Severstal · RUS:CHMF

Severstal — Q1 2013 Earnings Presentation

25 slides from Severstal's earnings presentation, May 20, 2013

1. Slide 1: Q1 2013 Financial Results Presentation

   Q1 2013 Financial Results Presentation 20 May 2013

2. Slide 2: Table of Contents

   3 Q1 2013 Results Overview 7 Divisional Performance and Market Outlook Table of Contents 12 Financial Position 18 Appendices

3. Slide 3: Q1 2013 Results Overview

   . Qi 2013 Severstal Results Overview

4. Slide 4: Summary

   Summary Q1 2013 Highlights  Better performance q/q due to significant earnings growth at Severstal Resources and Severstal International  Q1 revenue up 6.6% q/q to $3,322m due to higher realized volumes at Severstal Russian Steel and Severstal International, as well as higher realized prices for i

5. Slide 5: Revenue Dynamics and Breakdown

   Revenue Dynamics and Breakdown Q1 2013 Revenue: $3,322m Q1 2013 Revenue: $3,322m (Q4 2012: $3,116m; +6.6%) (Q1 2012: $3,679m; -9.7%) Q/q revenue increase across divisions, driven by Revenue down y/y across the divisions due to better iron ore prices at Severstal Resources and contraction in global s

6. Slide 6: EBITDA Dynamics and Breakdown

   EBITDA Dynamics and Breakdown Q1 2013 EBITDA: $425m Q1 2013 EBITDA: $425m (Q4 2012: $351m; +21.1%) (Q1 2012: $565m; -24.8%) A noticeable q/q EBITDA increase, driven by Contraction in Severstal Resources earnings was strong performance from Severstal Resources the major reason for y/y decline in EBIT

7. Slide 7: Divisional Performance and Market Outlook

   Divisional Performance and Market Outlook

8. Slide 8: Severstal Russian Steel

   Severstal Russian Steel EBITDA per tonne and average selling price  Q1 revenue up 5.2% q/q to $2,030m (Q4 2012: $1,929m) on higher realized EBITDA per tonne (US$/t) Average Selling Price (US$/t)* volumes. Q1 2013 revenue was down 8.8% y/y (Q1 2012: $2,226 million) 400  Q1 EBITDA down 5.4% q/q to $

9. 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 $550 $537 $500 $484 $472 $457 $457 $450 $430 $432 $419 $418 Q1 non-integrated cash cost $397 $401 of slab up by $17/t q/q $400 Cherepovets $350 $334 Q1 integrated cash cost of cash cost of slab

10. Slide 10: Severstal Resources

    Severstal Resources  Q1 revenue up 1.6% q/q to $684m (Q4 2012: $673m) on higher iron ore Average selling price and cash cost per tonne realized prices. On a y/y basis Q1 2013 revenue was down 15.7% (Q1 2012: Cash cost per tonne ($/t)** Average Selling Price ($/t)* Vorkutaugol (coking coal $811 mill

11. Slide 11: Severstal International

    Severstal International  Q1 SNA revenue of $930 million (Q4 2012: $810 million), was up 14.8% q/q. Year- EBITDA per tonne and average selling price on-year Q1 2013 revenue was down 15.1% (Q1 2012: $1,095 million) EBITDA per tonne (US$/t) Average Selling Price (US$/t*)  Q1 EBITDA up almost 8 times

12. Slide 12: Financial Position

    Financial Position

13. Slide 13: Cash Flow and Net Working Capital

    Cash Flow and Net Working Capital Highlights:  Liquidity position of $1,552m in cash and cash 1,726 109 10 1,552 equivalents (293)  Operating cash flow of $109m  CAPEX of $309m*  Net working capital up 6.9% comparing to the beginning Dec 2012 Cash & Operating CF Investing CF Financing CF, incl.

14. Slide 14: Robust Liquidity and Sustainable Leverage

    Robust Liquidity and Sustainable Leverage  Solid liquidity position: • Cash and cash equivalent of $1,552m 1,112 • Committed unused credit lines of $1,112m Total Short-term Debt to be Repaid of $840m*  Upcoming short-term debt maturities serviced with available liquidity of $2,664m: 1,552 • Q2 201

15. Slide 15: Debt Structure

    Debt Structure As at 31.03.2013 the debt structure remains broadly unchanged and is dominated by public debt (83% of total) and US dollar (91% of total) Debt Maturity Schedule, $m 1,511 1,129 969 835 750 527 44 2013 2014 2015 2016 2017 2018 2019 + This chart represents principal amount of debt. Page

16. Slide 16: Q2 2013 Market Outlook

    Q2 2013 Market Outlook Global:  Global steel demand is expected to improve by 3% in 2013 on the back of investments in China, revival of consumer spending and energy development in the USA, infrastructure projects in the Middle East…  … that said, global steel overcapacity continues to drag on the

17. Slide 17: Thank you. Q&A

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18. Slide 18: Appendices

    Appendices

19. Slide 19: Summary Income Statement

    Summary Income Statement $ million, unless otherwise stated Q1 2013 Q4 2012** Q1 2012** Revenue 3,322 3,116 3,679 COGS (2,625) (2,475) (2,816) EBITDA* 425 351 565 EBITDA margin, % 12.8% 11.3% 15.4% Profit from operations 222 140 387 Operating margin, % 6.7% 4.5% 10.5% Profit/ (loss) before income ta

20. Slide 20: Q1 2013 Revenue Breakdown by Region

    Q1 2013 Revenue Breakdown by Region Q1 2013/Q4 2012, $m Q1 2013/Q1 2012, $m Q4 2012 Q1 2013 Q1 2012 Q1 2013 5 47 Africa Africa 10 10 20 73 South-East Asia South-East Asia 111 111 87 144 China and Central Asia China and Central Asia 174 174 81 76 Middle East Middle East 70 70 58 151 Central and South

21. Slide 21: Q1 2013 Division Results

    Q1 2013 Division Results Severstal Russian Steel Q1 2013 Q4 2012** Change, % Q1 2013 Q1 2012** Change, % Revenue ($m) 2,030 1,929 5.2% 2,030 2,226 (8.8%) Cost of sales ($m) (1,602) (1,512) 6.0% (1,602) (1,792) (10.6%) G&A and distribution ($m) (306) (283) 8.1% (306) (318) (3.8%) G&A and distribution

22. Slide 22: Q1 2013 Division Results (Continued)

    Q1 2013 Division Results (Continued) Severstal Resources Q1 2013 Q4 2012* Change, % Q1 2013 Q1 2012* Change, % Revenue ($m) 684 673 1.6% 684 811 (15.7%) Cost of sales ($m) (432) (468) (7.7%) (432) (412) 4.9% G&A and distribution ($m) (107) (129) (17.1%) (107) (116) (7.8%) G&A and distribution as % o

23. Slide 23: Summary Balance Sheet

    Summary Balance Sheet $ million As at 31 March 2013 As at 31 December 2012 Cash and Cash Equivalents 1,552 1,726 Total Assets: 15,417 15,707 Current Assets 5,559 5,697 Non-current Assets 9,858 10,010 Total Liabilities: 8,298 8,492 Current Liabilities 2,683 3,370 Non-current Liabilities 5,615 5,122 T

24. Slide 24: Summary Cash Flow Statement

    Summary Cash Flow Statement $ million Q1 2013 Q4 2012* Q1 2012* Profit before Financing and Taxation 202 67 359 Cash Generated from Operations 235 454 568 Interest Paid (113) (80) (139) Income Tax Paid (13) (47) (67) Net cash from operating activities – continuing operations 109 327 362 Net cash use

25. Slide 25: 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

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