презентация для инвесторов, ноябрь декабрь 2011

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презентация для инвесторов, ноябрь декабрь 2011

  1. 1. Corporate PresentationNovember-December 2011
  2. 2. 1DisclaimerThis 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 oracquire securities of EVRAZ plc (“EVRAZ”) or any of its subsidiaries in any jurisdiction (including, without limitation, EVRAZ Group S.A.) (collectively,the “Group”) or an inducement to enter into investment activity. No part of this document, nor the fact of its distribution, should form the basis of,or be relied on in connection with, any contract or commitment or investment decision whatsoever. No representation, warranty or undertaking,express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information orthe opinions contained herein. None of EVRAZ or any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligenceor otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with the document.This document contains “forward-looking statements”, which include all statements other than statements of historical facts, including, withoutlimitation, any statements preceded by, followed by or that include the words “targets”, “believes”, “expects”, “aims”, “intends”, “will”, “may”,“anticipates”, “would”, “could” or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks,uncertainties and other important factors beyond EVRAZ’s control that could cause the actual results, performance or achievements of EVRAZ tobe materially different from future results, performance or achievements expressed or implied by such forward-looking, including, among others,the achievement of anticipated levels of profitability, growth, cost and synergy of recent acquisitions, the impact of competitive pricing, the abilityto obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment,volatility in stock markets or in the price of the Group’s shares or GDRs, financial risk management and the impact of general business and globaleconomic conditions.Such forward-looking statements are based on numerous assumptions regarding EVRAZ’s present and future business strategies and theenvironment in which the Group will operate in the future. By their nature, forward-looking statements involve risks and uncertainties because theyrelate to events and depend on circumstances that may or may not occur in the future. These forward-looking statements speak only as at thedate as of which they are made, and EVRAZ expressly disclaims any obligation or undertaking to disseminate any updates or revisions to anyforward-looking statements contained herein to reflect any change in EVRAZ’s expectations with regard thereto or any change in events, conditionsor circumstances on which any such statements are based.Neither EVRAZ, nor any of its agents, employees or advisors intends or has any duty or obligation to supplement, amend, update or revise any ofthe forward-looking statements contained in this document.The information contained in this document is provided as at the date of this document and is subject to change without notice.
  3. 3. 2EVRAZ in Brief◦ One of the largest vertically integrated steel and mining companies in the world◦ Leader in the Russian and CIS construction and railway products markets◦ A lead player in the European and North American plate and large diameter pipe markets◦ One of the world’s lowest cost steel producers due to production efficiency and high level of vertical integration◦ One of the leading producers in the global vanadium market◦ In 2010, EVRAZ produced 16.3 million tonnes of crude steel and sold 15.5 million tonnes of steel rolled products◦ 2010 consolidated revenue amounted to US$13.4 billion; EBITDA was US$2.4 billion◦ GDRs listed on London Stock Exchange since June 2005, shares listed in the Premium segment of the LSE since 7 November 2011
  4. 4. 3Investment Highlights◦ #15 steel producer by volume globally and #1 in Russia◦ Low cost operations driven by vertically integrated business model◦ Exposure to growing construction and infrastructure markets globally◦ Strong position in growing Russian market◦ Successful track record of strategic acquisitions◦ Multiple opportunities to drive growth◦ Focus on HSE
  5. 5. 4 Global Operating Model 240 Russia/CIS 402 6,420 2,607 1,054 Europe 400 590 4,208 North America 110 Asia 410 2010 Steel Sales Volume South America Africa 2010 Steel Sales Volume by Geography 110 by Product Africa Other Europe Tubular 4% 3% 6% Construction 9% Russia & CIS Steel Mills Railway 32% North 12% 42% Iron Ore MiningAmerica Coal Mining Flat- 17% Vanadium rolled 17% Semi- Sea Ports Asia finished 29% Mezhegey Coal Mill in Development 29% # Third Party Steel Products Sales (Kt), 2010 # Internal Supply of Slabs and Billets from Russian Steel Mills (Kt)
  6. 6. 5 Cost Leadership◦ Increased costs in 1H 2011 reflected mostly growth in Cash Cost*, Slabs & Billets US$/t raw materials prices 500 441 459 437 479 446 411◦ High level of vertical integration into iron ore and coking 400 354 364 350 378 438 coal helped to partially mitigate negative impact of 317 298 395 401 escalating prices 300 349 371 355 246 256 265 356 369 333 294◦ Approx. 60% of consolidated operating costs are rouble 200 271 280 denominated 200 216 179 100◦ EVRAZ enjoys a position on the global cost curve well 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 within the first quartile Slab Billet *Average for Russian steel mills, integrated cash cost of production, EXW Consolidated Cost of Revenues by Cost Elements Sep’11 Average Steel Slab Cash Cost by Region (EXW) Cash Cost ($/metric tonne) 1H 2011, % 1H 2010, % 720 World Average: 597 of total CoR of total CoR 600 Raw materials, including 39% 37% Iron ore 7% 6% 480 Coking coal 12% 11% 360 Scrap 14% 13% 240 Other raw materials 6% 7% Semi-finished products 7% 4% 120 Transportation 5% 6% 0 W. Europe (3) Staff costs 12% 12% S.America Africa Australia Asia Brazil USA India China South Korea Mid. East Mexico Japan Canada E. Europe Russia & Depreciation 7% 8% CIS Electricity 5% 5% Natural gas 4% 4% Other costs 21% 24% Cumulative Capacity Source: World Steel Dynamics
  7. 7. 6 Exposure to Growth in Construction and Infrastructure Construction Steel Consumption in Russia ◦ EVRAZ is the leading producer of long products in MMt Russia 15 ◦ Market share of 86% in H-beams, 66% in channels, 89% in rails and 36% in wheels as of 10 7.9 8.6 H1 2011 6.2 ◦ Russian construction steel demand expected to reach 5 pre-crisis levels in 2012 ◦ Expected robust growth in the railway steel market 0 ◦ We expect construction steel demand to reach 2009 2010 2011(f) approximately 11 MMt in 2015 Consumption of Construction Steel in Russia ◦ Over US$30 bn of capital investments by the Russian Russian Government Capital Investments Government planned for 2011 US$ bn ◦ Key programs include construction related to the Sochi 40 (1) 2014 Winter Olympics, infrastructure development for 32 the APEC 2012 summit in Vladivostok, Skolkovo 26 innovation centre 20 13 ◦ Russia committed to invest over $US50 bn in preparation for the 2018 FIFA World Cup (estimated steel requirement of 2.0-2.5 MMt) 0 ◦ Russian Railways approved investment programme for 2009 2010 2011(f) 2011-2013 of $US18.4 bnSource: Russian Government, press (1) RUB 895 bn
  8. 8. 7 Move to Premium Listing EVRAZ’s redomiciliation to the UK from Luxembourg and a premium share listing and admission to trading on the Main Market of the LSE since 7 November 2011◦ Transaction effected by way of a Share Exchange Offering (the “SEO”) by EVRAZ plc (UK entity) for the shares, including the shares represented by GDRs, of Evraz Group S.A. (Luxembourg entity) with 9 new shares for each Existing Share tendered and 3 new shares for each Existing GDR tendered (1)◦ Existing GDR listing and trading will be cancelled following termination on 8 February 2011 of the deposit agreement with The Bank of New York Mellon◦ No change to the Company’s business operations, assets or strategy as a result of the SEO◦ Expected benefits of the premium listing : ◦ Broader shareholder base ◦ Improvement in long-term access to capital ◦ Improved liquidity ◦ Expected FTSE 100 inclusion and the only steel stock in UK FTSE All-Share index (following FTSE Committee Quarterly Review on 7 December 2011) ◦ Committed to high standards of corporate governance (1) Three GDRs represents one Existing Share
  9. 9. 8 3Q 2011 Production VolumesSteel Products(1) Semi- Semi-Finished Products Construction Productskt kt kt 805 1,299 1,351 3,780 3,670 780 767 1,229 3,537 3Q 2010 2Q 2011 3Q 2011 3Q 2010 2Q 2011 3Q 2011 Flat Rolled Products Railway Products kt kt 730 448 550 517 646 609 3Q 2010 2Q 2011 3Q 2011 3Q 2010 2Q 2011 3Q 2011 3Q 2010 2Q 2011 3Q 2011 Semi-Finished Railway Other Construction Flat Rolled ProductsIron Ore Coal Vanadiumkt kt kt 5,396 5,435 10,490 10,108 4,981 3,032 3,197 8,696 2,611 3Q 2010 2Q 2011 3Q 2011 3Q 2010 2Q 2011 3Q 2011 3Q 2010 2Q 2011 3Q 2011 Coking Coal (2) Vanadium in Slag Steam Coal Raspadskaya Vanadium in Final Products (1) Net of re-rolled volumes (2) Calculated as 40% of total Raspadskaya production
  10. 10. 9Trading Update for 3Q and 9M 2011 9M 2011/ (US$ million) 3Q 2011 9M 2011 9M 2010 9M 2010, change, %Revenue 4,157 12,537 9,729 28.9%EBITDA 772 2,401 1,766 36.0%Interest expense 164 551 547 0.7%CAPEX 483 945 584 61.8%Steel product sales * 3,390 10,094 7,862 28.4%Iron ore product sales * 134 488 230 112.2%Coal product sales * 102 308 263 17.1%Vanadium product sales * 160 462 393 17.6%Other revenues * 371 1,185 981 20.8% As of 30 Sep As of 31 Dec Change, % 2011 2010Total debt 7,214 7,811 -7.6%Cash and cash equivalents 578 683 -15.4%* External sales
  11. 11. 10 Recent Market Developments Update EVRAZ Selling Prices◦ We are observing resilient demand across major US$/t product groups in our markets 1,200◦ Current steelmaking capacity utilisation: 1,000 ◦ Russia – 100% 800 ◦ Ukraine – 70% 600 ◦ Czech Republic – 70% 400 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 ◦ North America –100% Rebars, Russia, FCA Billets, Russia, export (1) Slabs, Russia, export (1) Plate, North America, FCA ◦ South Africa – 100% (1) Weighted average contract prices◦ We continue to enjoy vertical integration model Source: Company data advantages which mitigate the effects of raw materials prices volatility Raw Material Prices (Domestic Markets) US$/t◦ Global steel inventories significantly below mid-2008 500 levels decreasing to 2.5 months in August, a level 400 slightly below the 5-year average 300◦ EVRAZ order book (external sales) currently stands at 200 approx. US$300 mln representing 2.5 months’ 100 production 0 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Scrap, Russia, CPT Coking coal concentrate, Russia, FCA Iron ore concentrate, Russia, ExW Scrap, USA, CPT Source: Metall Expert
  12. 12. 11Growth ProjectsProjects in Final Stage of Completion◦ Rail mill modernisation enabling production of high value-added products◦ PCI installation at Russian steel millsProjects in Progress◦ Construction of Yerunakovskaya VIII mine, 2 mtpa of coking coal◦ Exploration of Sobstvenno-Kachkanarskoye iron ore deposit to increase KGOK production to 55 mtpa◦ Construction of Yuzhny and Kostanay rolling mills in regions where demand is growing (South Russia and Kazakhstan): total 900,000 tpa of construction productsProjects under Consideration◦ Mezhegey coking coal deposit development◦ Joint venture with Alrosa to develop Timir iron ore deposit in Yakutia◦ Construction of 2nd converter shop at EVRAZ NTMK: steel capacity increase of 1-1.5 mtpa
  13. 13. 12 CAPEX Dynamics ◦ Return to investment in modernisation projects and mine development in 2010 ◦ FY 2011 budgeted CAPEX of US$1.2 billion ◦ CAPEX over the next several years expected at the level of 2011 US$ mln 1,200 1,103 1,000 832 800 600 462 441 400 200 - 2008 2009 2010 1H 2011 Maintenance, Steel and other operations Coal mine development ** 2011 Budget Iron ore mine development Investment projects* CAPEX* In 2010 includes US$70 million acquisition of Mezhegey and Mezhegey East licences** Investment into maintaining and developing mining volumes, such as preparation of coal seams
  14. 14. 13 Update on Key Investment Projects Cum CAPEX by 30.06. Cum CAPEX by 30.06. Total CAPEX Total CAPEX 2011 2011 2011 Planned CAPEX 2011 Planned CAPEXProjectProject $US mln $US mln $US mln $US mln $US mln (1) $US mln (1) Project Targets Project TargetsIron ore & coalIron ore & coal Iron ore production to be increased to 55 mtpa Capacity of 950k tonnes of high-speed rails, including 450kExpansion of Kachkanar Mine 80 19 54 On-stream100 metre rails tonnes of by 2012 On-stream by 2013Development of Mezhegey and Eastern Field Coal Maintainingof higher-quality in high-quality hard coking coal Production self-sufficiency railsDeposits (Tyva, Russia) TBD 71 (2) 16 after depletion of existing deposits 550k tonnes capacity On-stream by 2015 and 2021 respectively On-stream by 2012 Coal production of 2 mtpaYerunakovskava Mine Construction 590 4 52 On-stream by mid-2013Steel Capacity of 950k tonnes of high-speed rails, including 450kReconstruction of Rail Mill at United ZSMK 485 259 146 tonnes of 100 metre rails(Former NKMK) On-stream by 2013 Production of higher-quality railsReconstruction of Rail Mill at NTMK 60 46 14 550k tonnes capacity On-stream by 2012 20% lower coke consumptionPulverised Coal Injection (PCI) Save annually up to 650 mcm of natural gas at NTMK and up 320 88 182at NTMK and ZSMK to 600 mcm at ZSMK On-stream by end-2012Reconstruction of Mechanical Area at Production of higher-quality wheels 40 21 19NTMK Wheel & Tyre Mill On-stream by 2011Construction of Yuzhny and Kostanay Capacity: 450 ktpa of construction products each mill 260 12 73Rolling Mills On-stream by mid-2013 (1) Total 2011 planned capex is ca. $US1.2 bn (2) Acquisition of Mezhegey and Mezhegey East licences
  15. 15. 14OutlookGlobal economy and the steel industry continue to face challenges and remain very volatileEVRAZ retains a strong order book and high capacity utilisationInventories at traders and at our mills and ports are very low4Q 2011 trading is being impacted by the seasonal change in the product mix in favour of lower-marginsemi-finished products and slightly lower prices for main product groups due to volatile global economicenvironmentEVRAZ continuously assesses the market environment and has significant flexibility in CAPEX plans4Q 2011 EBITDA is expected to be in the range of US$500-600 million
  16. 16. 15SummaryStrong 1H 2011 results reflecting the recovery of steel and raw material marketsObtaining benefits from enhanced raw material prices due to the Group’s high level of verticalintegrationImproved liquidity position and reduced debt level following continuous refinancing in 1H2011Renewed investment into enhancing the mining base, production modernisation and product quality willenable to achieve positive results in 2012 and beyondNo significant deterioration of the market at the momentThe premium share listing in London and potential FTSE 100 inclusion to improve liquidity andshareholder baseCompany now on sound footing to achieve further growth and is well prepared to efficiently operateeven in the prolonged period of market uncertainty
  17. 17. 1H 2011 Operating and Financial Results Overview
  18. 18. 17 1H 2011 SummaryUS$ mln unless otherwise stated 1H 2011 1H 2010 ChangeRevenue 8,380 6,379 31% 31%Gross profit 2,197 1,460 50% 50%Consolidated adjusted EBITDA* 1,629 1,154 41% 41%Adjusted EBITDA margin 19.4% 18.1%Net Profit** 263 176 49% 49%EPS (US$ per GDR) 0.62 0.42 48% 48%Interim Dividend (US$ per GDR) 0.2 0Steel sales volumes*** (’000 tonnes) 7,946 7,714 3% As of As of 30 June 2011 31 Dec 2010 ChangeNet Debt 6,042 7,127 (15)%Short-term Debt 604 714 (15)%* Consolidated adjusted EBITDA represents profit from operations plus depreciation and amortisation, impairment of assets, foreign exchange loss (gain) and loss (gain) on disposal ofPP&E. See appendix on p.30 for reconciliation of profit (loss) from operations to Adjusted EBITDA** Net profit in 1H 2011 was negatively affected by one-off items. Without one-off losses of US$231 million relating to the conversion and early repurchase of debts the 1H 2011 net profitwould have been US$494 million*** Here and throughout the presentation steel sales volumes to external customers only if not stated otherwise
  19. 19. 18 1H 2011 Financial Highlights◦ Significant growth in revenues and EBITDA in 1H 2011 vs. 1H 2010 as a result of market recovery◦ Revenue growth was driven primarily by prices increases as EVRAZ operated at high capacity utilisation levels in 1H 2011◦ EVRAZ benefits from high level of vertical integration◦ Major share of revenues coming from Steel segment, while more than half of EBITDA generated in Mining segment Consolidated Revenue by Segment Consolidated Adjusted EBITDAUS$ mln US$ mln12,000 1,629 8,380 482 1,800 8310,000 1,154 6,379 320 2,040 1,500 8,000 62 414 290 1,200 55 962 1,120 6,000 390 900 4,000 7,492 600 5,796 803 744 2,000 300 0 0 (156) (3) (1,241) (157) (1,954)-2,000 -300 1H 2010 1H 2011 1H 2010 1H 2011 Steel Mining Vanadium Other operations Eliminations Steel Mining Vanadium Other operations Unallocated & Eliminations
  20. 20. 19 FCF Generation ◦ Substantial free cash flow generation in 1H 2011 ◦ Release of working capital in spite of higher level of activity and higher prices ◦ Major uses of FCF in 1H2011 were: US$402 million increase in cash, US$275 million net repayment of loan principals, US$51 million purchase of non-controlling interests (Evraztrans) US$ mln 2000 134 1800 41 1,670 1,629 1,594 1600 (210) 1400 1200 (386) 1000 5 751 800 600 (462) 400 200 0 EBITDA 1H Non-cash EBITDA (excl. Changes in Income tax CF from Interest paid Capex CF from Free cash 2011 items non-cash working paid operating and costs of investing flow* items) capital, excl activities early activities income tax repurchase of (excl. capex) debts*Free cash flow comprises cash flows from operating activities less interest paid, costs of early repurchase of debts and cash flows frominvesting activities
  21. 21. 20 Dividend Policy◦ On 10 October 2011 the EVRAZ Board approved a new dividend policy and the payment of interim and special dividends for 1H 2011◦ First dividend payment since 2008◦ The Company believes that the new policy and dividend payment creates a balanced approach towards return on shareholder equity whilst retaining sufficient capital for the Group’s investment growthRevised Dividend ◦ Under the revised dividend policy EVRAZ will target to maintain a long-term averagePolicy dividend payout ratio of at least 25 % of the consolidated net profit calculated in accordance with IFRS and adjusted for non-recurring items, for the relevant period. Dividends are expected to be paid semi-annually ◦ In addition to the regular dividend payments the Company may also employ special dividends from time to time at the discretion of the EVRAZ Board to return surplus capital to shareholdersKey Parameters of ◦ Interim dividend: US$0.2 per GDRDividendAnnouncement ◦ Special dividend: US$0.9 per GDR ◦ Record date: 28 October 2011 ◦ Paid in November 2011
  22. 22. 21 Liquidity and Debt Maturity Profile ◦ Refinancing steps significantly strengthened the Group’s liquidity profile: ◦ In April 2011, EVRAZ issued US$850m bonds due 2018 at 6.75%, the lowest ever coupon for EVRAZ Eurobond issues ◦ Part of the proceeds from the issue was used to purchase approx. US$622m in aggregate principal amount of the outstanding bonds due 2013 ◦ In June 2011, Evraz issued a 20 billion 5-year rouble bond (approx. US$715m) at 8.40%, and incentivised conversion of US$648 million in principal amount of convertible bonds due 2014 ◦ In October 2011, the 5-year US$500 million unsecured credit facility with Gazprombank was used to prepay the existing US$300 million secured loan ◦ EVRAZ’s total debt was US$7.2 billion as of 30 June 2011, including US$4.9 billion of public debt and US$2.3 billion of bank loans ◦ EVRAZ had unutilised credit facilities of approx. US$1.4 billion, incl. US$788 million of committed facilities, as of 30 June 2011, compared with US$923 million and US$430 million respectively as of 30 June 2010. ◦ Targeting net debt/EBITDA ratio below 2.5x Debt* Maturities Schedule (as of 30 June 2011)US$ mln 2000 1500 1000 500 0 2011 2012 2013 2014 2015 2016 2017 2018 2019-2022 Public debt Bank loans * Principal debt (excl. interest payments)
  23. 23. 22 Improved Business Fundamentals ◦ EBITDA and EBITDA margin progression 31 December 30 June ◦ Focus on financial management 2009 2011 ◦ Reduction of total debt level Net Debt US$7,230m US$6,042m ◦ Significant improvement of leverage Leverage (Net Debt/LTM 5.8x 2.1x ◦ Successful refinancing of short-term debt using debt EBITDA) instruments with longer term maturities Average Maturity 3.4 years 3.8 years ◦ EVRAZ credit ratings upgraded: S&P to B+, Stable; Moody’s to B1, Positive; Fitch to BB-, Stable Short-term Debt US$1,992m US$604m EBITDA and EBITDA Margin Performance US$ MM %2,000 18% 17% 19% 20% 15%1,500 15% 10%1,000 10% 1,629 500 1,154 1,196 5% 769 468 0 0% 1H2009 2H2009 1H2010 2H2010 1H2011 EBITDA EBITDA Margin (RHS)
  24. 24. 23 2008- 2011 vs 2008-2009 End 2008-beginning 2009 30 September 2011 Very few forward sales on export contracts Export contracts are sold 2.5 months in advance No new orders Normal flow of orders Up to 5 months of stocks at traders Low stocks Risk of non-payments No sales on credit – risk of bad debts is minimal Some production is inefficient Inefficient production lines are closed Low capacities utilisation Nearly 100% capacities utilisation Short-term debt of almost US$4 billion Short-term debt of US$604 million as of 30 June 2011 (US$300 million to be paid till 2011 year-end as of 30 September 2011) USD/RUB Exchange Rates40.0035.0030.0025.0020.0015.0010.00 Jul Jul Jul Jul Jan Feb Jun Jan Feb Jun Jan Feb Jun Oct Oct Oct Mar Mar Mar Nov Dec May Nov Dec May Nov Dec May Sep Sep Sep Sep Aug Aug Aug Aug Apr Apr Apr 2008 2009 2010 2011
  25. 25. 24 Steel: CIS Steel Product Sales, Domestic vs. Export ◦ Full utilisation of Russian and Ukrainian steelmaking ‘000 tonnes capacities maintained in 2011 5,541 ◦ In 1H 2011 domestic steel sales accounted for 68% of 6,000 5,532 EVRAZ’s Russian and Ukrainian mills’ steel sales 5,000 32% 47% compared to 53% in 1H 2010, reflecting improving 4,000 demand in the CIS market and the shift to sales of higher 3,000 margin products 2,000 68% 53% ◦ High market share in domestic sales through own 1,000 distribution network 0 1H 2010 1H 2011 ◦ Prices of key products strengthened in response to demand recovery and growth in raw material prices Domestic Export Steel Product Sales Volumes Steel Product Revenues‘000 tonnes Revenue, Revenue per tonne, 5,541 Products 5,532 US$m US$ 6,000 387 512 5,000 785 1H 2010 1H 2011 1H 2010 1H 2011 813 4,000 2,100 Semi-finished 1,112 1,159 492 630 3,000 2,378 2,000 Construction 1,275 1,833 607 771 1,000 2,260 1,838 Railway 541 734 689 903 0 Other steel 247 422 638 824 1H 2010 1H 2011 Total 3,175 4,148 574 749 Semi-finished Construction Railway Other
  26. 26. 25 Steel: North America ◦ Gradual recovery in demand ◦ Sales volumes of steel products increased by 4% in 1H 2011 vs. 1H 2010 ◦ Flat-rolled steel volumes increased by 11%; railway products by 34% ◦ Average prices of all product categories increased with the largest increase in flat-rolled products (+US$266/t) ◦ Pricing of steel products generally follows scrap price trends Steel Product Sales Volumes Steel Product Revenues‘000 tonnes 1,276 1,321 Revenue, Revenue per tonne,1,400 Products US$m US$1,200 403 436 1H 2010 1H 2011 1H 2010 1H 20111,000 800 Construction 511 154 153 782 927 600 462 and other 400 Railway 172 249 950 1,029 181 242 200 Flat-rolled 400 866 197 165 578 1,131 0 1H 2010 1H 2011 Tubular 601 589 1,378 1,461 1,461 Construction & other steel Railway Flat-rolled Tubular Total 1,327 1,569 1,040 1,188 1,188
  27. 27. 26 Steel: Europe, South Africa Steel Product Sales Volumes,◦ EVRAZ’s European mills sales volumes increased by European Operations ‘000 tonnes 23% in 1H 2011 vs. 1H 2010 800 740◦ European flat-rolled product sales volumes increased 700 603 109 by 23%, which largely reflected the increased 600 92 500 demand picture in the European market 400 631◦ Sales of EVRAZ Highveld’s steel products were 300 200 511 effectively flat as domestic demand in the South 100 0 African market remained weak 1H 2010 1H 2011 Flat-rolled Other Steel Product Revenues Steel Product Sales Volumes, South African Operations Revenue, Revenue per tonne, ‘000 tonnesProducts US$m US$ 1H 2010 1H 2011 1H 2010 1H 2011 400 343 350 302 European Operations 52 300 10Flat-rolled 345 598 675 948 250Other 74 104 804 954 200 195 183Total 419 702 695 949 150 100 South African Operations 50 97 108Construction 70 89 721 824 -Flat-rolled 138 159 708 869 1H 2010 1H 2011Other 7 36 700 692 Construction Flat-rolled OtherTotal 215 284 712 828
  28. 28. 27 Mining: Integrated Portfolio of Iron Ore and Coking Coal◦ As of 1H 2011 EVRAZ was 99% self-sufficient in iron ore and Cash Cost, Russian Iron Ore Products and Coal 62% in coking coal (88% including 40% share of production US$/t 100 from Raspadskaya) 90◦ Cash cost of washed coking coal went up in 3Q 2011 due to 80 drop in production volumes and increased repair costs 70 60◦ EVRAZ’s strategy is to expand its mining division increasing 50 self-sufficiency 40 30◦ The company is developing a number of projects including 20 the Mezhegey and Yerunakovsky VIII coal deposits and the 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 Kachkanar iron ore deposit Iron ore products (Fe 58%) Washed coking coal (concentrate) Iron Ore Self-Coverage (1), 2009-H1 2011 Self- 2009- Washed Coking Coal (Concentrate) Self-Coverage (2) Self-‘000 tonnes ‘000 tonnes 99% 96% 90% 102% 99% 137% 125% 90% 80% 88% 6,000 5,288 12,000 10,397 10,635 10,455 4,795 9,955 9,608 9,981 10,191 10,355 4,218 4,053 8,859 8,809 4,021 3,850 3,501 3,642 3,229 3,402 8,000 3,000 4,000 3,499 3,299 2,191 2,506 2,404 100%(3) 78%(3) 54%(3) 62%(3) 62%(3) 0 0 H1 2009 H2 2009 H1 2010 H2 2010 H1 2011 H1 2009 H2 2009 H1 2010 H2 2010 H1 2011 Consumption Production Consumption Production Excl. Raspadskaya Raspadskaya Production (1) Self-coverage, %= total production divided by total steel segment consumption (2) Self-coverage, %= total production (plus 40% of Raspadskaya production on pro rata basis) divided by total steel segment consumption (3) Self-coverage excl. 40% Raspadskaya share
  29. 29. 29+7 495 232-13-70 IR@evraz.com www.evraz.com

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