Evraz PLC · LSE:EVR
Evraz — Investor Presentation (January 2014)
38 slides from Evraz's investor presentation, January 2014
Slide 1: EVRAZ Investor Presentation January 2014
EVRAZ Investor Presentation January 2014
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: EVRAZ Overview
EVRAZ Overview Y), Yi We
Slide 4: EVRAZ in brief
EVRAZ in brief One of the largest vertically integrated steel and mining companies in the world Top-20 steel producer in the world based on crude steel production of 16.1 mt in 2013 Leader in the Russian and CIS construction and railway product markets No 1 producer of rails and large diamet
Slide 5: Core strengths of EVRAZ
Core strengths of EVRAZ Low cost and well invested Russian steelmaking assets Unique full product range proposition in the Russian construction market Leading distribution network in the Russian steel market Global leadership in the rail market with dominant positions in Russia and the Unite
Slide 6: Low cost and well invested Russian steelmaking and rolling assets
Low cost and well invested Russian steelmaking and rolling assets Vertically integrated business model in Russia EVRAZ steel production in Russia predominantly based on blast furnace process Two steel mills in Russia with total steel making capacity of >13 Mtpa EVRAZ NTMK is the cost leader in
Slide 7: Unique proposition in long and railway steel products
Unique proposition in long and railway steel products Leader in all segments as №1 producer with sales volumes more than 4 Mtpa Full product range in the Russian long steel construction market allowing to be a provider of choice for key infrastructure players Distribution through one of the la
Slide 8: Long steel market in Russia
Long steel market in Russia Long steel consumption has reached pre-crisis level Demand is being driven by infrastructure development projects announced by the government and robust residential construction Demand from the construction sector is close to an all-time high EVRAZ is one of the b
Slide 9: Drivers of Russian long steel consumption growth
Drivers of Russian long steel consumption growth Lack of residential real estate in Russia – Residential construction in Russia square meters per capita are still well below sq.m % developed countries and Eastern Europe 80 100 70 90 Penetration of mortgage financing instruments 60 80 70 50 60
Slide 10: Leadership in the Russian railway product market
Leadership in the Russian railway product market Russia has one of the largest railway infrastructure globally EVRAZ Russia’s rails sales Strengthening of market positions after completion of the rail mill modernisation project at EVRAZ ZSMK Spread on railway products to billet price has been
Slide 11: Profitable NA steel business poised for further growth
Profitable NA steel business poised for further growth #1 producer of rail and large diameter pipe in North America and a leading North American producer of plate and Oil Country Tubular Goods Camrose, AB Red Deer, AB Unique location of most facilities and exposure to Surrey, BC Calgary, AB Regi
Slide 12: #1 position in the North American rail market
#1 position in the North American rail market Mature and stable market driven mainly by maintenance of existing railroads Rail mill expansion project at EVRAZ North American assets: Capacity expansion by ~10% (from 480 ktpa in 2011 to 525 ktpa run rate at the end of 2013) Upgraded rail mill
Slide 13: Leader in the Russian coking coal market
Leader in the Russian coking coal market Map of coking coal operations Largest market share of 25.1% after acquisition of Raspadskaya in January 2013 EVRAZ can offers a wide range of premium coking coal grades (Zh+GZh, KO) in high demand domestically and a single semi- hard grade (GZh) focusing
Slide 14: Improving cost position and delivering cheap growth in coal
Improving cost position and delivering cheap growth in coal Coking coal concentrate cash costs, EXW, and coal output Cash costs of coking coal concentrate 18.9 mt production in 2012: 15.5 mt Yuzhkuzbassugol - $73/t Raspadskaya - $75/t Aiming at cash cost reduction via cost $74 $68 optimisati
Slide 15: Overview of iron ore business of EVRAZ
Overview of iron ore business of EVRAZ Efficient vertical integration in iron ore is vital due to Map of iron ore operations the geographical location of Russian steel mills and oligopolistic iron ore market in Russia Large mineral resource base of 9.1 bn tonnes in Russia, including 6.9 bn tonne
Slide 16: Capex and Management Initiatives
Capex and Management Initiatives
Slide 17: Management initiatives to address current market environment
Management initiatives to address current market environment In response to challenging conditions of the steel industry EVRAZ seeks to streamline its business and focus on operational efficiencies throughout its key segments Capex Reduction Asset Disposals Idling of non-profitable facilities Other
Slide 18: Capex
Capex In H1 2013 total capital expenditure amounted to $492m compared to $565m in H1 2012, while updated FY2013 capex estimate is $0.9-1.0bn (including Raspadskaya) compared with budgeted capex of c.$1.3bn Delivering on major investment programme: Rail mill modernisation at EVRAZ ZSMK complete
Slide 19: Key investment projects
Key investment projects Cumulative Total capex by Capex in Capex in capex*, 30/06/2013*, H1 2013, H2 2013, Project $m $m $m $m Project targets Steel 347 224 46 72 Coke consumption to be reduced by ca. 20% and natural gas by Pulverised coal injection ca. 50%, with additional 140kg PCI coal per tonn
Slide 20: Q4 2013 and FY 2013 Production Results
Q4 2013 and FY 2013 Production Results
Slide 21: Steel
Steel Consolidated crude steel production increased by 1% to EVRAZ average selling prices, $/t (ex works) 16.1 mt as a result of implementation of PCI project at NTMK mill in Russia and related operational Product group FY 2012 FY 2013 Q3 2013 Q4 2013 improvements Semi-finished (Russia) 457 401 37
Slide 22: Mining: Coal
Mining: Coal In 2013, Yuzhkuzbassugol’s raw coking coal output grew by 31% to 11.1 mt vs. 8.8 mt in 2012 due to the launch of Yerunakovskaya-VIII, Alardinskaya mine working with two longwalls and less downtime for repositionings of longwalls at other mines Raspadskaya coal company increased outp
Slide 23: Mining: Iron ore
Mining: Iron ore In 2013, the overall production of saleable iron ore products (including by Mapocks in South Africa) decreased by 1% to 20.4 mt from 20.8 mt in 2012 as a result of a number of disposals and shutdowns of iron ore assets in Russia (VGOK in October 2013 and Evrazruda’s Irba mine sinc
Slide 24: Vanadium
Vanadium Ferrovanadium prices (FeV), $/kg contained V In 2013, EVRAZ’s total production of primary vanadium (vanadium in slag) was flat vs. 2012, 33.0 decreasing by 3% in Russia as a result of less pig 31.0 29.0 iron produced by duplex melting process and 27.0 increasing in South Africa due to inc
Slide 25: H1 2013: Financial Highlights, Segmental Results, Liquidity and Debt
H1 2013: Financial Highlights, Segmental Results, Liquidity and Debt
Slide 26: H1 2013 revenue/EBITDA drivers and FCF generation
H1 2013 revenue/EBITDA drivers and FCF generation Consolidated revenue decreased primarily due to lower sales Revenue drivers, $m prices, in line with general trends in the global steel industry 7,619 32 225 H1 2013 EBITDA reflects lower prices of steel products, in 246 7,362 particular in Europ
Slide 27: Performance by regions
Performance by regions EBITDA, EVRAZ Russia, $m EBITDA, EVRAZ North America, $m 1,052 882 216 81 H1 2012 H1 2013 H1 2012 H1 2013 EBITDA, EVRAZ Ukraine, $m EBITDA, EVRAZ Europe, $m EBITDA, EVRAZ South Africa, $m 40 21 16 6 (3) (6) H1 2012 H1 2013 H1 2012 H1 2013 H1 2012 H1 2013 * H1 2012 numbers are
Slide 28: Steel: CIS
Steel: CIS Russian steelmaking facilities continued to operate at close to full capacity during H1 2013 Construction industry remains the key driver of demand for steel products in CIS, demonstrating healthy growth of 13% Higher sales of semi-finished products vs. H1 2012 due to ramp-up of the
Slide 29: Steel: North America
Steel: North America Strong production performance in tubular and construction & other steel products Flat product group focused on enhancement of capacity utilisation Tubular product group concentrated on improving productivity rates at the seamless mill at Pueblo and on heat treating investm
Slide 30: Mining: coking and steam coal
Mining: coking and steam coal Sales volumes of coking coal products of Yuzhkuzbassugol (incl. intersegment sales) increased in H1 2013 by 40% Raspadskaya contributed additional 2.7mt sales of coking coal products Higher share of intersegment sales from Yuzhkuzbassugol was due to a shift of ext
Slide 31: Mining: iron ore
Mining: iron ore External sales volumes of iron ore products increased by 6% in H1 2013 compared to H1 2012 driven by higher volumes from EVRAZ Sukha Balka Intersegment sales decreased by 6% primarily due to changes to intersegment product delivery terms and lower volumes from the Irba mine at E
Slide 32: Liquidity and debt maturity profile
Liquidity and debt maturity profile Cash and short-term deposits of $1,537m provide sufficient liquidity. The major part of short-term credit lines was repaid, the utilisation of trade lines returned to a normalised level Debt composition: 72% – public debt (Eurobonds and Russian Rouble bonds),
Slide 33: Efficient debt management
Efficient debt management H1 2013 debt management included: issue of 7-year US$1bn Eurobonds at lowest ever rate of 6.50% refinancing the RUB bonds put (c.$365m) and repayment of PXF and other facilities with maintenance covenants as a result, remaining debt with maintenance covenants amount
Slide 34: Appendix
Ee, AS WS Appendix yj y YJ
Slide 35: World steel consumption and production
World steel consumption and production After decade-long acceleration of steel consumption the Steel consumption by country, kg per capita global steel industry is moving into a lower growth 700 phase 600 ~80% of world steel consumption growth during 2000- 2012 came from China 500 China steel
Slide 36: Global macro data and steel market
40 45 50 55 60 65 400 450 500 550 600 650 700 750 800 Jan-11 Jan-11 Mar-11 Mar-11 May-11 May-11 Jul-11 Jul-11 Sep-11 Sep-11 Slab Nov-11 Nov-11 Jan-12 Jan-12 China Mar-12 Mar-12 Source: Bloomberg, SBB, World Steel Billet Manufacturing PMI dynamics May-12 May-12 Steel prices, CFR East Asia, $/t Invest
Slide 37: Global coking coal and iron ore
0 10 20 30 40 50 60 70 80 110 130 150 170 190 210 50 70 90 Jan-11 Jan-11 Mar-11 Mar-11 May-11 May-11 Jul-11 Jul-11 Sep-11 Source: SBB, World Steel Sep-11 Nov-11 Nov-11 Jan-12 Jan-12 Mar-12 Mar-12 May-12 May-12 Investor Presentation, January 2014 Jul-12 Jul-12 China iron ore imports, mt, monthly Iron
Slide 38: Russian steel and raw materials markets
Russian steel and raw materials markets Crude steel production in Russia, mt Steel consumption by industry, 2012 120 82 90 78 Total consumption 73 80 43.1 mt 70 69 71 100 67 60 70 Construction 36% 80 28% 30% 32% 30% 33% 37% 39% 60 Tubular industry 23% 31% 50 EAFs 60 Metal products 12% 40 BOFs Machin