Troika dialog the russia forum 2009


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Troika dialog the russia forum 2009

  1. 1. EVRAZ GROUPTroika Dialog: The Russia Forum 2009, Moscow 6 February 2009
  2. 2. Disclaimer 02This 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 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 communication is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (iii) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). Any person who is not a relevant person should not act or rely on this document or any of its contents.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 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.
  3. 3. Evraz Strategy 03Our 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 Advance long product leadership in Russia and CIS 2007 EBITDA per Tonne of Steel Sales US$ 600 Enhance cost leadership position 514 500 387 Expand presence in international plate markets 400 325 300 260 216 214 197 190 200 180 178 167 Complete vertical integration and competitive 144 139 mining platform 100 88 63 0 Achieve world leadership in vanadium business POSCO NLMK MMK Nucor China Steel Baoshan Steel ArcelorMittal Mechel Steel US Steel Maanshan Steel Gerdau Usiminas Evraz Nippon Steel CSN Sources: IISI, Renaissance Capital estimates
  4. 4. 9M08 Financial Highlights 04 ◦ Revenue for the nine-month period was US$17,100 million ◦ EBITDA was US$5,951 million with EBITDA margin of 34.8% ◦ Depreciation amounted to US$869 million ◦ Interest expense was US$472 million ◦ Total debt as of September 30, 2008 amounted to approximately US$10,214 million including US$4,143 million of short-term loans and current portion of long-term loans ◦ Cash and cash equivalents at the end of the period stood at approximately US$623 million ◦ Capital expenditures amounted to US$900 million in 9M08 ◦ Total steel products sales in 9M08 amounted to 13.7 million tonnes Revenue by Product Rolled Products Sales Volumes* US$ mln ‘000 tonnes 528 579 516 1,082 3,108 4,163 2,146 2,628 1,830 4,415 4,439 1,737Semi-finished products Construction products Railway products Semi-finished products Construction products Railway productsFlat-rolled products Tubular products Other steel products Flat-rolled products Tubular products Other steel products *Excluding inter-company sales
  5. 5. 4Q and FY08 Operational Results 05 FY08 Crude Steel Production by Region ◦ FY08 crude steel production rose 7.1% to 17,674 ‘000 tonnes million tonnes vs 16,509 million tonnes in 2007 796 ◦ FY08 rolled products output was up 5.4% to 16,082 1,908 million tonnes mainly due to consolidation of new 802 assets in Ukraine and North America 1,167 ◦ in 4Q08 vs 3Q08 crude steel and rolled products production fell 33.5% and 35.1%, respectively, due 13,082 to the global financial downturn and subdued demand Russia Ukraine Europe North America South Africa FY08 Rolled Products Production by Region 4Q08 Rolled Products Production‘000 tonnes ‘000 tonnes 117 456,000 309 6355,0004,000 5123,0002,0001,000 781 0 545 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 Pig iron Semi-finished products Construction products Railway products Semi-finished Construction Railway Flat Tubular Others Flat-rolled products Tubular products Other steel products Russia Ukraine Europe North America South Africa
  6. 6. Price dynamics 06 ◦ The prices for steel products started to depreciate since 3Q08 on the back of global financial downturn leading to sluggish demand on most steel markets ◦ Steep fall in prices for construction products observed in Russia (-56% vs 3Q08), Ukraine (-51%), Europe (-16%), North America (-22%) and South Africa (-17%) ◦ The prices for plate and tubular goods in North America levelled out after a 1.5-year period of growth remaining at a relatively high level ◦ The prices for flat-rolled products in Europe and South Africa declined 17% and 24%, respectively Construction Products Flat-Rolled & Tubular non-RussianUS$/t US$/t 1,400 2,300 2,000 1,200 1,700 1,000 1,400 800 1,100 600 800 400 500 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 Russia Ukraine Europe North America South Africa Flat, Europe Flat, NA Tubular, NA Flat, SA
  7. 7. Russian Operations Construction Products Consumption 07 and Russia’s GDP Growth◦ Total Russian crude steel production in 4Q08 amounted to ‘000 tonnes 2.2 million tonnes (-39% vs 3Q08) 7,000 25.0%◦ Rolled products production was down 36% to 2 million 6,000 20.0% tonnes reflecting low demand from end users amid 5,000 aggravated global economic conditions: 4,000 15.0% ◦ Construction products volumes were lower by 41% 3,000 10.0% ◦ Semis production declined by 37% 2,000 5.0% ◦ Production of r/w products decreased by 24% 1,000 0 0.0% 2003 2004 2005 2006 2007 2008 R ebars A ngles, channels, sections G DP growth Evraz Russian Market Rolled Products Output Price Environment ‘000 tonnes US$/t 1,500 1,293 1,500 1,200 1,058 1,200 815 900 625 567 900 600 433 300 129 600 64 50 70 0 300 Semi-finished Construction Railway Flat-rolled Other steel 01- 07 04-07 07-07 10- 07 01- 08 04-08 07- 08 10- 08 H- beams R ebars (C PT , Moscow) 3Q2008 4Q2008 C hannel 10-16 (C PT , Moscow) T urkey R ebars, export (F O B)  Source: Metal-Courier
  8. 8. N.American, European and S.African Operations 08◦ North America: Rolled Products Production, North America ◦4Q08 rolled products output went down by 17% only vs ‘000 tonnes 3Q08 despite tough market environment ◦4Q08 tubular products output increased by 22% due to 350 300 321 309 IPSCO Canada consolidation 250 253◦ Europe: 200 183 ◦In 4Q08 total rolled products output decreased by 26% vs 150 100 103 122 112 56 3Q08 reflecting compressed demand 50◦ South Africa: 0 Construction Railway Flat-rolled Tubular ◦4Q08 rolled products production went down 23% q-on-q 3Q2008 4Q2008 Rolled Products Production, Europe Rolled Products Production, South Africa ‘000 tonnes ‘000 tonnes 300 287 250 97 100 205 200 73 74 80 150 60 53 100 40 44 50 28 20 21 14 6 8 0 0 Construction Flat-rolled Other steel Construction Flat-rolled Other steel 3Q2008 4Q2008 3Q2008 4Q2008
  9. 9. Current Debt Portfolio 09 As of 31 December 2008: ◦ The total debt amounted to US$10,222 million, including US$3,860 million of short-term debt maturing in 2009 ◦ 92.4% of the total debt is denominated in USD, 3.5% in RUR and 3.8% in EUR; for short-term debt it is 85.4% in USD, 9.3% in RUR and 4.8% in EUR Debt Maturity Schedule Short-Term Debt StructureUS$ mln US$ mln 3,8604,000 3003,000 805 1,4442,000 1,733 1,5681,000 802 747 764 700 1,311 23 13 11 0 Eurobond 2009 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Syndicated $3.2bn loan repayments Term loans Revolving debt
  10. 10. Recent Developments 010◦ In December 2008, Vnesheconombank of Russia approved US$1.8 billion of credit lines to refinance Evraz’s short-term debt; US$1 billion has been withdrawn, and the remaining US$800 million will be used for quarterly payments on the $3.2 billion syndicated loan.◦ Evraz and TMK completed the transaction on the sale to TMK of the remaining 49% in NS Group at the price of US$508 million that will be kept in reserve against future interest payments on the Company’s debt in 2009.◦ Evraz gave up the right for the licence to develop the Mezhegey coal deposit in view of the weak coal market and intends to develop its existing resources of coal, in particular at Yuzhkuzbassugol.◦ Evraz’s Board of Directors approved a change in the dividend policy: beginning with the final dividend for 2008, Evraz will pay dividends not exceeding 25% of its consolidated net income, as calculated under IFRS.◦ EGM held on January 30, 2009, approved the voluntary partial scrip dividend in respect of the 2008 interim dividends: ◦ Part of the dividend in the amount of US$2.25/share (US$0.75/GDR) will be paid in new shares issued by the Company at US$22.50/share (7.50/GDR) if the holders have so elected ◦ Cash payment to the shareholders who voted against the option or abstained will be made within two weeks of the EGM
  11. 11. Evraz’s Global Business 011
  12. 12. +7 495