NLMK · RUS:NLMK

NLMK — 2009 UBS Annual Investment Conference: Russia/CIS

15 slides from NLMK's conference presentation, Oct 22, 2009

  1. Slide 1: Delivering Sustainable Growth

    Delivering Sustainable Growth 2009 UBS ANNUAL INVESTMENT CONFERENCE: RUSSIA/CIS Anton Bazulev, Director, Corporate Communications Moscow, 22 October, 2009

  2. Slide 2: Disclaimer

    Disclaimer This document is confidential and has been prepared by NLMK (the “Company”) solely for use at the investor presentation of the Company and may not be reproduced, retransmitted or further distributed to any other person or published, in whole or in part, for any other purpose. This documen

  3. Slide 3: NLMK business profile

    NLMK business profile Crude steel output, 1997‐2009E 12 million t 10 8 • Balanced asset portfolio 6 4 • Favorable geographic locations 2 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009E • Efficient vertical integration Sales revenue and EBITDA, 2003‐2008 • Diversified sales and product

  4. Slide 4: Balanced and favorably located assets

    Balanced and favorably located assets Sharon Coating Novolipetsk NLMK Long products Dan Steel HDG Steel: 8.5 m t Steel : 1.9 m t Thick plate: 0.5 mln t Slabs: 3.6 m t Longs: 1.9 m t Duferco Farrell Flats: 4.5 m t HRC, CRC incl. electrical 0.5 m t RUSSIA Altai‐koks Beta Steel Moscow Coke: 3.3 mlt HRC

  5. Slide 5: Active crisis management

    Active crisis management Russian steel consumption vs NLMK run rate • Timely capacity changes million t 4250 110% • Hedged slabs supplies to 100% capacity restored 3500 90% JV/own rolling assets 2750 70% • More efficient capacity loaded 2000 50% • Obsolete coke batteries shut down 1250 35% decrease

  6. Slide 6: Quick response to new market conditions

    Quick response to new market conditions Global sales by region* (tonnes) • Low Russian demand offset for 100% 6% 3% 2% by exports 11% 18% 0% 24% 80% 3% 11% 4% • Balanced portfolio of products 8% 3% 60% 19% 23% helped sustain comparatively 19% 11% high sales volumes 40% 12% 8% 5% 12% 9% • Increased s

  7. Slide 7: Lower cost is a priority

    Lower cost is a priority Cash cost by product • 45% cost cut from Q4 2008 400 USD/t 347 362 • Lower prices for raw materials 300 270 292 221 243 • Personnel optimization 202 200 155 132 108 • Capacity management 100 20 14 • Use of captive supplies 17 21 16 0 2007 2008 Q4 2008 Q1 2009 Q2 2009 Slabs C

  8. Slide 8: Superior returns through the cycle

    Superior returns through the cycle EBITDA per t • Quick output rebound 500 USD • Stable financial results 400 300 • High EBITDA margin 200 • Solid cash flow 100 • Low net debt ‐ 2003 2004 2005 2006 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 ‐100 2008 2008 2008 2008 2009 2009 2009E ‐200 Peers range NLMK Source: Compa

  9. Slide 9: Committed to organic growth …

    Committed to organic growth … CAPEX/tonne: Russian steel sector vs NLMK • Major Capex program 200 USD/t started in 1998 175 • USD6.5 bn invested 150 125 • Productivity up 55%* 100 75 • Over 40% of high value added 50 products 25 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 Industry (ex NLMK) NLMK

  10. Slide 10: … and upstream vertical integration that creates value…

    … and upstream vertical integration that creates value… EBIT contribution: 2000 ‐ 2008 • Iron ore 4 500 USD, million • Coke 4 000 3 500 • Scrap 3 000 • Energy 2 500 2 000 • Logistics 1 500 1 000 500 2003 2004 2005 2006 2007 2008 NLMK steel assets Stoilensky and Other Mining Altai‐Koks 10

  11. Slide 11: ... with downstream integration adding more to it

    ... with downstream integration adding more to it EBIT contribution, 2000 ‐ 2009 • Selective approach 4 000 USD, million • Product mix improvement 3 500 • Semis re‐rolling 3 000 • New market entries 2 500 2 000 1 500 2006 2007 2008 Parent and upstream assets VIZ‐Stal Maxi Group Dan‐Steel 11

  12. Slide 12: Geared for further organic growth in Russia

    Geared for further organic growth in Russia Main objectives 2012‐2014 Crude steel capacity expansion: 2009 – 2012* • Steel +5.0 m tpa to 17.5 m tpa 20 1,2 million, t USD, million • Flats +0.5 m tpa to 7 m tpa 16 1 0,8 • Longs +1.5 m tpa to 4 m tpa 12 EAF mill BF#7 +3.4 m tpa +1.5 m tpa 0,6 • Pelleti

  13. Slide 13: Together with prudent M&A approach

    Together with prudent M&A approach Main objectives: Brown field expansion vs M&A • Efficient upstream integration 1 200 USD/t • Selective downstream integration 1 000 • Niche market share gains 800 600 400 200 0 2004 2005 2006 2007 2008 2009E 2010E M&A Brown field Sources: WSD, PWC, Bloomberg, compa

  14. Slide 14: Outlook

    Outlook Summary • NLMK is delivering superior returns through the cycle • Strategy remains unchanged • Strong financial position and profitability enabling fast growth • Focused on long term value creation FY2009 Outlook • Steel output of 10.5 million tonnes, flat y‐o‐y • Capex (incl. maintenance) t

  15. Slide 15: THANK YOU

    THANK YOU www.nlmk.com

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