Evraz Plc · LSE:EVR
Evraz — H1 2016 Earnings Presentation
23 slides from Evraz's earnings presentation, Aug 18, 2016
Slide 1: H1 2016 Financial Results
H1 2016 Financial Results 18 August 2016
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: Core operations and distribution markets
Core operations and distribution markets No. 1 No. 1 No. 1 31%* 77%* 16%* (rebar) No. 1 41%** among rail among rail in the rebar and among the suppliers in suppliers in construction steel Russian coking North America Russia market in Russia coal producers Key operational indicators, mt 1 Production
Slide 4: Highlights
Highlights Alexander Frolov – Chief Executive Officer
Slide 5: Key themes
Key themes Global steel producers experienced a positive trend in Global steel and raw material prices, $/t pricing in Q2 2016 driven by a combination of Chinese HRC, China export, FOB, lhs Iron ore, Fines, 62% Fe, SPOT, CFR China, rhs government investment stimulus, low inventory levels and Hard
Slide 6: Vertically integrated business model supported by robust cost base
Vertically integrated business model supported by robust cost base Having low-cost operations is crucial for EVRAZ Significant progress in cash cost reduction due to implementation of cost-cutting initiatives amid rouble devaluation Enhanced cost positions*, $/t Average cash cost of slab of Aver
Slide 7: Safety is key priority
Safety is key priority Regrettably, 4 fatalities in H1 2016 Lost Time Injury Frequency Rate (LTIFR)* LTIFR 2.48x, up 28% due to a spike in reported lost-time 2.48 incidents involving minor injuries 1.94 EVRAZ remains committed to its ultimate goal of reaching zero fatalities at all its sites H
Slide 8: Strategic goals - H1 2016 deliverables
Strategic goals - H1 2016 deliverables Key business priorities EBITDA effect* from customer focus initiatives of $46m achieved. Major effects are: Creating additional $24m – rails sales volumes increase 1 value for our $7m – high quality premium slabs sales volumes increase customers $4m – c
Slide 9: Financial Performance
Financial Performance Giacomo Baizini– Interim Chief Financial Officer
Slide 10: Performance improved as steel prices show signs of recovery
Performance improved as steel prices show signs of recovery 8000 Financial performance H1 2014 - H1 2016 50.0% EBITDA of $577 million, up 14% HoH due to improved 6,805 Revenue, $m EBITDA, $m EBITDA margin, %45.0% market conditions 7000 6,256 40.0% EBITDA margin reached 16.3% in H1 2016 up 3.2 60
Slide 11: H1 2016 FCF generation
H1 2016 FCF generation Free cash flow for the period is a positive $102m Net cash flow from operating activities contracted to $533min H1 2016 from $804m in H1 2015 mainly due to EBITDA decrease EBITDA bridge to Free cash flow* in H1 2016, $m 585 27 (67) 533 (12) (239) (200) 8 102 EBITDA** Chang
Slide 12: Continuous reduction of net debt
Continuous reduction of net debt Deleveraging on track: net debt reduced to $5,316m Net debt reduction reached $1,218m in 2014 - 2016 Net leverage increased to 4.9x due to the EBITDA decline Net debt bridge, $m 6,724 Total debt 6,184 Net debt 102 41 28 5,349 5,316 Net debt at 31/12/15 Free cas
Slide 13: Debt management
Debt management Total debt was reduced by $540m to $6,184m via scheduled Maturity profile*, $m debt repayments and liability management initiatives as of 30 June 2016 YT Uncommitted credit lines $744m across 2017-2018 EVRAZ and Raspadskaya Committed credit lines 2,000 Cash and Cash equivalents E
Slide 14: Capex optimised
Capex optimised Well invested asset base with largest investment projects Capex, $m completed in recent years H1 2015 H1 2016 (20)% 251 Ongoing optimisation of capital expenditures led to a 20% decrease to reach $200m in H1 2016 200 137 123 2016 FY target is $375-400m 53 55 38 23 14 8 Maintena
Slide 15: Operational update
\\ G it Mh: Operational update Y / YY
Slide 16: CIS: construction steel
CIS: construction steel EVRAZ' construction steel sales volumes, kt Revenues from external sales of construction products declined by 23% to $819m in H1 2016vs $1,068m in 1,081 H1 2015 H1 2016 H1 2015 due to lower average prices (down 18%), reduced 942 volumes (down 6%) Construction products sal
Slide 17: Russia: railway products
Russia: railway products Rail consumption in Russia reached 525kt in H1 2016, up EVRAZ’ rail shipments, kt 34% from 391kt in H1 2015, mainly driven by increased H1 2015 H1 2016 H1 2015 H1 2016 demand from Russian Railways 726 726 The market share in rails declined to 77% as the main 639 639 comp
Slide 18: CIS: semi-finished steel
CIS: semi-finished steel Sales volumes of slabs & billets, kt Revenues from external sales of semi-finished products fell by 37% to $720m in H1 2016 vs $1,136m in H1 2015 due 2,605 to lower average prices (down 29%) and sales volumes 2,393 (down 8%) Decrease of slabs sales volumes to European an
Slide 19: North America
North America Revenues from steel product sales declined by 34% to Plate and rebar prices, $/short ton $770m in H1 2016 vs $1,159 in H1 2015 driven by lower 800 Plate Price - Domestic US Rebar Price - Domestic US sales volumes (down 20%) and average sales prices (down 14%) 700 Favourable rulings
Slide 20: Russia: coking coal
Russia: coking coal Overall revenues in the segment increased slightly in H1 Coking coal products sales by market, kt 2016, due to the recovery of global demand supported by +9% a temporary domestic supply deficit 7,945 7,292 Coal segment’s sales to the Steel segment amounted to $201m in H1 2016
Slide 21: Looking Forward
\\ G it Mh: Looking Forward Y / YY
Slide 22: 2016 outlook
2016 outlook EVRAZ expects its FY results to be affected by positive dynamics in global steel markets. While in H2 2016 EVRAZ does not anticipate significant Russian steel demand improvements due to moderate investment activity and economic environment, we believe current steel prices will gradu
Slide 23: Contact details
London +44 207 832 8990 Moscow +7 495 232 1370 [email protected] www.evraz.com 18 August 2016