Evraz Plc · LSE:EVR
Evraz — FY2014 Earnings Presentation
29 slides from Evraz's earnings presentation, Apr 1, 2015
Slide 1: FY 2014 Financial Results
FY 2014 Financial Results 1 April 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: Highlights
Highlights Executive Summary Financial Performance Segment Performance Looking Forward Appendix FY 2014 Financial Results 2
Slide 4: Executive Summary
Executive Summary
Slide 5: Solid financial results
Solid financial results EBITDA of US$2.3 billion, up 28% YoY EBITDA margin up to 17.8% vs. 12.6% in 2013 Revenue of US$13.1 billion, down 9% YoY CAPEX of US$0.65 billion, down 27% vs 2013 Free cash flow of US$1.0 billion up 124% Net loss of US$1.3 billion vs. FY 2013 net loss of US$0.6 b
Slide 6: HSE performance
HSE performance Lost Time Injury Frequency Rate (LTIFR)* Safety is our key value LTIFR of 1.60x; 19 fatalities (12 employee and 7 contractor fatalities) recorded in FY 2014, a 21% decrease YoY 2.23 Employees’ unsafe behaviour accounts for up 1.96 1.60 to 90% of incidents Commitment to achi
Slide 7: Delivering on commitments
Delivering on commitments Sustainability in volatile market environment; EBITDA margin improved from 12.6% to 17.8% Operational efficiency plan implemented Optimisation of asset portfolio; EVRAZ Vitkovice Steel sold for US$287 million Strong cash flow sufficient to pay down debt; Net Debt/EB
Slide 8: Financial Performance
Financial Performance
Slide 9: Revenue analysis
Revenue analysis Group revenues decreased by 9%, mostly as a result of a decline in the Steel segment revenues as a result of lower prices of steel products, in line with the general negative trend in steel pricing Steel sales volumes were unchanged at 15.2mt Revenues of the Steel, North Ameri
Slide 10: Cost of revenue
Cost of revenue Cost of revenue breakdown by item, $m The Group’s cost of revenue decreased by 11,501 -15% 15.4% due to reduction in all costs due to 3,396 9,734 Raw materials, cost cutting initiatives and devaluation of the incl. Staff costs Russian rouble 3,086 1,951 Goods for resale 828 1,577 A
Slide 11: Efficiency improvement plan: 2014 progress update
Efficiency improvement plan: 2014 progress update Implementation of efficiency savings plan resulted in savings of US$420 million* exceeding the 2014 target of US$400 million Approximate US$55 million reduction in G&A included, as planned * our actions to reduce costs and improve operational per
Slide 12: EBITDA dynamics and breakdown
EBITDA dynamics and breakdown EBITDA up 28% mainly as a result of: Consolidated EBITDA dynamics, $m asset optimisation 2,325 cost reduction activities 2,027 +28% EBITDA decrease in expenses in US$ terms at Russian and 1,821 margin, % Ukrainian subsidiaries due to the local currencies devalua
Slide 13: 2014 FCF generation
2014 FCF generation Free cash flow for the period is a positive US$1,012 million Cash flows from operating activities before changes in working capital increased by 35% in 2014 to US$1,976 million reflecting better operational results compared to 2013 and the Russian rouble and Ukrainian hryvnia
Slide 14: FY 2014 debt bridge and Net leverage
FY 2014 debt bridge and Net leverage US$ million Deleveraging on track: Net debt/EBITDA reached 2.5x 8,166 Total debt 6,907 220 93 Net debt 21 (21) 1,012 (1,012) 6,534 5,814 Net debt at 31/12/13 Free cashflow (sign Foreign exchange Other changes in net Dividends Net debt at 31/12/14 reversed) effect
Slide 15: Liquidity and debt maturity profile
Liquidity and debt maturity profile Cash and short-term deposits of US$1,086 million as at 31 December 2014 compared to short-term debt of US$1,040 million* Cash on hand sufficient to pay down all redemptions for 2015 Debt currency composition: USD – 97% (incl. synthetic USD); EUR – 3% Cash
Slide 16: Capex
Capex FY2014 total capital expenditures, including recorded in financing activities, reduced to US$654 million, a US$248 million reduction compared to FY2013 No major capital spending in 2014 as key investment projects were completed in 2013 Significantly increased capex flexibility going forw
Slide 17: Segment Performance
Segment Performance
Slide 18: Russia: Steel
Russia: Steel Steel sales breakdown by destination Capacity utilisation remains high Crude steel output largely unchanged YoY, reaching 11.8mt Shipments remain stable Sales of rebars in Russia went up by 4% YoY Russia Sales volumes of construction products dropped 3% to 4.5mt, Export with
Slide 19: Sales Mix. Steel. External sales.
Sales Mix. Steel. External sales. Consolidated sales by product (mt) Production of steel and steel products 15.5 15.2 remains the core EVRAZ’s business 0.6 0.5 0.9 1.1 Other steel products Consolidated crude steel sales totaled 2.4 1.4 1.9 Tubular products 15.5 mt, a 4% decrease YoY 1.9 Flat-rol
Slide 20: Russia: Iron ore
Russia: Iron ore Production of iron ore products (sinter and pellets) in Russia decreased by 4% in 2014, amounting to 17.6mt vs 18.4mt in 2013, as a result of the disposal of high cost loss making assets Steel segment revenues from the sales of iron ore products decreased by 32%, primarily as a
Slide 21: Russia: Coal
Russia: Coal Coal segment revenues by products, $m 21mt of raw coking coal mined and 14mt of coking coal concentrate produced by Yuzhkuzbassugol and 1,486 Raspadskaya 104 1,318 Other revenues 103 External sales volumes up 20% mainly due to higher sales of coking concentrate 650 493 Coal segmen
Slide 22: North America: Steel
North America: Steel 10% growth in sales volumes from continuing operations and 6% improvement in average sales prices on the back of continued improvement in economic indicators and outlook in the US Record rail sales supported by higher output post EVRAZ Pueblo rail mill upgrade, strong custom
Slide 23: Looking Forward
Looking Forward
Slide 24: Russia and global: 2015 market outlook
Russia and global: 2015 market outlook Global steel production increased 2% in 2014; global capacity utilisation rate stands at 76.8%, down 1.3% Pressure on global steel prices as a result of growing competition between major exporters continues and growing steel exports from China China’s eco
Slide 25: USA and Canada: 2015 market outlook
USA and Canada: 2015 market outlook Continued strength in US steel demand in-line with economic recovery and increasing activity levels in the automotive, energy and construction sectors Positive outlook on rail underpinned by another year of record capital expenditures by Class-I railroads Co
Slide 26: Appendix
Appendix
Slide 27: Revenue Drivers
Revenue Drivers Revenue drivers, US$ million 14,411 141 13,061 (263) (194) (151) (21) (555) (108) (197) Revenues 2013 Steel, quantity Steel, mix Steel, prices Coal, volumes Coal, prices Iron ore, Iron ore, prices Other Revenues 2014 volumes FY 2014 Financial Results 26
Slide 28: Vanadium
Vanadium Vanadium consumption and prices continue to be Ferrovanadium prices (FeV), $/kg contained V largely driven by trends in the steel market Due to the launch of new projects in 2015, 27.19 vanadium supply growth is expected to slightly 26.53 26.39 outpace demand 25.87 25.69 EVRAZ remains
Slide 29: Contact: London, Moscow, [email protected]
London +44 207 832 8990 Moscow +7 495 232 1370 [email protected] www.evraz.com April 2015