Evraz Plc · LSE:EVR
Evraz — H1 2005 Earnings Presentation
17 slides from Evraz's earnings presentation, Oct 13, 2005
Slide 1: Superior Drive for Performance
SUPERIOR DRIVE FOR PERFORMANCE INTERIM RESULTS FOR 6 MONTHS ENDED JUNE 30, 2005 October 13, 2005
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: Summary Financial Performance
Summary Financial Performance 1H 2005 1H 2004 $ million Revenues + 27% 3,632 2,856 Net Profit * + 10% 729 661 EBITDA ** + 16% 1,119 968 Cash from operations + 289% 727 187 Cash flow used in investments, net (657) (527) incl. purchas es of PP&E (280) (239) * including minority interests ** profit fro
Slide 4: Top Russian Steel Producer
Top Russian Steel Producer Evraz Group’s main locations Top Russian steel producers Output1 Russian (million tons)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.
Slide 5: Our Strategy
Our Strategy n Focused on leveraging its inherent advantages n Russia’s sustainable low-cost advantage n Evraz Group’s unique access to raw materials n Economies of scale and growing benefits of vertical integration n Domestic market strategy is focused on finished products n Leading position in lon
Slide 6: Summary Operational Performance
Summary Operational Performance 1H 2005 1H 2004 Y-o-Y thousand thousand change, % Product tonnes tonnes § Retained position of Steel division Russia’s largest steel Pig iron 5,951 5,630 + 5.7% producer Steel 7,008 6,728 + 4.2% Rolled products 6,306 6,012 + 4.9% § Enhanced profile as a Mining divisio
Slide 7: 1H05 Highlights
1H05 Highlights § Revenues up on the back of stronger domestic and export steel prices § EBITDA up 16% from $0.97 billion to $1.12 billion fueled by growing mining segment § IPO completed in London in June § Investment program on track to deliver further value § Further consolidation of significant
Slide 8: Steel Segment 1H05 Highlights
Steel Segment 1H05 Highlights § Revenue up 34% from $2.7 billion to $3.7 billion on higher volumes (+2%) and ever better pricing environment § Steel operating profit flat y-o-y, the Group able to offset coal and iron ore price pressures by increasing volumes and maintaining stronger prices in the ke
Slide 9: Financial Performance
Financial Performance 7,000 $ mln Revenue 6,000 $ mln Total Assets 5,504 50% 5,933 45% 6,000 5,000 40% 4,253 5,000 35% 4,000 30% 4,000 3,632 3,000 25% 2,232 20% 3,000 2,000 2,168 15% 1,222 2,000 1,540 10% 1,000 5% 1,000 0 0% 0 2002 2003 2004 1H05 2002 2003 2004 1H05 Assets ROCE***, % 2,500 $ mln EBI
Slide 10: P&L Highlights
P&L Highlights § Gross profit up 20% to $1.4 billion on the back of stronger prices prices and volume growth § SG&A increased by 40% due to higher staff costs, taxes (other than income tax) and due to acquisitions § Income from associates (mainly the JV regarding Raspadskaya mine) added $41 million
Slide 11: Excellent Cash Flow Generation
Excellent Cash Flow Generation § Net Operating Cash Flow improved by 289% to $727 million § Conversion of EBITDA to Net Operating Cash Flow much stronger – 65% § Cash flows impacted by $308 million expenditure to buy out minorities 1H 2005 Cash Flow Bridges 1H 2004 $ mln $ mln 1,400 1,200 1,200 1,00
Slide 12: Ever Stronger Liquidity and Enhanced Credit Profile
Ever Stronger Liquidity and Enhanced Credit Profile § While EBITDA was up by 16%, total debt* since December 31, 2004 increased by only 7% § Cash reserves up 2.3x to $673 million § In 1H 2005 net debt** reduced by $289 to $736 million 1,600 0.9x 1,400 0.8x 1,200 0.7x 0.6x 1,000 0.5x 800 0.4x 600 0.3
Slide 13: Capital Expenditure
Capital Expenditure § Key focus remains at efficiency and product mix improvement § Implementation on-track with the annual budget of $600 million § Capital spending of $280 million in 1H05 vs $239 million in 1H04 § Key projects included: Project Status Construction of a 2.5 mty slab caster at ZapSi
Slide 14: Costs
Costs § Steel cost increase fueled by raw material price pressures § Significant portion of steel cost hikes captured in the growing profitability of the mining segment § SG&A cost has become the Company’s key focus Steel segment COS and Other operating cost: Mining segment COS and Other operating c
Slide 15: Looking Ahead
Looking Ahead § Further benefits of vertical integration, mainly in iron ore § Robust domestic performance, difficult pricing environment in the steel export markets until the year end § Completion of the main part of return-driven capex program § Positive impact on the Group’s topline and bottomlin
Slide 16: Post Balance Sheet Events
Post Balance Sheet Events § 75% stake purchased in Palini e Bertoli (Aug, complete) § Vitkovice Steel privatization auction won (Jul, on- on-going) § New slab caster commissioned at ZapSib site (Sept, complete) § JV with Mitsui signed to develop Denisovskoye coal field (Sept, on- on-going) § Fitch R
Slide 17: Evraz Group
=) EVRAZ GROUP