Severstal · RUS:CHMF
Severstal — Q2 2014 Earnings Presentation
26 slides from Severstal's earnings presentation, Jul 30, 2014
Slide 1: Q2 and H1 2014 Financial Results Presentation
Q2 and H1 2014 Financial Results Presentation 30 July 2014 Photo: Balakovo long products mini-mill of Severstal.
Slide 2: Table of Contents
3 Q2 2014 Results Overview 7 Divisional Performance and Market Outlook Table of Contents 12 Financial Position 17 Appendices
Slide 3: Q2 2014 Results Overview
Q2 2014 Severstal Results Overview chieve more together Ek Wii a Eee! EEE es
Slide 4: Summary
Summary Q2 2014 Highlights: Another resilient performance driven by continued operational enhancements. Group EBITDA margin expanded to 18.6% (Q1 14: 17.8%) Significant growth in EBITDA* and EBITDA margin y/y : Q2 14 EBITDA of $606m (Q2 13: $479m); Q2 14 EBITDA margin of 18.6% (Q2 13: 14.0%), de
Slide 5: Revenue Dynamics and Breakdown
Revenue Dynamics and Breakdown Q2 2014 Revenue: $3,253m H1 2014 Revenue: $6,260m (Q1 2014: $3,007m; +8.2%) (H1 2013: $6,736m; -7.1%) Strong rebound in volumes as well as moderate Russian Steel and Resources saw decreases in improvement in prices q/q led to higher revenues revenues on lower realized
Slide 6: EBITDA Dynamics and Breakdown
EBITDA Dynamics and Breakdown Q2 2014 EBITDA: $606m H1 2014 EBITDA: $1,140m (Q1 2014: $534m; +13.5%) (H1 2013: $909m; +25.4%) Group EBITDA margin* expanded q/q due to Strong performance of Russian Steel on the back of operational improvements, improved steel pricing operational enhancements and lowe
Slide 7: Divisional Performance and Market Outlook
Divisional Performance and Market Outlook
Slide 8: Severstal Russian Steel
Severstal Russian Steel Q2 14 saw seasonal pickup in demand on domestic and export markets. Proximity to domestic clients and EBITDA per tonne and average selling price export markets provides flexibility to increase share of local shipments when domestic prices rebound (domestic sales increased t
Slide 9: Cost Control at Severstal Russian Steel
Cost Control at Severstal Russian Steel Cherepovets Steel Mill production cash cost of slab, $/t $600 $559 $537 $500 $484 $472 $457 $457 $432 $418 Cherepovets $409 $401 $400 $370 $377 cash cost of $361 slab at market $326 Q2 14 non-integrated price of raw $300 cash cost of slab up materials $35/t q/
Slide 10: Severstal Resources
Severstal Resources Q2 revenue 14.3% lower q/q to $486m (Q1 14: $567m), despite 10% q/q increase in Average selling price and cash cost per tonne iron ore concentrate sales largely due to continued longwalls repositioning at Vorkutaugol and overall q/q commodity prices decline. H1 revenue down 24.
Slide 11: Severstal International
Severstal International Severstal North America delivered good Q2 performance. Sales of rolled products EBITDA per tonne and average selling price increased 6% q/q to 1.25 mt. Q2 revenue of $1,066m (Q1 14: $1,016m), up 4.9% q/q EBITDA per tonne (US$/t) Average Selling Price (US$/t*) due to higher
Slide 12: Financial Position
Severstal Financial Position Achieve more together [i a Nee
Slide 13: Cash Flow and Net Working Capital
Cash Flow and Net Working Capital Q2 and H1 2014 Highlights: Cash Flow dynamics, 31 Dec 2013 to 30 Jun 2014 Solid liquidity position of $780m in cash and cash equivalents Strong operating cash flow of $684m in Q2 1,172 Q2 capex of $211m, 20% below the capex of Q1 FY capex target of $976m may
Slide 14: Robust Liquidity and Sustainable Leverage
Robust Liquidity and Sustainable Leverage Strong liquidity position: As at the end of Q2, cash and cash equivalents stood at $780m In Q2 Severstal announced a public tender offer to buy back 2016 1,070 and 2017 Eurobonds. Total of approximately $288m of both bond issues was purchased from the to
Slide 15: Debt Structure
Debt Structure As at 30.06.2014 the debt structure was dominated by public debt (78% of total) and the US dollar (93% of total)*. Debt Maturity Schedule, $m 1 294 764 913 774 96 42 2014 2015 2016 2017 2018 2019 + Notes: Debt represents the principal amount of debt. Debt for 2014 represents amount of
Slide 16: Q3 2014 Market Outlook
Q3 2014 Market Outlook Global: » Global steel demand and production are growing by 2.2% in H1 2014 YTD y/y, while global capacity utilization hovers at 78.5% » European economy and the steel market are recovering with steel output growing by 3.8% (YTD) » Steel production keeps growing in China by 3%
Slide 17: Appendices
Severstal Appendices Achieve more together
Slide 18: Summary Income Statement
Summary Income Statement $ million, unless otherwise stated Q2 2014 Q1 2014 H1 2014 H1 2013 Revenue 3,253 3,007 6,260 6,736 COGS (2,491) (2,318) (4,809) (5,303) EBITDA 606 534 1,140 909 EBITDA margin, % 18.6% 17.8% 18.2% 13.5% Profit from operations 404 336 740 500 Operating margin, % 12.4% 11.2% 11
Slide 19: Q2 2014 Revenue Breakdown by Region
Q2 2014 Revenue Breakdown by Region Severstal Group Q2 2014 revenue Severstal Russian Steel Q2 2014 revenue Central Asia breakdown by region Middle East breakdown by region 3% 1% Other Other 6% 13% Central Europe Asia 13% Russia 3% 42% Europe 18% Russia North America 65% 36% Severstal Resources Q2 2
Slide 20: Q2 2014 Division Results
Q2 2014 Division Results Severstal Resources Q2 2014 Q1 2014 Change, % H1 2014 H1 2013 Change, % Revenue ($m) 486 567 (14.3%) 1,053 1,390 (24.2%) Cost of sales ($m) (346) (344) 0.6% (690) (866) (20.3%) G&A expences ($m) (34) (24) 41.7% (58) (66) (12.1%) Distribution expences ($m) (44) (49) (10.2%) (
Slide 21: Q2 2014 Division Results (Continued)
Q2 2014 Division Results (Continued) Severstal International* Q2 2014 Q1 2014 Change, % H1 2014 H1 2013 Change, % Revenue ($m) 1,066 1,016 4.9% 2,082 1,883 10.6% Cost of sales ($m) (984) (961) 2.4% (1,945) (1,836) 5.9% G&A expences ($m) (26) (24) 8.3% (50) (41) 22.0% Distribution expences ($m) - - n
Slide 22: Summary Balance Sheet
Summary Balance Sheet $ million As at 30 June 2014 As at 31 December 2013 Cash and Cash Equivalents 780 1,036 Total Assets: 12,661 14,534 Current Assets 4,241 4,906 Non-current Assets 8,420 9,628 Total Liabilities: 6,668 7,534 Current Liabilities 2,081 2,549 Non-current Liabilities 4,587 4,985 Total
Slide 23: Summary Cash Flow Statement
Summary Cash Flow Statement $ million Q2 2014 Q1 2014 H1 2014 Loss/Profit before Financing and Taxation (606) 312 (294) Cash Generated from Operations 794 592 1,386 Interest Paid (111) (96) (207) Income Tax Received/(Paid) 1 (8) (7) Net cash from Operating Activities 684 488 1,172 Total cash used in
Slide 24: Disposal of US-based assets
Disposal of US-based assets » In July 2014, the Group completed the acquisition of 50% stake in Mountain State Carbon LLC from a third party, increasing its ownership interest up to 100%. The consideration payable by the Group includes cash of US$30.0 million and cancellation of the promissory note
Slide 25: Intention to increase shareholder returns
Intention to increase shareholder returns » Further to the Company’s previous announcement that it has entered into agreements to sell Severstal Dearborn LLC and Severstal Columbus LLC together with their subsidiaries and investments in joint ventures and associates for a cash consideration of US$2,
Slide 26: Disclaimer
Disclaimer These materials are confidential and have been prepared by OAO Severstal (Severstal) solely for your information and may not be reproduced, retransmitted or further distributed to any other person or published, in whole or in part, for any other purpose. These materials may contain projec