Evraz accounted for nearly 100% of sales of rails in Russia n Significant RZD capex
Slide 9: Growing self-sufficiency in raw materials
Growing self-sufficiency in raw materials n Approximately 75% of iron ore and 70%(1) of coking coal are sourced internally n Evraz has access to a large proportion of its raw materials supply n Limited exposure to high and variable raw material prices Global iron ore and coking coal prices ($/t)(2)
Slide 10: Attractive export markets – Asia
Attractive export markets – Asia n Robust GDP growth expected to continue in all of Evraz’s key export markets, significantly outperforming expected economic expansion in developed nations n Steel exports accounted for 43% of Evraz’s total 1H05 revenues, with the majority delivered as semi-finished
Slide 11: Magnitude and quality of transformation
Magnitude and quality of transformation Growing profitable business Increasingly diversified EBITDA 8,000 40% 100% 7,000 6,709 34% 80% 32% 6,000 30% 5,000 60% (US$m) 22% 4,000 20% 40% 3,000 14% 2,168 2,000 10% 1,413 20% 1,000 0 0% 0% 2002 2003 2004 LTM¹ 1H04 2004 1H05 Net income EBITDA Steel segment
Slide 12: Summary financials
Summary financials US$mn 2002 2003 2004 1H05 Income statement Revenues 1,540 2,168 5,933 3,632 Gross Profit 205 559 2,447 1,381 Margin (%) 13.3% 25.8% 41.2% 38.0% Adjusted EBITDA (1) 209 476 2,017 1,119 Margin (%) 13.6% 22.0% 34.0% 30.8% Net income 1 253 1,345 729 Balance sheet Total assets 1,222 2,
Slide 13: Cost Structure
Cost Structure Steel division costs Mining division costs US$2,566m US$1,683m US$325m US$192m 100% 100% 8% 5% 10% 12% 6% 6% 3% 3% 8% 80% 7% 5% 80% 10% 10% 27% 8% 10% 60% 60% 8% 18% 40% 40% 67% 76% 58% 20% 20% 35% 0% 0% 1H05 1H04 1H05 1H04 Raw materials Transportation Staff costs Depreciation Energy
Slide 14: Price dynamics: iron ore
Price dynamics: iron ore Ore (RUR/tonne) Concentrate (RUR/tonne) 700 2,500 600 2,000 500 1,500 400 300 1,000 200 500 100 0 Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Lebedinsky GOK (68% Fe) Stoilensky GOK (66,7% Fe) Stoilensky GOK (53 % Fe) Mikhailovsky GOK (
Slide 15: Price dynamics: coal
Price dynamics: coal Coking coal concentrate (RUR/tonne) 3000 2500 2000 1500 1000 500 0 Jan March May July Sept Nov Average price in Russia for c oking c oal c oncentrate, FCA Note: Price for average quality coking coal concentrate Source: OOO Rasmin, VGUP Vukhin, Evraz 14 PDF created with pdfFactor
Slide 16: Price dynamics: steel products
Price dynamics: steel products Rebars (RUR/tonne) H-beams (RUR/tonne) 24,000 16000 20,000 12000 16,000 8000 12,000 8,000 4000 4,000 0 0 Jan March May July Sept Nov Jan March May July Sept Nov Export price, FOB Export price, FOB Russian price index, FCA Russian price index, FCA Source: Evraz, Metallt
Slide 17: Recent Corporate Developments: Palini e Bertoli
Recent Corporate Developments Palini e Bertoli n Palini e Bertoli is a rolling mill operator in northern Italy producing steel plate products n Target markets - Southern Europe and the Mediterranean n 2004 output - 356,000 tonnes of rolled products, revenues - €183mn under198 - 2002 003 - Present It
Slide 18: Recent Corporate Developments: Vitkovice Steel
Recent Corporate Developments Vitkovice Steel n Vitkovice Steel in the north-east of the Czech Republic is a leading European producer of hot-rolled steel products n Target markets – the Czech Republic and Central Europe 003 - Present n Total sales in 2004 - 870,000 tonnes of rolled products, 2004 r
Slide 19: Yuzhkuzbassugol Acquisition
Yuzhkuzbassugol Acquisition n Highlights n Leading coal producer in Russia, operating 10 mines, 2 washing plants, 3 machinery plants, 3 transportation companies and a number of support companies n Annual output exceeded 17mn t of coal in 2005 n Wide and complementary range of coal brands, permitting
Slide 20: Neryungri Ugol – Project on track
Neryungri Ugol – Project on track n Highlights n 2.4mn tpy coking coal mine n Extractable reserves are estimated at 70-85mn t of high grade hard coking coal n Production to start in 2H06, expected to reach full production during 2008 n Current stage n Evraz – Mitsui JV agreement signed, Mitsui becom
Slide 21: Corporate Governance
Corporate Governance n Management n Board of Directors decision on management changes based on necessity to separate the roles of chief executive officer and of chairman of the Board: n New structure effective since January 1, 2006: – Mr. Valery Khoroshkovsky, Managing Director Operations, appointed
Slide 22: Contacts
Contacts Corporate Affairs and Investor Relations: Irina Kibina Vice President Nikolay Arutyunov Director Irina Dubitskaya Senior Manager Tel. +7-095-2321370 Fax +7-095-2321359 ir@evraz.com 21 PDF created with pdfFactory Pro trial version www.pdffactory.com