Db access ceemea conference, london

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Db access ceemea conference, london

  1. 1. Investor PresentationdbAccess CEEMEA Conference23-25th January 2013, London
  2. 2. EVRAZ in brief One of the largest vertically integrated steel and mining companies in the world Top-20 steel producer in the world based on crude steel production Leader in the Russian and CIS construction and railway product markets No 1 producer of rails and large diameter pipes in North America One of the leading producers in the global vanadium market 14.2 million tonnes of steel products produced in 2012 2011 consolidated revenue of US$16.4 billion, EBITDA of US$2.9 billion; H1 2012 revenue of US$7.6 billion, EBITDA of US$1.2 billion Total debt as at 30 June 2012 of US$7.8 billion, net debt/LTM EBITDA of 2.5x Constituent of FTSE 100 index since December 2011 and the only steel stock in UK FTSE All-Share index; part of MSCI UK and MSCI World Indices Total dividend payments of US$375 million in 2012Investor Presentation January 2013 1
  3. 3. Global operating model 150 Russia/CIS 1,313 100 3,730 529 Europe 122 580 1,717 North America Asia 231 H1 2012 steel sales volume South America Africa H1 2012 steel sales volume by geography by product Africa and RoW Other 4% Tubular 4% 5% Semi- finished Russia & Asia CIS Steel mills 22% 22% Flat-rolled 48% Iron ore mining 18% Coal mining Vanadium Americas Railway Construction 17% Sea ports 14% 37% Europe 8% Mezhegey coal mine in development # Third party steel products sales* (Kt), H1 2012 # Internal supply of slabs and billets from Russian steel mills (Kt) * Excluding routes with sales volumes below 50kt each, together totalling 93ktInvestor Presentation January 2013 2
  4. 4. Production Update
  5. 5. Q4 2012 steel production Crude steel output decreased by 6% vs. Q3 2012 due to planned maintenance at EVRAZ ZSMK in Russia and suspension of steel shop’s operations in the Czech Republic to reduce slab inventory Consolidated production of finished steel goods was marginally flat QoQ at 2.6-2.7 mt PCI project at EVRAZ NTMK was mostly completed with ramp-up scheduled for Q1 2013 Rail mill at EVRAZ ZSMK launched in early 2013 after modernisation projectProduction of steel products, Kt Share of finished products in product mix1,4001,2001,000 20% 800 600 Semi-finished products 400 Finished products 200 0 80% Semi-finished Construction Railway Flat-rolled Tubular Other steel products products products products products products Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012Investor Presentation January 2013 4
  6. 6. 2012 steel production EVRAZ’s overall production of crude steel decreased by 5% vs. 2011 due to  a large number of overhauls in Russia for asset modernisation  suspensions of steelmaking in the Czech Republic for maintenance and to reduce slab inventory  interruptions of production in South Africa caused by industrial actions Consolidated production of finished steel goods decreased by 5% compared to 2011 as a result of lower output of flat-rolled products in Europe and lower production of railway products in Russia due to reconstruction of EVRAZ ZSMK rail millProduction of steel products, Kt Share of finished products in product mix6,0005,000 22%4,0003,000 Semi-finished products2,000 Finished products1,000 78% 0 Semi-finished Construction Railway Flat-rolled Tubular Other steel products products products products products products 2011 2012Investor Presentation January 2013 5
  7. 7. Steel: Russia Full economic utilisation of Russian steelmaking capacity Steel product sales, domestic (Russia and CIS) vs. export, Kt maintained through 2012 In 2012 crude steel output decreased by 4% vs. 2011 due to 5,541 5,586 a larger number of overhauls of blast furnaces and converters as well as the EVRAZ ZSMK rail mill 32% 33% modernisation project In 2012, production of railway products was 14% lower vs. 2011 as EVRAZ ZSMK rail mill was closed for Export reconstruction from April 2012 Domestic 68% 67% Average prices for some high value added products such as railway products enjoyed positive dynamics due to improved product mix H1 2011 H1 2012Steel production volumes, Kt EVRAZ average selling prices, $/t (ex works) 10,942 10,592 2012 2011 Q4 2012 Q3 2012 4,202 4,091 Semi-finished products 457 529 396 443 Semi-finished products Construction products Construction products 677 732 667 680 Railway products 4,220 4,281 Flat-rolled products Railway products 891 882 911 908 Other steel products Flat-rolled products 607 706 559 577 1,564 1,346 356 334 600 540 Other steel products 729 790 709 714 2011 2012Investor Presentation January 2013 6
  8. 8. Steel: North America In 2012, EVRAZ’s North American steelmaking facilities continued to operate at high utilisation rates, and output of crude steel increased by 4% vs. 2011 Production of finished steel goods was marginally flat year-on-year Slightly better results for construction and tubular products were achieved through redistribution of production capacity from other product categories:  Output of construction products increased by 9% as a result of healthy demand for rod & bar products. A third working shift at EVRAZ Pueblo was added to meet the increased demand for these products  Production of tubular goods increased by 3% due to an overall improvement in customer demand Steel production volumes*, Kt Average selling prices, $/t (ex works)fyreetfjpigtyre4wjojioyugy 2,646 2,661 302 330 2012 2011 Q4 2012 Q3 2012 490 486 Construction products 845 897 767 810 Construction products Railway products Railway products 989 1,023 932 928 1,007 975 Flat-rolled products Tubular products Flat-rolled products 1,017 1,134 901 992 848 869 Tubular products 1,509 1,486 1,461 1,472 2011 2012 * FY 2012 production volumes are preliminaryInvestor Presentation January 2013 7
  9. 9. Steel: Europe and South Africa Crude steel output in Europe was lower by 42% vs. 2011 as Average selling prices, $/t (ex works) fyreetfjpigtyre4wjojioyugy a result of prolonged maintenance works at the EVRAZ Vitkovice Steel’s steelmaking facility in July-August 2012 EUROPE 2012 2011 Q4 2012 Q3 2012 and its suspension in Q4 2012 in order to reduce slab Construction products 877 896 890 877 inventory Flat-rolled products 743 907 674 715 Operational performance of EVRAZ Highveld Steel and Vanadium was impacted by unstable operations in the first SOUTH AFRICA 2012 2011 Q4 2012 Q3 2012 half of 2012, the industrial action in Q3 2012, ramp-up Semi-finished products 489 587 699 742 problems in the second half of the year following the end of industrial action as well as by a transportation strike in the Construction products 737 797 730 712 country Flat-rolled products 765 837 699 740 Other steel products 604 677 636 615Steel production volumes, Europe, Kt Steel production volumes, South Africa, Kt 1,267 131 564 1,028 51 69 461 15 Construction products 179 169 Flat-rolled products 1,057 Semi-finished products 920 Other steel products Construction products 287 243 Flat-rolled products Other steel products 79 39 47 34 2011 2012 2011 2012Investor Presentation January 2013 8
  10. 10. Mining: Coal Average selling prices, $/t (ex works)fyreetfjpigtyre4wjojioyugy In 2012, raw coking coal output by Yuzhkuzbassugol was 35% higher vs. 2011 due to more stable performance of the mines as a result of successfully implemented operational improvement programmes 2012 2011 Q4 2012 Q3 2012 Production of coking coal concentrate was flat year-on-year Raw coking coal 69 97 63 65 Output of raw steam coal decreased by 23% vs. 2011 Raw steam coal 27 36 25 27 following the repositioning of a longwall at the Gramoteinskaya mine in Q1 2012, as well as suspension of Coking coal concentrate 136 203 116 129 mining at the Gramoteinskaya mine in Q4 2012 Steam coal concentrate 56 80 49 59 Steam coal concentrate production decreased by 51% due to larger raw steam coal sales and lower outputEVRAZ’s coal production volumes, Kt Raspadskaya’s coal production volumes, Kt 10,789 9,268 2,283 2,965 Raw steam coal (mined) Raw coking coal (mined) 7,002 8,506 6,251 6,303 2011 2012 2011 2012 * Reported numbers are for 100% production. As at 31 December 2012 EVRAZ held a 41% effective interest in the Raspadskaya coal company, on 16 January 2013 EVRAZ increased interest in * Raspadskaya to 82%Investor Presentation January 2013 9
  11. 11. Mining: Iron ore In 2012, production of saleable iron ore products by the Company was slightly down by 2% compared to 2011 Production of saleable concentrate in Russia decreased by 13% due to the following:  termination of processing of third party raw ore being uneconomic in the current market environment;  change in the product mix (larger volumes of sinter output);  scheduled kiln repair at EVRAZ KGOK iron ore processing plant in Q3 2012 Output of lumpy ore by EVRAZ Sukha Balka in Ukraine in 2012 was 7% higher vs. 2011 as a result of smoother repositioning of a skip conveyor in the reporting year vs. 2011 Decreased production of iron ore in South Africa was due to operational issues as a result of an industrial action at EVRAZ Highveld Steel and a nationwide transportation labour strikeIron ore production volumes, Kt EVRAZ average selling prices, $/t (ex works)fyreetfjpigtyre4wjojioyugy 21,170 20,753 1,257 1,174 2012 2011 Q4 2012 Q3 2012 6,447 5,615 Lumpy ore (South Africa) Concentrate, saleable Concentrate, saleable (Russia) 84 111 70 82 (Russia) Sinter (Russia) 4,473 4,698 Pellets (Russia) Sinter (Russia) 91 128 70 89 Lumpy ore (Ukraine) Pellets (Russia) 91 132 74 95 5,907 6,051 Fines ore (South Africa) Lumpy ore (Ukraine) 61 78 50 61 2,446 2,608 Fines ore (South Africa) 12 24 13 9 640 607 2011 2012Investor Presentation January 2013 10
  12. 12. Vanadium In 2012, the strong performance of Russian operations Ferrovanadium prices (FeV), $/kg contained V (+16% y-o-y) fully offset lower output at EVRAZ Highveld Steel and Vanadium (-21% y-o-y) and led to overall growth of production of vanadium in slag at EVRAZ by 2% to 20,741 tonnes of V Production of final vanadium products fell by 12% 26.8 Total production of ferrovanadium decreased by 14% vs. 25.6 25.6 25.3 2011 but increased by 15% at EVRAZ’s own facilities in the 24.3 26.0 26.1 23.7 Czech Republic and Russia which were operating at 24.5 24.6 24.2 maximum capacity to meet the improved market demand 23.0 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Source: LMBProduction of Vanadium products, t of V* EVRAZ average selling prices, $/t (ex works)f 20,834 2012 2011 Q4 2012 Q3 2012 18,434 Vanadium in final products Ferrovanadium Ferrovanadium 24,062 27,653 23,579 24,517 16,683 Nitrovan® 14,381 Nitrovan® 27,900 29,506 26,912 28,615 Oxides, vanadium aluminium and chemicals Oxides, vanadium aluminium 32,579 36,194 36,024 30,944 and chemicals 2,874 2,723 1,277 1,330 2011 2012* Calculated in pure vanadium equivalentInvestor Presentation January 2013 11
  13. 13. Key Investment Projects Cumulative CAPEX by CAPEX in CAPEX in Total CAPEX 30.06.2012 H1 2012 H2 2012,Project $m $m $m $m Project Targets Project targetsCoal ore & coalIron & iron ore o Coal production of 2 mtpaYerunakovskava VIII mine construction 390 81 47 150 o Start in Q1 2013, full capacity to be reached in Q1 2014 o Maintaining self-sufficiency in high-quality hard coking coal afterDevelopment of Mezhegey coal deposit depletion of existing deposits 190 23 18 25(Tyva, Russia) o On-stream Q4 2013, reaching full capacity by Q4 2014 o Iron ore production to be increased to 55 mtpaExpansion of Kachkanar mine 76 60 13 14 o On-stream by the end of Q1 2013Steel o Capacity of 950k tonnes of high-speed rails, including 450kReconstruction of rail mill at EVRAZ ZSMK 490 366 84 113 tonnes of 100 metre rails(former NKMK) o On-stream in Q1 2013, fully operational since Q4 2013 o Coke consumption is expected to reduce by 20% and naturalPulverised coal injection (PCI) at EVRAZ gas by 50% for the additional usage of 150 kg of PCI coal per 170 130 28 29NTMK tonne of pig iron o Launched in December 2012, fully operational in Q1 2013Pulverised coal injection (PCI) 150 88 27 50 o On-stream by 2014, fully operational since Q1 2014at EVRAZ ZSMKReconstruction of mechanical area at o Production of higher-quality wheels 40 25 3 8EVRAZ NTMK wheel & tyre mill o Start production in Q2 2014; full capacity by Q3 2014 o Capacity: 450 ktpa of construction productsConstruction of Yuzhny rolling mill 135 55 16 32 o On-stream by mid-2013, fully operational in 2015 o Capacity: 450 ktpa of construction productsConstruction of Kostanay rolling mill 125 38 18 28 o On-stream by mid-2013, fully operational in Q3 2014 Final stage of completion In progressInvestor Presentation January 2013 12
  14. 14. Acquisition of Raspadskaya In January 2013, EVRAZ completed acquisition of an indirect controlling interest in OJSC Raspadskaya, increasing its stake from 41% to 82% Remaining 18% of Raspadskaya shares will remain listed on the Russian Stock Exchange, MICEX-RTS Pursuant to the terms of the Acquisition, EVRAZ has issued new ordinary shares which are admitted to trading on the Main Market of the London Stock Exchange The resulting total number of voting rights in the Company is 1,472,582,366 as at 16 January 2013 EVRAZ issued 33,944,928 new warrants to subscribe for new 33,944,928 ordinary shares in EVRAZ as well as will pay to the seller $202m in four equal payments in Q1, Q2 and Q3 2013 and Q1 2014 Raspadskaya will be consolidated in EVRAZ’s financial statements from 16 January 2013 Raspadskaya assets Major shareholdings Facilities  Three underground coking coal Shareholder Number of ordinary % of issued mines shares share capital  Open-pit coking coal mine Mr. Roman Abramovich 471,302,870 32.01%  Raspadskaya coal concentrate Mr. Alexander Abramov 330,216,751 22.42% preparation plant Mr. Alexander Frolov 164,892,446 11.20% Coking coal reserves 1,314 million tonnes Mr. Gennady Kozovoy 67,191,316 4.56% (IMC, 31/12/2011) Mr. Alexander Vagin 66,326,503 4.50% 6.3 mt of raw coking coal Mr. Igor Kolomoyskiy 59,865,435 4.07% Production in 2011 3.8 mt of coking coal concentrate Mr. Eugene Shvidler 46,825,408 3.18%Investor Presentation January 2013 13
  15. 15. Selected FinancialInformation
  16. 16. H1 2012 summaryUS$ million unless otherwise stated H1 2012 H1 2011 Change Revenue 7,619 8,380 (9)% EBITDA1 1,175 1,629 (28)% EBITDA margin 15.4% 19.4% (21)% Net profit/(loss) (50) 263 (119)% Dividends for the period (cents/ordinary share) 11c 6.7c 64% Operating cash flow 1,089 1,594 (32)% Capex 565 462 22% Net debt2 6,070 6,442 (6)% Short-term debt2 1,550 626 148% Steel sales volumes3 (‘000 t) 7,713 7,946 (3)%1 EBITDA represents profit from operations plus depreciation, depletion and amortisation, impairment of assets, foreign exchange loss (gain) and loss (gain) on disposal of property, plant and equipment and intangible assets2 As at 30 June 2012 and 31 December 2011 respectively; short-term debt includes current portion of finance lease liabilities, including lease liabilities directly associated with disposal groups classified as held for sale3 Here and throughout this presentation segment sales data refer to external sales unless otherwise statedInvestor Presentation January 2013 15
  17. 17. Liquidity and debt maturity profile Total debt of $7,833m as of 30 June 2012, having increased as a result of drawing on available credit lines to increase the cash balance Cash and cash equivalents totalled $1,763m ($801m as at 31 December 2011) Net debt - $6,070m (6% decrease vs. 31 December 2011) In December 2012, EVRAZ received consent of the holders of its 8.25% Eurobonds due 2015 to delete the covenant requiring to maintain the Net Leverage Ratio at or below a specified level (“maintenance covenant”) In December 2012, EVRAZ successfully placed ECPs in the total amount of US$250 million EVRAZ* issuer credit ratings (S&P B+, Stable; Moody’s Ba3, Stable; Fitch’s BB-, Stable)Debt cost** and average maturity Debt*** maturities schedule (as at 30 June 2012), $m 8 5 7.8 4.8 2,000 1,875 7.6 4.6 7.4 4.4 1,400 Q4 7.2 4.2 1,500 1,373 Q3 7 4 1,124 981 Q2 6.8 3.8 1,000 Q1 6.6 3.6 630 500 414 6.4 3.4 6.2 3.2 36 6 3 0 31/12/2010 31/03/2011 30/06/2011 30/09/2011 31/12/2011 31/03/2012 30/06/2012 2012 2013 2014 2015 2016 2017 2018 2019- 2023 % Years* All ratings refer to Evraz Group S.A., except for Fitch’s, which also refers to EVRAZ plc** Weighted average cost of debt*** Principal debt (excl. interest payments)Investor Presentation January 2013 16
  18. 18. Capex dynamics $m 1,400 1,281 1,200 1,103 1,000 H2 2012 capex 832 800 expected in the range of 600 565 $650-750m 441 400 200 - 2008 2009 2010 2011 H1 2012 Maintenance, Steel and other operations Iron ore mine development Coal mine development * Investment projects * Investment into maintaining and developing mining volumes, such as preparation of coal seamsInvestor Presentation January 2013 17
  19. 19. Appendices
  20. 20. HSE performance Increase in LTIFR and FIFR vs. H1 2011 Lost Time Injury Frequency Rate (LTIFR)* Safety remains a key priority 0.94 Key ongoing safety initiatives: 0.81  Contractor safety management  Fall prevention (follow 6S project)  PPE (Personal Protective Equipment)  Improvement in workplace conditions  Tests for drugs and alcoholic intoxication  Internal safety training Key ongoing environmental initiatives: H1 2011 H1 2012  Water use: Wastewater dumping reduction programme (ZSMK, NTMK, Yuzhkuzbassugol, Evrazruda, DMZP); Fatal Injury Frequency Rate (FIFR)*  Air emissions: Air protection equipment upgrade (ZSMK, DMZ, Claymont);  Waste management: Waste recycling and reuse 2.02 programmes (ZSMK,NTMK, Vanady Tula) 1.85 H1 2011 H1 2012 * Calculated as the total number of work-related injuries (which resulted in the loss of work time) – LTIFR or fatalities – FIFR/total number of working hours during the period x 1,000,000Investor Presentation January 2013 19
  21. 21. Quarterly steel products output by assetsRussia, Kt North America, Kt 3,500 800 3,000 700 150 143 104 138 120 600 2,500 97 74 277 132 206 211 445 84 194 210 242 361 71 500 366 258 2,000 1,127 400 1,500 1,093 1,069 1,049 254 1,037 246 261 239 221 300 1,000 200 1,122 124 117 134 114 122 500 1,030 1,050 949 970 100 74 83 79 79 89 0 0 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Semi-finished products Construction products Railway products Flat-rolled products Other steel Construction products Railway products Flat-rolled products Tubular productsEurope, Kt South Africa, Kt 350 200 180 300 8 15 160 250 23 140 10 4 4 15 120 14 6 200 100 70 150 236 269 69 80 66 71 243 207 200 4 100 60 40 56 35 50 46 20 41 45 33 27 17 26 26 7 12 3 0 0 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Semi-finished products Construction products Flat-rolled products Other steel Construction products Flat-rolled products Other steel productsInvestor Presentation January 2013 20
  22. 22. H1 2012 financial highlights Consolidated revenue by segment, $m The major factor of the decrease in revenue was reduced steel sales volumes and prices 8,380 482 Decrease in revenues and EBITDA was also 320 541 7,619 2,040 263 a result of lower Mining segment contribution 1,383 Other operations because of lower raw materials volumes and Vanadium prices 7,492 Mining 7,019 Steel Eliminations (1,954) (1,587) H1 2011 H1 2012Revenue drivers, $m Consolidated EBITDA by segment*, $m 1,629 8,380 80 7,619 1,175 (437) Vanadium & Other 962 (324) 98 operations Mining 417 Steel Unallocated & 744 699 Eliminations (157) (39) H1 2011 Revenue Volumes Prices H1 2012 Revenue H1 2011 H1 2012 * Vanadium & Other operations consists in H1 2011 of $(3)m Vanadium segment EBITDA and $83m of Other operations EBITDA and in H1 2012 of $4m and $94m respectivelyInvestor Presentation January 2013 21
  23. 23. Revenue: geographic breakdown H1 2011 H1 2012 Africa & Africa & Other RoW RoW Asian Other Asian 3% 3% 7% 9% Thailand 4% China Thailand 1% 3% China Middle East 1% Russia 3% 41% Middle East Russia 2% 40% Europe Europe 13% 10% Ukraine Americas Ukraine Americas 3% 4% 24% 22% Other CIS Other CIS 3% 4%Investor Presentation January 2013 22
  24. 24. Steel products: sales by market Kt $m Kt 3,331 3,331 3,324 3,324 2,661 2,604 1,732 1,732 1,586 1,586 1,652 1,582 1,441 1,441 1,345 1,345 1,015 1,068 858 858 758 632 632 431 406 431 406 492 300 275 300 275 359 336 257 214 Russia Russia CIS CIS Europe Europe Americas Americas Asia Asia Africa & RoW Africa & RoW Russia CIS Europe Americas Asia Africa & RoW H1 2011 H1 2012 H1 2011 H1 2012Investor Presentation January 2013 23
  25. 25. EBITDAUS$ million Six months ended 30 June 2012 2011 Consolidated EBITDA reconciliation Profit from operations 430 859 Add: Depreciation, depletion and amortisation 668 501 Impairment of assets 80 32 Loss on disposal of property, plant & equipment 25 17 Foreign exchange (gain) loss (28) 220 Consolidated EBITDA 1,175 1,629Investor Presentation January 2013 24
  26. 26. Resilient and profitable asset base EBITDA, EVRAZ Russia, $m EBITDA, EVRAZ North America, $m 1,276 1,051 265 216 H1 2011 H1 2012 H1 2011 H1 2012 EBITDA, EVRAZ Ukraine, $m EBITDA, EVRAZ Europe, $m EBITDA, EVRAZ South Africa, $m 81 87 29 6 (3) H1 2011 H1 2012 (6) H1 2011 H1 2012 H1 2011 H1 2012Note. (1) Consolidated EVRAZ plc EBITDA also includes Unallocated EBITDA of $(109)m in H1 2011 and $(89)m in H1 2012(2) EVRAZ North America includes EVRAZ Inc. NA, EVRAZ Inc. NA Canada, Stratcor; EVRAZ Ukraine includes EVRAZ DMZP, Sukha Balka and coking plants; EVRAZ Europe includes EVRAZ Palini e Bertoli, EVRAZ Vitkovice Steel, Nikom and attributable trading margin Investor Presentation January 2013 25
  27. 27. Cost structure by segmentCost structure of Steel segment, $m Cost structure of Mining segment, $m 6,237 5,749 9% 8% Other 1,177 15% 3% 1,092 Energy 8% 9% 19% 4% 4% Depreciation 23% 6% 9% 11% 7% Staff Other 4% 13% 4% Transportation 5% Energy 17% 30% Semi-finished products 15% 16% Depreciation Other raw materials Staff costs 17% 24% 15% Scrap 23% Transportation Coking coal 13% Raw materials 21% 19% 10% Iron ore 12% 7% H1 2011 H1 2012 H1 2011 H1 2012Cost structure of Vanadium segment, $m 304 242 Other 30% Energy 12% 41% Depreciation 5% 12% Staff costs 6% 13% 5% Transportation 13% 35% Raw materials 28% H1 2011 H1 2012Investor Presentation January 2013 26
  28. 28. Group cost dynamics  EVRAZ benefits from high level of vertical integration in iron ore and coking coal  Costs were positively impacted by rouble devaluation in H1 2012 (more than 50% of the costs are rouble- denominated)  In H1 2012 steel segment costs benefited from lower raw materials prices: costs of raw materials accounted for 45% of Steel segment revenues in H1 2012 vs. 51% in H1 2011  Implementation of cost saving technologies (e.g. PCI), further development of own power generation, progress of Lean project are expected to help mitigate negative impact of growing energy, transportation and labour costsConsolidated cost of revenues by cost elements Cash Cost*, Slabs & Billets, $/t H1 2012, % H1 2011, % of total CoR of total CoR 479 437 448 426 410Raw materials, including 35% 40% 403 401 Iron ore 6% 8% 438 415 401 Coking coal 9% 12% 395 379 372 368 Scrap 14% 14% Slabs Other raw materials 6% 6% BilletsSemi-finished products 4% 6%Transportation 6% 7%Staff costs 14% 13%Depreciation 10% 7% Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12Electricity 5% 5%Natural gas 4% 4%Other costs 22% 18% * Average for Russian steel mills, integrated cash cost of production, EXW Source: Management accountsInvestor Presentation January 2013 27
  29. 29. FCF generation  Free cash flow generation of $362m in H1 2012  Further release of working capital achieved 1,175 91 $m 1,132 1,089 (43) (134) (233) 92 362 (21) (565) EBITDA H1 Non-cash items EBITDA (excl. Changes in Income tax paid Cash flows from Net interest paid Capex CF from Collateral under Free cash flow 2012 non-cash items) working capital operating (incl. realised investing swaps (excl. income activities gain on swaps & activities tax) covenants reset (excl.capex and costs) interest received)* Free cash flow comprises cash flows from operating activities less interest paid and cash flows used investing activitiesInvestor Presentation January 2013 28
  30. 30. Net debtUS$ million 30 June 2012 31 December 2011 Net debt calculation Add: Long-term loans, net of current portion 6,271 6,593 Short-term loans and current portion of long-term loans 1,531 613 Finance lease liabilities, including current portion 31 39 Less: Short-term bank deposit 0 (2) Cash and cash equivalents (1,763) (801) Net debt 6,070 6,442Investor Presentation January 2013 29
  31. 31. DisclaimerThis 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 ofEVRAZ plc (“EVRAZ”) or any of its subsidiaries in any jurisdiction (including, without limitation, EVRAZ Group S.A.) (collectively, the “Group”) or an inducement toenter 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 orcommitment 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 or the opinions contained herein. None of EVRAZ, the Group or any of its affiliates, advisorsor representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents orotherwise arising in connection with the document.This document contains “forward-looking statements”, which include all statements other than statements of historical facts, including, without limitation, anystatements preceded by, followed by or that include the words “targets”, “believes”, “expects”, “aims”, “intends”, “will”, “may”, “anticipates”, “would”, “could” or similarexpressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond theGroup’s control that could cause the actual results, performance or achievements of the Group to be materially different from future results, performance orachievements expressed or implied by such forward-looking, including, among others, the achievement of anticipated levels of profitability, growth, cost and synergyof recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russianeconomic, 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 ofgeneral business and global economic conditions.Such forward-looking statements are based on numerous assumptions regarding the Group’s present and future business strategies and the environment in whichthe Group will operate in the future. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend oncircumstances that may or may not occur in the future. These forward-looking statements speak only as at the date as of which they are made, and each of EVRAZand the Group expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein toreflect any change in EVRAZ’s or the Group’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statementsare based.Neither the Group, nor any of its agents, employees or advisors intends or has any duty or obligation to supplement, amend, update or revise any of the 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.Investor Presentation January 2013 30
  32. 32. London +44 207 832 8990Moscow +7 495 232 1370IR@evraz.comwww.evraz.com

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