Mechel · RUS:MTLR
Mechel — FY2004 Earnings Presentation
16 slides from Mechel's earnings presentation, Jun 27, 2005
Slide 1: 2004 Results Presentation
2004 Results Presentation June 27, 2005
Slide 2: Disclaimer
Disclaimer This presentation 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 Mechel Steel Group OAO (Mechel) or any of its subsidiaries in any jurisdiction or an inducement to enter into inv
Slide 3: Introduction and Overview
Introduction and Overview Vladimir Iorich 3
Slide 4: Highlights
Highlights Net income of $1,342 million on revenues of $3.6 billion EBITDA margin of 25%* IPO on the NYSE – 3rd Level ADR raising $335.1 million Significant strengthening of the mining segment Focus on efficiency projects in steel Strengthened balance sheet and performance allowed Board
Slide 5: 2004: Operational highlights
2004: Operational highlights Maintained leadership in core products — 2nd largest coking coal producer and largest exporter — 2nd largest longs producer Sales by product, FY2004 Sales by region, FY2004 Russia Europe 39% 35% Steel 76% Coal 23% RoW 2% Other CIS Asia 6% Middle East 15% 1% 3% 5
Slide 6: 2004: Mining Segment Accomplishments
2004: Mining Segment Accomplishments Operating income of $384.1 million on revenues of $878.4 million, growth of 505.3% and 112.2%, respectively Strong EBITDA margin of 52.1%. Mining segment EBITDA constituted 50.5% of consolidated EBITDA Additional 1.3 billion of coal reserves, predominantly
Slide 7: 2004: Steel Segment Accomplishments
2004: Steel Segment Accomplishments Operating income of $366.8 million on revenues of $2.8 billion, growth of 173.2% and 70.8%, respectively Steel segment EBITDA constituted 49.5% of consolidated EBITDA Efficiency and cost-saving programs underway — Share of steel produced through concasting t
Slide 8: Outlook for 2005
Outlook for 2005 Mining Steel Increase coal mining production Shutdown of inefficient capacity to reduce output of pig iron and Explore Krasnoyarovskoe iron raw steel, but not of rolled ore deposit to further increase products iron ore production Further improvement in efficiency through int
Slide 9: Strategy in 2005
Strategy in 2005 Management to focus on profitability of operations and further integration Cost control and efficiency are primary goals Work to maintain high profitability of the mining segment Focus on improving profitability of steel operations Expand integration between subsidiaries Pos
Slide 10: Financial Review
Financial Review Svetlana Ardentova 10
Slide 11: Continued solid financial performance
Continued solid financial performance Revenues EBITDA* 1,000 908 30% 4,000 3,636 3,500 800 25% (US$m) 3,000 600 (US$m) 2,500 2,050 341 20% 400 2,000 207 1,314 200 106 15% 1,500 1,020 1,000 0 10% 500 2001 2002 2003 2004 2001 2002 2003 2004 EBITDA EBITDA margin (rhs) Net profit Total assets 1,600 1,34
Slide 12: Improved steel and mining margins
Improved steel and mining margins EBITDA margin* Mining segment revenues 50% 1,250 1,150 40% 1,050 950 (US$m) 30% 850 750 20% 650 550 10% 450 350 0% 250 2001 2002 2003 2004 2001 2002 2003 2004 Steel segment Intersegment revenues Mining segment External revenues * Excluding MMK gain 12
Slide 13: Strong segment operations
Strong segment operations Mining segment Steel segment 1,250 60% 3,000 30% 1,150 50% 25% 1,050 2,500 950 20% 40% 2,000 (US$m) 850 (US$m) 750 30% 15% 650 1,500 20% 10% 550 450 1,000 10% 5% 350 250 0% 500 0% 2001 2002 2003 2004 2001 2002 2003 2004 Intersegment revenues Intersegment revenues External r
Slide 14: Maintain focus on cost control
Maintain focus on cost control Tight control over our cost base remains strategic priority Increased continuous casting from 13.6% to current 39.4%, target 60% in 2007 Internal generation of a significant portion of electrical energy needs through cogeneration plants Effect of switching to own
Slide 15: Cashflow and financial position
Cashflow and financial position Cashflow dynamics Debt maturity table (as of December 31, 2004) 300 350 300 150 250 (US$m) 200 (US$m) 0 150 100 (150) 50 0 (300) 2005 2006 2007 2008 2001 2002 2003 2004 Operations Financing Investments 15
Slide 16: Targeted capital expenditure program
Targeted capital expenditure program Capex program in 2005 to be directed at reducing bottlenecks and improving efficiency $1.25 billion from 2005 through 2009* Focus on cost saving measures rather than on increasing output Expected capex program, 2005-2009 600 500 400 (US$m) 300 200 100 0 200