Mmk · RUS:MAGN
Mmk — 9M 2010 Earnings Presentation
23 slides from Mmk's earnings presentation, 2010
Slide 1: 9M and Q3 2010 IFRS Financial Statements Presentation
MAGNITOGORSK IRON & STEEL WORKS 9M and Q3 2010 IFRS Financial Statements Presentation
Slide 2: MMK Group 9M and Q3 2010 Highlights
MMK Group 9M and Q3 2010 Highlights 9M 2010 Financials Revenue USD 5,775 mln - 70% growth to 9M 2009 EBITDA USD 1,199 mln - 90% growth to 9M 2009 EBITDA margin – 21% Domestic sales share - 65% Q3 2010 Financials Revenue USD 2,055 mln - less than 1% decrease to Q2 2010 EBITDA USD 388 mln
Slide 3: Key Contribution Factors
Key Contribution Factors • Largest domestic player with strong direct exposure to growing sectors of Russian economy • Import substitution strategy with focus on niche HVA products • Target investments into high-quality assets and high-margin projects • Growing integration into raw materials and inc
Slide 4: Growth Output Driven by HVA Products
Growth Output Driven by HVA Products • Finished products output in Q3 2010 MMK key operational indicators rose by 1.5% q-on-q and amounted to 9M 10 9M 09 +/- Q3 10 Q2 10 +/- 2,661 th. tons Cast iron 3 865 5 924 -34,7% 2 315 2 320 -0,2% Crude steel incl. 8 655 7 060 22,6% 2 938 2 984 -1,6% • Main gro
Slide 5: Strong Exposure to Price Premium Domestic Market
Strong Exposure to Price Premium Domestic Market • Share of domestic sales continued to grow and amounted HVA products output growth, th. tons to 69% 3 000 2 513 • Retaining presence in key export markets, MMK met the demand of end-customers in Russian and CIS 2 000 1 704 • HVA products meet the dom
Slide 6: Domestic Sales Structure
Domestic Sales Structure • Q3 2010 domestic shipments amounted to 1 835 th. tons Domestic sales of finished products Q3 2010 • HVA products account for the bulk of domestic Downstream Long shipments – 42% products products 19% 18% Flat cold- rolled • Most intensive steel consuming regions – The Ural
Slide 7: Presence at Key Export Markets
Presence at Key Export Markets Export shipments by product type • Q3 2010 export shipments amounted to 826 th. tonnes Q3 2010 Downstream Slabs and products billets • HR steel continues to prevail in the exports 1% 10% structure – 77% Flat cold- Long rolled products products 0,1% • In spite of the fa
Slide 8: Key P&L Statement Figures
Key P&L Statement Figures 9M 2010 MMK Group 9M 2010 revenue equals to USD 5,775 mln – which is 70% higher Y-on-y MMK Group 9M 2010 EBITDA is 90% higher Y-on-y thanks to growth in prices and HVA share and equals to USD 1,199 mln EBITDA margin – 21% Profit for the period - USD 190 mln Q3 2010
Slide 9: MMK Group 9M 2010 Financial Highlights
MMK Group 9M 2010 Financial Highlights MMK Group revenue, USD mln • Revenue growth driven by evolution of finished steel 6 000 5 775 products structure, as well as output and average price growth • Steel products sales account for the bulk of revenue – 4 000 3 407 92% • MMK has been successful in cu
Slide 10: MMK Group Q3 2010 Financial Highlights
MMK Group Q3 2010 Financial Highlights MMK Group revenue, USD mln • MMK managed to keep sales in Q3 2010 at the levels of Q2 2010 due to mastering of new products types and 2 500 the possibility to meet the demand coming from the 2 068 2 055 domestic market 2 000 1 652 1 500 1 404 • Q3 2010 EBITDA d
Slide 11: MMK Key Performance Indicators Analysis
MMK Key Performance Indicators Analysis MMK Group EBITDA structure • Revenue decreased by 60 mln due to prices drop, and increased by 47 mln due to higher output volumes and 24 improvement of products portfolio 400 70 29 88 57 300 • Q3 2010 cash-cost of slab increased by USD 34 due to 38 major raw m
Slide 12: Strong Balance to Secure Further Growth
Strong Balance to Secure Further Growth • MMK balance is one of the strongest in the sector • MMK total assets stand at USD 16,631 mln as of September 30, 2010 – 12.1% growth to December 31, 2010 • Property, Plant & Equipment went up by 8.5% by the end of Q3 2010 and amounted to USD 12,235 mln • The
Slide 13: MMK Financial Strength
MMK Financial Strength Debt structure breakdown by maturity profile Debt maturity profile as of 30.09.2010 30.09.2010 868 800 739 764 29% 600 538 400 254 200 71% 0 1-st 2-nd 3-rd 4-th 5-th and beyond 3,411 USD m* Long-term debt Short-term debt Debt structure by currency MMK Group liquid assets, USD
Slide 14: Cash Flow
Сильные MMK позиции Cash Flow на внутреннем рынке • CAPEX for 9M 2010 amounted to USD 1,666 mln, exceeding the record level of 2009 – USD 1,613 mln • Investment activities are financed with long-term borrowings • MMK demonstrates efficient working capital management 1 240 2 000 1 600 602 1 200 -181
Slide 15: Outlook
Outlook • Steel products output in 2010 – 10.2 – 10.3 mln tonnes • Share of HVA products in 2010 – 34% • Sales growth in 2010 y-o-y above 50% • Share of domestic sales – around 70% in 2010 • Historical highest domestic market shipment volumes • Growing dominance of MMK in the pipe steel market • Ste
Slide 16: Future Growth Factors
Future Growth Factors MMK crude steel growth drivers • MMK plans to increase production volumes by 50% by 2012 from the current levels as the result of 18 000 50% growth Magnitogorsk production site development and MMK- 16 000 Atakas project completion 14 000 12 000 • Growth plans are called for inc
Slide 17: Future Growth Factors
Future Growth Factors • Key beneficiary of steel market recovery – 50% by 2012 • Growing volumes and share of HVA products (46% by 2012) to secure sustainably high efficiency • Focus on specialty steel products to replace imports in Russia and to enjoy domestic market price premium • Access to lucra
Slide 18: Appendices
APPENDICES
Slide 19: MMK Group Revenue Breakdown
ММК Group Revenue Breakdown Revenue by type of products, USD mln Revenue by type of products Q3 10 Q2 10 +/- % Q3 2010 4% 6% Slabs Slabs 82 26 56 2% Flat products Flat products 1 195 1 314 -119 -9% Long products Long products 138 92 46 50% 23% Downstream products Downstream products 468 458 10 2% Co
Slide 20: MMK Group Operating Costs and Cost of Sales Structure
ММК Group Operating Costs and Cost of Sales Structure ММК Group operational costs , USD mln ММК Group operational costs Q3 10 Q2 10 +/- % Q3 2010 1% 6% Cost of sales 1 624 1 507 117 8% 8% Cost of sales Selling and distribution expenses 146 165 -19 -12% Selling and distribution expenses General and a
Slide 21: Events and Projects Update
Events and Projects Update ММК • Rating agency Fitch Ratings has changed the Outlook for MMK to positive from stable and affirmed Long-Term Issuer Default Rating at BB (17.09.2010) • MMK and Russian office of LG corporation (OOO "Electronics RUS") agreed on experiment supply of MMK galvanized steel
Slide 22: Events and Projects Update
Events and Projects Update Iron ore • In order to increase integration into iron ore MMK put into operation the separation unit Amcom-3 (which allows to process tailings) in September 2010. • MMK contracted Hatch to design most efficient method of Prioskolskoye deposit development (26.10.2010) ММК-A
Slide 23: Disclaimer
Disclaimer •THIS PRESENTATION IS FOR INFORMATION ONLY. •THIS PRESENTATION IS FOR DISTRIBUTION IN UK ONLY AMONG THE PEOPLE HAVING PROFESSIONAL SKILL IN THE ISSUES RELATED TO INVESTMENTS WITHIN THE MEANING OF ARTICLE 19(5) OF DIRECTIVE ON FINANCIAL ADVERTISEMENT APPROVED IN 2005 ON THE BASIS OF LAW ON
Magnitogorsk Iron & Steel Works (MMK) — 9M 2010 Earnings Presentation on 6ix