2. 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 Group S.A. (Evraz) or any of its subsidiaries in any jurisdiction 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 or the opinions contained herein. None of the Evraz or any of its affiliates, advisors or
representatives shall have any liability whatsoever (in negligence or 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, without
limitation, 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 to be
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 ability to 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 our shares or GDRs, financial risk management and the impact of general business and global economic conditions.
Such forward-looking statements are based on numerous assumptions regarding Evraz’s present and future business strategies and the environment in
which Evraz Group S.A. will operate in the future. By their nature, forward-looking statements involve risks and uncertainties because they relate to
events and depend on circumstances 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 Evraz expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements
contained herein to reflect any change in Evraz’s expectations with regard thereto or any change in events, conditions or circumstances on which any
such statements are based.
Neither Evraz, nor any of its agents, employees or advisors intend or have 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.
2
3. Evraz Highlights
n Vertically integrated steel and mining business, one of the largest steel
producers in the world
n 1H06 Revenue grew 5.3% y-o-y to $3,825 mln reflecting 23% increase in sales
volumes to 8.3 million tonnes
n 1H06 EBITDA flat y-o-y at $1.1 bn, EBITDA margin remains strong at 29%
n Leader in Russian long products market with 30-100% market share
n High level of vertical integration and self-sufficiency in iron ore and coal with
mines located close to steel production sites
n Strong commitment to high standards of corporate governance
*Excluding Oregon Steel Mills operations
3
4. EVRAZ GROUP’S MAIN LOCATIONS
KGOK VGOK Raspadskaya
YKU Neryungriugol OSM
Moscow Mine 12
London Luxembourg EvrazRuda OSM
NTMK NKMK
ZapSib
Vitkovice Steel
Nakhodka Stratcor
OSM
Sea Port
Palini e Bertoli
Stratcor Highveld (24.9%)
Steel mills Iron ore mining
Vanadium Coal mining Sea port Main export countries
4
5. VISION AND STRATEGIC GOALS
Our Vision is to be a world class steel and mining company
and one of the Top 5 most profitable steelmakers globally by
ROCE and EBITDA margin through:
n Leadership in CIS construction and railway steel product
markets
n Strengthened positions in global flat product markets
n Lowest costs secured by superior efficiency and 100% self-
sufficiency in raw materials
n Growing vanadium business
5
6. 2006 WORLD STEEL
PRODUCTION
n 2006 world crude steel output reached 1,239.5 mln tonnes representing an
increase of 8.8% y-o-y. China produced 418.8 mln tonnes
n In Russia, crude steel production grew by 6.8% to 70.6 mln tonnes and
apparent consumption increased by 20%
n Global steel demand likely to grow 5% in 2007 and at 3%+ per annum over
the next decade
1400
mln tonnes
1200
1000
China
RoW
800
CIS
EU
600
USA
Japan
400
200
0
2000 2001 2002 2003 2004 2005 2006
Source: IISI report and Evraz estimate
6
7. CONSTRUCTION GROWTH
IN RUSSIA
n Construction growth in Russia and CIS continues to outperform GDP
n Growth of home construction in Russia is expected to grow at 10% annually
n The share of monolithic construction is expected to grow to up to 50%
New Housing Construction in Russia Share of Cast-in construction
mln m2
61 62.3
60.3 %
55 100
50.2 10 10
43.6 80
41 30
50
60
40
60
20 40
0
2004 2005 2006 2007* 2008* 2009* 2010* 2005 2010*
Panel Cast-in Brick
Sources: Goskomstat RF data and forecasts; Deutsche Bank UFG
7
8. REBAR MARKET IN RUSSIA
n Russian and CIS steel consumption per capita remains below global
benchmarks
n Rebar market increased by 30 % in 2006
n Steel usage in construction is expected to increase from 75 kg per m2 to
93 kg per m2 due to higher volumes of monolithic buildings
Rebar market growth Rebar market by Regions
‘000 tonnes
Ea st-Sibe rian Fa r Ea st
2% 3%
W e st-Sibe ria n
4,860 5%
+30%
3,730
3,276 +14% Urals
8%
North-W e st Ce ntra l pa rt
incl. incl. Moscow &
St.Pe te rsbour the re gion
g & the re gion 48%
10%
26% 30% 26%
South
2004 2005 2006 region, 9%
Evraz G roup Other producers
Privolz hye
Source: Evraz market estimates 15%
8
9. Commercial Real Estate
Construction
n The Russian commercial real estate market has benefited substantially
from the country’s strong economic growth and high levels of business
activity
n The overall expansion of the economy and growing consumer demand are
beginning to take hold throughout Russia
mln m2
12
10
4.8
8
4.4
3.6
4.0
6 3.3
2.0
2.4 2.5 2.0
4 2.0
2.1
1.0 1.9
2 3.5 4.0
0.9 3.0 3.0
2.1
1.4
0.8
0
2004 2005 2006 2007* 2008* 2009* 2010*
Offic e Ret ail Warehousing
Source: Deutsche Bank UFG
9
10. SECTIONS MARKET IN RUSSIA
n Sections market growth due to the strong investments in industrial and
infrastructure constructions
n Strong demand for H-beams and channels, Evraz leadership products
n Angles demand softening with substitution by channels, structural tubing
and aluminium for light weight industrials constructions
Sections market in Russia Evraz share on sections market
‘000 tonnes 2,886 ‘000 tonnes +6% 2,886
3,000 3,000 2,715
2,715 +7%
2,516 (1)% 2,516
2,500 +6% 2,500
41%
44%
2,000 45% 2,000
1,500 +8% 1,500
+15% 23%
23%
22% 50%
1,000 1,000
+15% 46%
+6%
33% 35%
500
33% 500 42%
0 0
2004 2005 2006 2004 2005 2006
Channe l H-be am Angle Evra z Gro up O the rs
*CAB means Channels, Angles and Beams
Source: Evraz market estimates
10
11. AVERAGE RUSSIAN MARKET PRICES
FOR LONG PRODUCTS*
US$/t
1,000
850
700
550
400
250
100
3
04
04
4
05
05
5
06
06
6
3
3
4
4
5
5
6
6
04
05
06
0
-0
0
-0
0
-0
0
-0
-0
-0
-0
-0
r-
n-
r-
n-
r-
n-
g-
g-
g-
g-
b-
b-
b-
ct
ct
ct
ct
ec
ec
ec
ec
Ap
Ap
Ap
Au
Ju
Au
Ju
Au
Ju
Au
Fe
Fe
Fe
O
O
O
O
D
D
D
D
H-beams Channels Angles Rebars
Source: Evraz market estimates *on FCA basis
11
12. A
ug
-
0
100
200
300
400
500
600
03
O
ct
- 03
D
ec
Source: Metall-courier
-
US$/t
03
Fe
b-
0
Ap 4
r-
0
Ju 4
n-
04
A
ug
-0
O 4
ct
-0
D 4
ec
-0
Fe 4
b-
05
A
pr
Billet (FOB, Far East)
-0
Ju 5
n-
05
A
ug
-0
O 5
ct
-0
D 5
ec
-0
Fe 5
b-
0
Ap 6
r-
0
Ju 6
n-
0
Au 6
g-
0
Slab (FOB, Far East)
O 6
ct
-0
D 6
ec
-0
Fe 6
b-
07
12
SLABS & BILLETS PRICE DYNAMICS
13. 2006 DEVELOPMENTS
n Crude steel production grew by 16.3% to 16.1 million tonnes of crude steel
n Rolled products increased by 19.5% to 14.5 million tonnes driven by organic growth
and acquisitions in Europe
n Strong growth on Russian market with favourable pricing environment through
2006
n Acquisition of 24.9% in Highveld Steel and Vanadium Corporation (South Africa) for
$208 mln in July
n Acquisition of 72.84% in Strategic Minerals Corporation (USA) for $110 mln in August
n Successful IPO of OAO Raspadskaya in November
n Acquisition of Oregon Steel Mills (USA) for $2.3 bln in January 2007
n Revamp of BF5 and CB5 at NTMK inline with Capex program focused on efficiency
improvement at the front end of steel production
13
14. 1H06 STEEL SEGMENT* RESULTS
n 1H06 Consolidated steel products sales volume up 23% to 8.3 mln tonnes
n Russia remains key market contributing 50% to total steel segment revenue
for 1H06
n Sales into attractive European and US markets increased by a factor of 5
n 21% increase in semi-finished sales volumes driven by organic growth and
world steel market demand
Steel Segment Sales by Region Steel Segment Sales by Product
North and
South CIS
America 3%
3%
C o nstructio n,
2,197
Europe
16%
Russia Se mi-finishe d,
50% 4,164
P la te s , 830
Asia
28%
Ra ilw a y , 789
O the r**, 181
*Excluding Oregon Steel Mills operations Mining, 139
14
15. 1H06 STEEL SALES* BY REGION
n 1H06 Domestic sales volumes increased by 13.8% to 3.65 million tonnes
n 1H06 Non-Russian sales volumes increased by 31.8% to 4.65 million
tonnes
n European assets plates sales volumes increased 843%
n Construction steel export volumes shifted to attractive Russian market
n Favourable domestic pricing environment through 2006
Russian Sales Mix Non-Russian Sales Product Mix
‘000 tonnes ‘000 tonnes 110
669
714
+20%
42 416
597
71 - 28%
871
580 617
-1% 60%
879 380
1,342
+8% 541
27%
499 1,053
+18%
784 6%
663
1,412 1,491
+30%
573 744
1H05 1H06 1H05 1H06
Rebars Sections Rails Other finished Semis Billets Slabs Other semis
Construction Plates Other finished
*Excluding Oregon Steel Mills operations
15
16. GROWING VANADIUM BUSINESS
n Best strength to weight ratio of common engineering materials
n Steel industry responsible for 90% of consumption
n In June Evraz acquired 24.9% in Highveld
n In August Evraz acquired 72.84% in Strategic Minerals Corporation
n 1H06 Vanadium slag sales totaled $83 mln
Vanadium consumption growth rate V as proportion of steel prices
m tonnes ‘000 tonnes
1550 80
FeV, $/kg
Steel production
Vanadium consumption 80 20.0%
1450
Steel production
Vanadium consumption 70
70
1350
15.0%
60
1250 60
1150 50
50 10.0%
1050 40
950 40 30
5.0%
850
20
30
750 * European hot rolled coil price
10 0.0%
650 20
1995 2004 2005 2006f
1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 Cost of V ($/t steel) V as % of produc t value
Source: CRU, Evraz
16
17. SUCCESSFUL IPO OF RASPADSKAYA
§ One of the 10 largest producers of coking coal in
Financial Highlights Russian the world
leading
coking coal
§ 781 mln tonnes of high quality coking coal proved
541 and probable reserves in Russia
US$ mln producer
§ Evraz interests remains at 40 %
421
§ Cash cost of concentrate production in the bottom
quartile of the global cash cost curve (19$/t)
322
Efficiency
259
§ Operational efficiency on par with global peers
218 § Compact integrated operating complex
165
127 120 Strong § EBITDA margin – c. 60% in each of the last two
financial years
51
performance § ROCE in 2005(1) – 31%
2004 2005 1H 2006 Listing § 18% of the capital placed on RTS and MICEX
Revenue EBIT DA Net inc ome
§ $2.25 per share
Pricing § Implied market value of $1.76bn
Production Growth*
§ 2.1 times oversubscribed
‘mln tonnes
CAGR 2006-2010 - 12%
§ Target production volume growth 2006-2010 –
17.0 12% CAGR
Growth
§ Projects under way to further strengthen
CAGR 2001-2005 - 10% Raspadskaya’s positions in domestic market
10.6 potential
§ Growth of market share in Ukraine and Eastern
Europe and access to rapidly growing markets of
6.7
South East Asia
2001 2006 2010T
Source: Raspadskaya, IMC
*2006 Production include production by MUK-96 and Razrez Raspadsky since December 31, 2005
17
18. OREGON STEEL MILLS
n In January 2007 Evraz successfully completed tender offer for shares of
Oregon Steel at $63.25 per share with total value of $2.3 bln
n The acquisition of Oregon Steel represents a solid platform for Evraz as a
footprint in North America.
n Transaction secures an important place on the attractive plate market and
in the expanding pipe business in North America.
n The combined company will also be the leading rail producer globally
Financial Highlights Sales, million tons
1,800 23% 25%
US$ mln
1,600 19% 1,500 2,000
20%
16%
1,400
1,258 350 1,725 1,660
1,185 15% 1,635
1,200 1,486
229
238 10%
1,000
800 723 5%
9
600
0%
400
-5%
200
-8%
0 -10%
2003 2004 2005 2006E 2003 2004 2005 2006E 2007E
Revenue EBIT DA* EBIT DA Margin
Source: Oregon Steel Mill
18
19. OREGON STEEL MILLS
n Leading West Coast steel producer with total capacity of 2.3 million tonnes
n Leading commodity and specialty plate producer in the Western United States
n Leading rail producer in North America
n Leading large diameter line pipe producer in North America
2006E Sales by Product
Structural
Tubing 77,000
Rod and Bar 5%
288,000 17%
Welded Pipe
265,000 16%
Seamless Tube
Camrose
Pipe Mill 65,000 4%
Portland
Plate Mill Plate and Coil
Structural Tube Mill Rail 448,000
516,000 31%
Cut-to-Length Line 27%
Large Diameter Pipe Mill
Pueblo
Steel Mill Rocky Mountain Oregon Steel
Rails Mill
Rod and Bar Mill
Steel Mill Mill Division
Steamless Pipe Mill 801,000 tons 858,000 tons
48% 52%
Source: Oregon Steel Mill
19
21. PRICE DYNAMICS
n The gap between Chinese and US steel prices has narrowed to below $75/t
in January and not sufficient to cover transport expenses ($60/t) and risks
n Growth of cash costs in China will push breakeven line of steel products
(price increase for iron ore, ocean freight ($10-15), electricity, further
appreciation of the CNY versus the USD)
World HRC Spot Prices US HRC Price vs. Cash Costs
21
22. EVRAZ 2006 PRODUCTION
RESULTS*
Pig Iron, ‘000 tonnes Rolled Products, ‘000 tonnes Steel, ‘000 tonnes
+19.6% +16.3% 16,115
14,457 13,852
+11.4% 12,754 4,103
11,453 12,086
3,6 10
3,639
3,085
2,955 3 ,218
Q4
Q4 9M
Q4 9M
9M
200 5 2 006 2005 2006
2005 2006
IRON ORE ‘000 tonnes COAL**, ‘000 tonnes
(5.5)%
+1.9% 17085
16,666 16,989 16137
4,053 4,275
+43.2%
9160 2005
Q4
9M 2006
6395
+43.2%
588 842
2005 2006 Evraz (Mine12) Raspadskaya Yuzhkuzbassugol
**Excluding Oregon Steel Mills operations
*Mine 12 operational results are consolidated into the Group since April 2005. Evraz Group holds 40% beneficial interest in OAO Raspadskaya and 50% interest in
Yuzhkuzbassugol. Operational results of Yuzhkuzbassugol are consolidated into the Group since December 31, 2005, while operational results of OAO Raspadskaya are consolidated
into the Group since March, 2004, and include production by MUK-96 and Razrez Raspadsky since their acquisition in May 31, 2006. 22
23. STRONG BALANCE SHEET (excluding OSM)
n Current credit ratings (reaffirmed after OSM tender offer): BB by Fitch;
Ba3 by Moody’s; BB- by S&P
n Well-capitalised balance sheet to fund future growth
Net Debt-to-EBITDA Ratio Total Assets
3,000 1.2 8,000 80%
US$ mln US$ mln
1.0
7,000 67% 70%
2,500 0.9 1 7,317
2,652 6,000 60%
2,394
6,663
2,000 0.8
5,000 50%
1,883
0.5 4,000 40%
1,500 1,736 0.6
4,253
1,374 3,000 27% 30%
1,000 0.4
1,094
2,000 20% 20%
500 0.2
1,000 10%
0 0 0 0%
2 2004 2005 LTM 2
2004 2005 LT M
3
1 Total Assets ROCE
Total Debt Net Debt Net Debt/EBITDA
1Net debt equals total debt less cash & cash equivalents and short-term bank deposits
2Evraz have not prepared audited or reviewed financial statements for the 12 month period ended 30 June 2006. Financial indicators presented under LTM (last twelve months)
are calculated as a sum of 1H06 financial results and FY05 less 1H05 financial results
3ROCE represents profit from operations plus profit from equity investments less income tax over total equity plus interest bearing loans and lease average for the period 23
24. COST STRUCTURE
n 1H06 Cost of revenues up y-o-y 11.9% to $2,520 mln as a result of higher
steel sales volumes, lower raw material prices and acquisitions impact
n Risk of further cost increase concentrated in energy and labour expenses
Steel Segment Costs Mining Segment Costs
Depreciation
Energy SG&A
3% Raw materials
7% 11%
Staff 20%
8%
Other
18%
Other
8%
Raw materials
54%
Staff
SG&A 20%
10%
Energy
Transport 24% Depreciation
10% 7%
24
25. OSM US PEERS PROFITABILITY
n Superior profitability of OSM vs most US peers due to high margin product mix
§ Sales per ton ratio of $846 in 2005 and $951 in 3Q06
§ EBITDA per ton of $155 in 2005 and $249 in 3Q06
Revenue per tonne (US$) EBITDA(1) per ton (US$)
294 296
249
951 957
876
846
733 714
740 184
702
167
608 621 155
135
121 117
89
Oregon Steel Steel Dynamics Nucor Ipsco US Steel Oregon Steel Mill US Steel Nuc or Steel Dynamic s Ipsc o
Mill 2005 Q3 2006
2005 Q3 2006
(1) EBITDA is defined as the sum of net income, depreciation and amortization, interest, and income taxexpense and excludes
fixed and other asset impairment charges,labor dispute settlement charges, settlement of litigationand loss on early
extinguishment of debt
25
26. US FLAT PRODUCTS
IN 2007 – 2010
§ In 2007 flat steel consumption is likely to decline by 2.5% based on volumes
reduction of building construction and automobile production. In future
consumption growth is estimated at 3% a year.
+2.8
+2.9
+3.2 +2.9
+4.3 -2.5 11 395 Other industrial goods
10 862
9 696 10 355
9 332 9 909
5 556
5 712 Other consumer goods
5 200 5 415
5 043 5 304
13 073
11 645 12 955 Pipes
10 671 12 847
12 556
18 004
19 244 18 107 18 121
20 359 18 632 Automobiles
16 994 17 494
18 899 15 495
16 495 Building construction
18 844
19 925 21 076 22 295
18 153 18 884
16 052 Non-building construction
2005 2006E 2007F 2008F 2009F 2010F
Source: AIIS, Morgan Stanley Research, US Census Bureau, Moody’s, Standard Poor’s, UBS, Evraz estimates
26
27. US PLATE MARKET
Plate Consumption Consumption structure, 2005
Railway
‘000 tonnes -3% Others
%
28% Ship industry 4.6
-4% 3.2
buildings
34% 4.1
Raw
9,890 9,633 materials
5.4
8,468
8,030 7,700
Pipes
17.1
Constructio
n and
service
2002 2003 2004 2005 8 m 2006 centres
65.6
Plate prices
$/tonne
US Midwest mill, FOB Export Import
950
900
850
800
750
700
650
600
550
500
450 Jan 05 Mar 05 May 05 Jul 05 Sep 05 Nov 05 Jan 06 Mar 06 May 06 Jul 06 Aug 06 Oct 06
Note: all indicators are calculated from short tons into the metric ones (1 short ton = 0.907 metric ton)
Source: SBB, International Trade Administration data
27
