Evraz Plc · LSE:EVR
Evraz — H1 2009 Earnings Presentation
24 slides from Evraz's earnings presentation, Sep 1, 2009
Slide 1: EVRAZ GROUP 1H 2009 Financial and Operating Results
EVRAZ GROUP 1H 2009 Financial and Operating Results 1 September 2009
Slide 2: Disclaimer
Disclaimer 02 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 Group S.A. (Evraz) or any of its subsidiaries in any jurisdiction or an inducement to enter into investment
Slide 3: Agenda
Agenda 03 Execution of Management Action Plan 1H09 Results Summary Liquidity and Financial Position Operations by Segment Recent Market Developments Appendices
Slide 4: Execution of Management Action Plan
Execution of Management Action Plan 04 ◦ Production optimisation ◦ Shutdown of inefficient capacity ◦ Shift of production to semi-finished products, where demand is relatively high ◦ Take advantage of flexibility between billet and slab production depending on market situation ◦ Full utilisation of
Slide 5: Major Changes in Accounting Policies
Major Changes in Accounting Policies 05 ◦ Adoption of the revaluation model for property, plant and equipment instead of the cost model in accordance with IAS16 from 1 January 2009 in order to provide more relevant information in the light of recent currencies devaluation ◦ The effect of this change
Slide 6: 1H09 Financial Summary
1H09 Financial Summary 06 US$ mln unless otherwise stated 1H 2009 1H 2008 Change Revenue 4,639 10,723 (57)% Cost of revenue (4,297) (6,616) (35)% SG&A (595) (960) (38)% Adjusted EBITDA* 468* 3,706 (87)% Adjusted EBITDA margin 10% 35% Net Profit/(loss)** (999)** 2,039 Net Debt*** 7,783 9,031 (14)% Sa
Slide 7: Adjusted EBITDA and Net Loss Reconciliation
Adjusted EBITDA and Net Loss Reconciliation 07 Profit from Operations to Adjusted EBITDA, 1H09 EBITDA Excluding All Extraordinary Items, 1H09 US$ mln US$ mln 600 564 468 520 11 7 512 400 26 200 25 (68) (1,046) 782 211 0 480 468 -200 -400 440 -600 -800 400 -1 000 -1 200 Adjusted Receivables Inventori
Slide 8: 1H09 Financial Highlights
1H09 Financial Highlights 08 ◦ Group revenue decreased by 57%, driven largely by decrease in Consolidated Revenue by Market average prices and sales volumes of steel products US$ mln ◦ Geographical diversification of the business helped to stabilise 12,000 10,723 operations in crisis environment 441
Slide 9: Increase in Export and Geographic Diversification
Increase in Export and Geographic Diversification 09 ◦ Sales to customers outside Russia increased from Steel Steel Products Products Sales Sales Volumes Volumes by by Product Product 60% to 72% of total revenues h-o-h ’000 tonnes ◦ Raised share of semi-finished products in steel 10,000 316 9,473 se
Slide 10: Maintaining Cost Leadership
Maintaining Cost Leadership 10 ◦ Constant review of product and resources flows for Cash Cost*, Slabs & Billets potential efficiency gains US$/t ◦ Mining segment cash costs have reduced significantly: 400 345 375 ◦ Approximately 75% of consolidated cost is rouble 300 248 denominated 221 ◦ Russian-ba
Slide 11: Financial Initiatives: Prudent Working Capital Management
Financial Initiatives: Prudent Working 11 Capital Management ◦ Company has actively focused on management of working capital to minimise cash outflows ◦ Management has suppressed production levels in line with real demand ◦ Preference towards direct sales vs. traders ◦ Excess inventory levels have b
Slide 12: Debt Maturities and Liquidity Profile
Debt Maturities and Liquidity Profile 12 ◦ Total debt reduction of approx. US$1.51bn from US$9.99bn as of 31 December 2008 to US$8.48bn as of 30 June 2009 ◦ Short-term debt as of 30 June 2009 was approx. US$3.8bn* ◦ Approx. US$765m is represented by trade finance and other revolving debt ◦ Cash and
Slide 13: Recent Capital Market Developments
Recent Capital Market Developments 13 ◦ On 9 July Evraz priced concurrent GDR and convertible bond offerings, raising US$965m ◦ After placement of the offerings, cash and cash equivalents increased to approx. US$1.64bn ◦ US$176m of 2009 bonds repaid in August 2009 (net outstanding amount post buy-ba
Slide 14: Steel: Russian & Ukrainian Domestic Sales
Steel: Russian & Ukrainian Domestic Sales 14 ◦ Destocking in Russian domestic market completed Evraz Prices, Russia, exW US$/t ◦ Apparent domestic demand for finished steel 1,200 stabilised at approximately 50% of last year’s sales volumes with some volume pick-up observed in July 1,000 and August 8
Slide 15: Steel: Russian & Ukrainian Export Sales
Steel: Russian & Ukrainian Export Sales 15 ◦ Increasing global competitiveness of exports due to lower Evraz Prices, Russia, FCA cost base and devaluation of local currencies US$/t ◦ Restart of blast furnace at Zapsib effective from July 2009, 1,000 adding back 1.2 mtpa of steelmaking capacity due t
Slide 16: Steel: North America
Steel: North America 16 ◦ Good performance at the beginning of 2009 with US$/t Evraz Prices, exW subsequent deterioration in line with market trends 2,500 ◦ Stability of demand for large diameter pipes in 2,000 1,500 Canada due to long contracts 1,000 ◦ Destocking in the market is largely over with
Slide 17: Steel: Europe, South Africa
Steel: Europe, South Africa 17 ◦ Destocking of traders is largely over Highveld Sales Volumes ◦ Domestic demand in Europe remains weak ‘000 tonnes 400 367 and exclusively related to public projects 11 280 ◦ Increased share of production is exported to 300 209 5 106 the Middle East and North Africa 2
Slide 18: Mining: Positive Margins Even in the Downturn
Mining: Positive Margins Even in the Downturn 18 ◦ Full self-coverage in raw materials achieved, Mining Segment Performance allowing cash preservation US$ mln ◦ Mining segment remained EBITDA positive 2,500 2,000 2,012 even at the lowest levels of raw material prices 1,500 ◦ Sustainability of vertic
Slide 19: Market Improvement since the Beginning of 2009
Market Improvement since the Beginning of 2009 19 ◦ Destocking in most markets is over Prices for Select Evraz Russian Steel Products ◦ Recovery in prices for semi-finished steel is driven US$/t predominantly by demand from emerging markets 450 in Asia, the Middle East and North Africa 400 ◦ Apparen
Slide 20: Summary
Summary 20 ◦ Difficult economic situation in the first half of 2009 ◦ Increased geographical diversification of business helped to stabilise the situation ◦ Strengthening global demand for semi-finished steel allowed us to fully utilise Russian steelmaking starting from 1 July 2009 ◦ Post April 2009
Slide 21: Appendices
21 Appendices
Slide 22: Evraz's Global Business
| Evraz’s Global Business Key in Aa 1-Zapsib 2 -NKMK 3 -NTMK 4-DMZzP 5 - Evraz Inc. NA 6 - Highveld 7 - Evraz Palini e Bertoli 8 - Evraz Vitkovice Steel 9 - Delong 10 - Evrazruda 11 - KGOK 12 - VGOK 13 - Sukha Balka 14 - Yuzhkuzbassugol 15 - Raspadskaya 16 - Bagley Coke 17 - Dneprodzerzhinsk Coke 18
Slide 23: Revenue by Market
Revenue by Market 23 First Half of 2008 First Half of 2009 4% 3% 7% 12% 3% 28% 5% 2% 1% 4% 40% 10% 14% 2% 9% 3% 5% 16% 2% 30% Russia Ukraine Other CIS Americas Russia Ukraine Other CIS Americas Europe Middle East China Thailand Europe Middle East China Thailand Other Asian Africa & RoW Other Asian A
Slide 24: [email protected] www.evraz.com
+7 495 232-13-70 [email protected] www.evraz.com