Evraz PLC · LSE:EVR
Evraz — Investor Presentation (January 2015)
31 slides from Evraz's investor presentation, January 2015
Slide 1: Investor presentation January 2015
Investor presentation January 2015
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: One of the world's largest vertically integrated steel and mining companies
One of the world’s largest vertically integrated steel and mining companies Map of EVRAZ operations Top-20 steel producer in the world based on crude steel production Leader in Russian and CIS construction steel NTMK products Moscow Camrose ZSMK Red Deer Calgary Regina KGOK Timir Global leader
Slide 4: Segmental and Geographical Overview
Segmental and Geographical Overview
Slide 5: Steel: consolidated production
Steel: consolidated production Decrease in consolidated crude steel and steel product output y-o-y as a result of the disposal of EVRAZ Vitkovice Steel and the shutdown of EVRAZ Claymont Growth in production of semi-finished goods driven by the rouble devaluation 6% increase q-o-q in productio
Slide 6: Steel: Russia
Steel: Russia Billet prices Crude steel and steel products output was broadly flat 600 in 2014 vs 2013 2014 production of semi-finished products increased 550 by 6% with production of finished steel products 500 decreasing by 4%, due to higher export sales driven 450 by weakening Russian rouble
Slide 7: Steel: North America
Steel: North America Share of announced LD pipe projects by region** No 1 producer of rail and large diameter pipe in North America Diversified product portfolio enhanced by targeted investments into quality and product expansion 75% Strong customer relationships Asset optimisation programme
Slide 8: Coal
Coal Low risk long-term growth options underpinned by 2.1bn Coking coal production, kt tonnes of high quality P&P reserves +11% 21,062 Focus on quality, attractive portfolio of premium hard and 18,933 51 semi-hard coking coal grades (Zh+GZh, K, KO) Efficient stable operations at Yuzhkuzbassugo
Slide 9: Raspadskaya & Yuzhkuzbassugol production in 2014
Raspadskaya & Yuzhkuzbassugol production in 2014 Raspadskaya Yuzhkuzbassugol Longwall 4-9-25 was launched in November at Stable production volumes by Yuzhkuzbassugol in Raspadskaya mine which is currently operates at four 2014 longwalls Yerunakovskaya VIII mine launched in 2013 Ramp-up of Ra
Slide 10: Iron ore
Iron ore EVRAZ KGOK is a large, stable low cost operation Map of iron ore operations in Russia organically integrated with EVRAZ NTMK Asset P&P ore reserves*, mt Evrazruda is re-emerging as a compact operation KGOK 8,225 after a major turnaround programme, feeding 40% of Evrazruda 100 EVRAZ ZSMK
Slide 11: Liquidity and Financial Position
Liquidity and Financial Position
Slide 12: Liquidity and debt maturity profile
Liquidity and debt maturity profile Cash and short-term deposits of $1,353m as at 30 June 2014 compared to short-term debt of $1,244m Debt currency (as at 30 June 2014) composition: USD – 96% (incl. synthetic USD); RUB – 3%, other – 1% In August 2014, EVRAZ signed a $425m syndicated pre-export
Slide 13: Overview of H1 2014 Results
Overview of H1 2014 Results
Slide 14: H1 2014 financial highlights
H1 2014 financial highlights Consolidated revenue decreased primarily due to Consolidated revenue by segment, $m lower prices in line with negative global price 7,319 465 6,805 trends and a lag in domestic steel prices in Russia 268 434 Total 900 and Ukraine in adjusting to the depreciation of 722
Slide 15: Analysis of cost of revenue
Analysis of cost of revenue H1 2014, % of H1 2013, % of Relative Item revenue revenue change Comments on changes $m $m Revenue 6,805 7,319 (7)% Cost of revenue 5,192 76% 5,886 80% (12)% Raw materials, incl. 1,731 25% 1,819 25% (5)% Iron ore 432 6% 371 5% 16% Higher external purchases following dispo
Slide 16: Efficiency improvement plan: H1 2014 progress update
Efficiency improvement plan: H1 2014 progress update Implementation of efficiency savings plan resulted in savings of $193m* Total 2014 target is $400m Efficiency improvement, $m Cost cutting initiatives at ongoing operations: $98m 36 Reduction of headcount and related G&A costs $33m Cost cuttin
Slide 17: H1 2014 FCF generation
H1 2014 FCF generation Working capital increased by $175m due to the repayment of a $312m payable to Yuzhny GOK (supplier of sinter to EVRAZ DMZP) which was offset by other improvements Interest payments were $235m compared to $273m last year due to lower debt and refinancing at lower rates Ca
Slide 18: H1 2014 debt bridge and net leverage
H1 2014 debt bridge and net leverage US$ million Investor presentation, January 2015 17
Slide 19: Capex and Investment Projects
Capex and Investment Projects
Slide 20: Capex
Capex No major capital spending in 2014 as key investment projects were completed in 2013 Significantly increased capex flexibility going forward Capex is mostly channelled to maintenance Priority is given to cash cost reduction projects with projected IRR of >40% In 9 months of 2014, capi
Slide 21: Appendix
Appendix
Slide 22: Performance by regions
Performance by regions EBITDA, EVRAZ Russia, $m EBITDA, EVRAZ North America, $m 1,000 870 129 81 H1 2013 H1 2014 H1 2013 H1 2014 EBITDA, EVRAZ Ukraine, $m EBITDA, EVRAZ Europe, $m EBITDA, EVRAZ South Africa, $m 53 40 27 21 16 H1 2013 H1 2014 H1 2013 H1 2014 (12) H1 2013 H1 2014 Note. (1) Consolidate
Slide 23: EVRAZ's global business
EVRAZ’s global business Global vertically integrated steel, mining and vanadium business with strong positions in highly attractive markets 141 Russia/CIS 16 1,301 349 3,718 124 Europe 479 1,716 North America Asia 237 South America Africa Steel mills Steel sales volume breakdown (H1 2014) Iron ore m
Slide 24: Steel market in Russia – key drivers
Steel market in Russia – key drivers Rebar and sections import volumes, kt Share of buildings using steel frame in 2013 200 65% 65% 68% 175 150 48% 125 100 30% 75 26% 20% 50 12% 25 0 Jul-13 Mar-14 May-14 Jul-14 Apr-14 Oct-13 Nov-13 Dec-13 Feb-14 Oct-14 Nov-14 Jun-13 Aug-13 Sep-13 Jan-14 Jun-14 Aug-1
Slide 25: Unique proposition in construction long steel products
Unique proposition in construction long steel products EVRAZ benefits from wide proprietary distribution network in Russia 81% clients consider EVRAZ’s service the best in Russia (+6% y-o-y)* Loyalty level of steel traders and end users increased to 85% (+3%)* Share of permanent clients is 8
Slide 26: Cautious view on global iron ore market prospects
Cautious view on global iron ore market prospects Flattening of global cost curve, $/t (ExW) Long-term outlook is conservative as market 160 2013 fundamentals are changing 140 2018 China steel production could be close to peak 120 Flattening of global cost curve due to new low 100 cost capacit
Slide 27: Vertical integration in Russia
Vertical integration in Russia Fundamentally the best production model for integrated steel mills is to have resources nearby That’s how Russian steelmaking capacities were built during the Soviet time: iron ore and steelmaking facilities were set in clusters As a result, Russian steelmaking c
Slide 28: Cost structure by segment
Cost structure by segment Cost structure of Steel segment, % of segment revenue Cost structure of Coal segment, % of segment revenue Revenue: 6,393 5,898 Revenue: 722 665 CoR: 5,260 4,649 Other CoR: 640 557 Energy 89% Depreciation 84% 82% 79% Staff costs 23% Other 13% 22% 15% Transportation Energy 7
Slide 29: Efficiency improvement plan: update on progress
Efficiency improvement plan: update on progress Initiative H1 2014 achievements H1 2014* vs. H1 2013 actual results, $m Operating cost savings plan is Shutdown and disposal of inefficient Russian iron ore, coal mines, Restructuring of workshop at ZSMK, Central Heat and Power Plant and mill at EV
Slide 30: EVRAZ's public debt structure
EVRAZ’s public debt structure EVRAZ plc Raspadskaya, OJSC US$ 400m 7.75% Loan Participation Notes due 2017 Evraz Group S.A. US$ 138m 8.25% Notes due 2015 Guaranteed by Mastercroft S.à r.l. US$ 600m 7.40% Notes due 2017 US$ 509m 9.50% Notes due 2018 US$ 850m 6.75% Notes due 2018 US$ 1,000m 6.50% Note
Slide 31: Contact details
London +44 207 832 8990 Moscow +7 495 232 1370 IR@evraz.com www.evraz.com January 2015