Evraz Plc · LSE:EVR
Evraz — FY2012 Earnings Presentation
34 slides from Evraz's earnings presentation, Apr 11, 2013
Slide 1: 2012 Financial Results
2012 Financial Results 11 April 2013
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: Agenda
Agenda Overview of 2012 Results Liquidity and Financial Position Segmental Results Capex and Investment Projects Key Market Developments and Outlook 2012 Financial Results 2
Slide 4: Overview of 2012 Results
Overview of 2012 Results
Slide 5: 2012 summary
2012 summary US$ million unless otherwise stated 2012 2011 Change Revenue 14,726 16,400 (10)% EBITDA* 2,012 2,898 (31)% EBITDA margin 13.7% 17.7% (4)% Net profit/(loss) (335) 453 n.a. Operating cash flow 2,143 2,647 (19)% Capex 1,261 1,281 (2)% Net debt** 6,184 6,442 (4)% Short-term debt** 1,862 626
Slide 6: 2012 financial highlights
2012 financial highlights Consolidated revenue by segment, $m Decrease in revenue driven by a combination of lower steel and raw materials (iron ore and 16,400 coking coal) prices as well as by lower mining 966 665 14,726 1,046 sales volumes 3,784 2,650 520 Eliminations Other operations 2012 EBI
Slide 7: Focus on cost efficiencies
Focus on cost efficiencies Lower raw material costs (-20%) due to lower purchase prices of iron ore, coking coal and scrap Growth of intragroup re-rolling of slabs led to 39% decrease of cost of purchased semi-products Cost of goods for resale increased by 55%, as third party products were pur
Slide 8: Liquidity and Financial Position
Liquidity and Financial Position
Slide 9: Liquidity and debt maturity profile
Liquidity and debt maturity profile As a result of proactive refinancing actions in 2012, as at 31 December 2012 EVRAZ had $2,064m of cash and short-term deposits and $1,146m of unutilised credit facilities ($421m committed and $725m uncommitted). Sufficient liquidity cushion to cover 2013 maturit
Slide 10: 2012 FCF generation
2012 FCF generation Positive cash flow despite market weakness Working capital release of $441m (excluding income tax) due to falling cost of inventory, improved recoverability of taxes and related party receivables 2012 cash flow generation supported by proceeds from EvrazTrans sale ($306m) a
Slide 11: Segmental Results
Segmental Results
Slide 12: HSE Performance
HSE Performance Safety remains a key priority Lost Time Injury Frequency Rate (LTIFR)* 2.23 Growth of LTIFR partially reflects more 1.86 comprehensive and accurate statistics and zero tolerance approach to concealment of accidents Falls and equipment related injuries contribute to 42.5% of all
Slide 13: Steel: CIS
Steel: CIS Steel products sales volumes: CIS vs. export, kt Facilities operated at full available economic capacity in 2012 Strong sales of long products in Russian market 10,953 10,983 Lower rail sales driven by temporary closure of EVRAZ 3,385 3,613 ZSMK facilities for modernisation CIS EV
Slide 14: Steel: North America
Steel: North America Strong performance in all product segments with total sales of flat, tubular and long steel products exceeding 2.6 Mt with utilisation rates high throughout the reporting year Positive price dynamics for high value-added tubular goods, whilst prices for other products margin
Slide 15: Mining: iron ore
Mining: iron ore Iron ore products sales volumes excluding Mapochs*, kt Intersegment volume of sales of iron ore products remained largely flat 19,951 18,637 External volumes of sales of iron ore products were lower on 5,259 the back of termination of processing and reselling of third 3,900 part
Slide 16: Mining: coking and steam coal
Mining: coking and steam coal Coal products sales volumes, kt Decrease in overall sales volumes of coal products was primarily driven by lower sales of raw and washed steam coal 8,595 (-872 kt) due to repositioning of longwall and suspension of 203 7,566 Steam coal concentrate operations at Gramot
Slide 17: Capex and Investment Projects
Capex and Investment Projects
Slide 18: Capex excluding Raspadskaya
Capex excluding Raspadskaya 2012 capex was $1,261m in line with budget and Company’s guidance 2013 capex estimate is $1.1bn. Organic expansion of Raspadskaya can contribute up to $150m of additional capex Growth in mining capex will be driven by the development of Mezhegey hard coking coal dep
Slide 19: Update on rail and beam mill and PCI projects
Update on rail and beam mill and PCI projects Rail and beam mill at ZSMK Launched in January 2013, first 100 metre rails produced in March 2013 Current production rate 40 kt/month, plan to reach design capacity of 100 kt/month in Q1 2014 (including 79 kt/month of rails) Certification for 100
Slide 20: Key investment projects
Key investment projects Total Remaining capex*, capex at 2013 capex Project $m 1/01/2013*, $m Budgeted*, $m Project targets Steel 248 Increase of production capacity to 950 ktpa, including 450 ktpa of 100 Rail mill modernisation at 490 63 63 metre rails EVRAZ ZSMK Launched in January 2013. Ramp-
Slide 21: Recent Market Developments and Outlook
Recent Market Developments and Outlook
Slide 22: Recent corporate activity
Recent corporate activity Acquired controlling interest in Raspadskaya coal mining company for equity and cash consideration in January 2013 Executed non-binding term sheet on potential sale of EVRAZ Highveld in March 2013 for US$320 million Acquired 51% stake in Timir iron ore project from Al
Slide 23: Recent market developments and outlook
Recent market developments and outlook Steel product prices (domestic markets), $/t Full utilisation of Russian steel making capacities continues 900 800 High level of North American steelmaking 700 capacity utilisation 600 Finished goods inventories at our mills and sales 500 network are low
Slide 24: Summary
Summary 2012 results reflect worsening pricing environment for our products Continued investments in efficiency and modernisation Ongoing optimisation of asset portfolio Stable debt and liquidity position following continued focus on refinancing Renewed focus on HSE Business outlook for
Slide 25: Appendix
Appendix
Slide 26: EVRAZ's Global Business
EVRAZ’s Global Business Global Vertically Integrated Steel, Mining and Vanadium Business with Strong Positions in Highly Attractive Markets 346 Russia/CIS 2,680 394 7,370 986 Europe 211 660 3,185 North America Asia 426 South America Africa Steel mills Steel Sales Volume Breakdown (2012) Iron ore min
Slide 27: Steel products: sales by market
Steel products: sales by market kt $m 6,722 6,570 5,443 5,126 2011 2011 2012 2012 3,249 3,276 3,020 3,093 2,766 2,746 1,988 1,909 1,562 1,450 1,348 1,006 849 802 716 645 573 475 486 357 Russia Americas Asia Europe CIS Africa & RoW Russia Americas Asia Europe CIS Africa & RoW 2012 Financial Results 2
Slide 28: Performance by Regions
Performance by Regions EBITDA, EVRAZ Russia, $m EBITDA, EVRAZ North America, $m 465 2,458 1,952 340 2011 2012 2011 2012 EBITDA, EVRAZ Ukraine, $m EBITDA, EVRAZ Europe, $m EBITDA, EVRAZ South Africa, $m 114 26 78 (2) (11) (67) 2011 2012 2011 2012 2011 2012 * Consolidated EVRAZ plc EBITDA also include
Slide 29: Steel: Europe, South Africa
Steel: Europe, South Africa Steel products sales volumes: European operations, kt EVRAZ’s hot steel production in Europe in 2012 declined by 42% due to prolonged maintenance works at Vitkovice’s hot steel shop and overall market downturn 1,296 48 EVRAZ’s European-based rolled product sales decli
Slide 30: Cost Structure by Segment
Cost Structure by Segment Cost structure of Steel segment, $m Cost structure of Mining segment, $m 12,375 2,363 2,306 10% 11,154 Other 8% 16% 21% 21% 4% Energy 8% Depreciation Other 9% 11% 11% 4% 4% 6% Staff costs Energy 10% 7% Transportation 22% 5% 26% Depreciation 4% Semi-finished products 16% 6%
Slide 31: Vanadium
Vanadium Ferrovanadium prices (FeV), $/kg contained V EVRAZ’s external sales of vanadium products decreased vs. 2011 by 22% to $496m, primarily due to lower production volumes in South Africa due to industrial action at EVRAZ 31.6 30.9 31.2 30.2 30.0 Highveld, a transportation strike in the countr
Slide 32: EBITDA
EBITDA US$ million 31 December 31 December 2012 2011 Consolidated EBITDA reconciliation Profit from operations 243 1,860 Add: Depreciation, depletion and amortisation 1,259 1,153 Impairment of assets 413 104 Loss on disposal of property, plant & equipment 56 50 Foreign exchange (gain) loss 41 (269)
Slide 33: Net debt
Net debt US$ million 31 December 31 December 2012 2011 Net debt calculation Add: Long-term loans, net of current portion 6,373 6,593 Short-term loans and current portion of long-term loans 1,783 613 Finance lease liabilities, including current portion 13 39 Loans of disposal groups classified as hel
Slide 34: Contact
London +44 207 832 8990 Moscow +7 495 232 1370 [email protected] www.evraz.com 11 April 2013