H1 2013 Results Presentation
.pdf
H1 2013 debt bridge and net leverage
In H1 2013 net debt increased mostly due to the consolidation of Raspadskaya
US$ million |
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Cash Deposits |
8,606 |
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8,440 |
Collateral under swaps |
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8,248 |
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Total Debt |
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572 |
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87 |
8 |
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192 |
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0 |
Net Debt |
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7,043 |
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6,184 |
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6,376 |
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Net debt on 31/12/12 as reported on 11/04/13
LTM EBITDA
Net leverage
Adjustments to |
Debt on 31/12/12 |
Free cash flow |
Exchange |
Dividends and |
Other changes in |
Net debt on |
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debt under new |
per new approach |
incl. M&A (sign |
differences - effect |
equity |
net debt *** |
30/06/13 |
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approach** |
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reversed) |
on total debt and |
transactions |
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cash |
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2,027 |
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1,782 |
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3.1 |
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4.0 |
*These calculations should not be considered for covenant purposes
**Adjustments iInclude unamortised debt issue costs ($116m), nominal effect of cross-currency swaps on rouble-denominated notes ($76m)
***Includes debt acquired with Raspadskaya of $555m and a $12m loan payable to a subsidiary which was sold in H1 2013
Total debt represents nominal value of loans and borrowings plus unpaid interest, finance lease liabilities, Nominal effect of cross-currency swaps on principal of rouble-denominated notes.
Net debt represents Total debt less cash and liquid short-term financial assets, including those relating to disposal groups classified as held for sale.
H1 2013 Financial Results |
10 |
Liquidity and debt maturity profile
Maintenance covenant non-compliance risk has been pro-actively managed:
Outstanding balance on the $950m structured credit facility containing maintenance covenant was prepaid
Waivers were received for the next two testing periods in respect of outstanding bilateral facilities amounting to US$260m
Cash and short-term deposits of $1,537m as at 30 June 2013 compared to short-term debt of $1,574m
Debt cost* and average maturity |
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Debt** maturities schedule (as at 30 June 2013), $m |
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8 |
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5 |
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1,453 |
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1,452 |
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1,392 |
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4.5 |
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1,203 |
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1,092 |
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7.5 |
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1,050 |
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7 |
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3.5 |
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664 |
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3 |
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6.5 |
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2.5 |
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2 |
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Jun-11 |
Dec-11 |
Jun-12 |
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Dec-12 |
Jun-13 |
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2013 |
2014 |
2015 |
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2016 |
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2017 |
2018 |
2019- |
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2023 |
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% |
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Years |
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Q1 |
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Q2 |
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Q3 |
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Q4 |
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(LHS) |
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(RHS) |
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*Weighted average cost of debt
**Principal debt (excl. interest payments)
H1 2013 Financial Results |
11 |
Segmental and Geographical
Results
Steel: CIS
Our Russian steelmaking facilities continued to operate at close to full capacity during H1 2013
Construction industry remains the key driver of demand for steel products in CIS, demonstrating healthy growth of 13.1%
Higher sales of semi-finished products vs. H1 2012 due to ramp-up of the modernised rail mill at EVRAZ ZSMK
Railway products revenues fell as a result of lower sales volumes during the ramp-up of the rail mill while prices remained resilient
PCI project at EVRAZ NTMK was completed in Q1 2013 - cost saving effect of $10/t of crude steel
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Steel products sales volumes, kt |
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5,586 |
5,633 |
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539 |
530 |
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788 |
651 |
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Other |
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2,566 |
2,510 |
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Railway |
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Construction |
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1,693 |
1,942 |
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Semi-finished |
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H1 2012 |
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H1 2013 |
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H1 2013 Financial Results
Steel products sales volumes: CIS vs. export, kt
5,586 |
5,633 |
33% |
34% |
CIS
Export
67% |
66% |
H1 2012 H1 2013
Steel products revenues and prices
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Revenue, |
Revenue per tonne, |
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$m |
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$ |
Products |
H1 2012 |
H1 2013 |
H1 2012 |
H 1 2013 |
Semi-finished |
1,028 |
1,011 |
607 |
521 |
Construction |
1,933 |
1,825 |
753 |
727 |
Railway |
720 |
606 |
914 |
931 |
Other |
410 |
360 |
761 |
679 |
TOTAL |
4,091 |
3,802 |
732 |
675 |
13
Steel consumption in Russia
Long steel consumption has reached pre-crisis level
Demand is being driven by infrastructure development projects announced by the government and robust residential construction
Demand from the construction sector is close to an all-time high
EVRAZ is one of the best positioned to benefit from construction products and rail demand in Russia
Russian long steel consumption by product, mt |
Russian long steel consumption by industry, mt |
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1.8 |
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Pre-crisis level |
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1.8 |
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Peak (pre-crisis level) |
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1.6 |
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1.6 |
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1.4 |
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1.4 |
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1.2 |
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1.2 |
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1.0 |
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1.0 |
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0.8 |
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0.8 |
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0.6 |
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0.6 |
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0.4 |
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0.4 |
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0.2 |
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0.2 |
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0.0 |
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Nov.08 |
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Dec.10 |
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0.0 |
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Jan.08 |
Jun.08 |
Apr.09 |
Sep.09 |
Feb.10 |
Jul.10 |
May.11 |
Oct.11 |
Mar.12 |
Aug.12 |
Jan.13 |
Jun.13 |
Jan-08 |
Jun-08 |
Nov-08 |
Apr-09 |
Sep-09 |
Feb-10 |
Jul-10 |
Dec-10 |
May.11 |
Oct.11 |
Mar.12 |
Aug.12 |
Jan.13 |
Jun.13 |
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Rebar |
Sections |
Other bars |
Wire rod |
Rails |
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Machine building industry |
Hardware plants |
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Concrete product plants |
Construction and traders' market |
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Source: Morgan Stanley |
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H1 2013 Financial Results |
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14 |
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Steel: North America
Strong production performance in tubular and construction & other steel products
Flat product group focused on enhancement of capacity utilisation
Tubular product group concentrated on improving productivity rates at the seamless mill at Pueblo and on heat treating investment project at the Calgary mill
Long product group continued with the modernisation of rail mill at Pueblo to increase annual capacity to 526 kt
Pricing environment remained with shrinking spreads between scrap and rolled steel products challenging with tubular and flat-rolled products particularly impacted
Steel products sales volumes, kt
1,314 |
1,334 |
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Total |
371 |
427 |
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Tubular |
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534 |
475 |
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Flat-rolled |
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Railway |
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255 |
228 |
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Construction & |
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other steel |
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154 |
204 |
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H1 2012 |
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H1 2013 |
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Steel products revenues and prices
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Revenue, |
Revenue per tonne, |
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$m |
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$ |
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Products |
H1 2012 |
H1 2013 |
H1 2012 |
H1 2013 |
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Construction and |
140 |
167 |
909 |
819 |
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other steel products |
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Railway |
266 |
215 |
1,043 |
943 |
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Flat-rolled |
571 |
412 |
1,069 |
867 |
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Tubular |
579 |
568 |
1,561 |
1,330 |
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TOTAL |
1,556 |
1,362 |
1,184 |
1,021 |
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H1 2013 Financial Results |
15 |
Mining: iron ore
External sales volumes of iron ore products increased by 6.5% in H1 2013 compared to H1 2012 driven by higher volumes from EVRAZ Sukha Balka
Intersegment sales decreased by 6.0% primarily due to changes to intersegment product delivery terms and lower volumes from the Irba mine at Evrazruda which was closed in July
In H1 2013 ca. 69% of EVRAZ’s iron ore consumption was satisfied by own operations compared with 71% in H1 2012
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Cash costs of iron ore |
products averaged $63/t in |
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H1 2013 (Fe 58%) |
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Iron ore self-coverage**, kt |
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SC* |
101% |
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98% |
97% |
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10,389 |
10,240 |
10,429 |
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tonnes |
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Consumption |
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Production |
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‘000 |
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10,462 |
9,992 |
10,136 |
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H1 2012 |
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H2 2012 |
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H1 2013 |
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Iron ore products sales volumes excluding Mapochs*, kt
9,336 |
9,025 |
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2,002 |
2,133 |
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External sales
Intersegment sales
7,334 |
6,892 |
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H1 2012 H1 2013
Cash cost, Russian iron ore products (Fe 58%), $/t***
165 |
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Cash cost, iron ore |
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145 |
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products (Fe 58%) |
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Selling price, pellets, |
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125 |
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EXW |
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105 |
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85 |
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65 |
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45 |
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H1 2011 |
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H2 2011 |
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H1 2012 |
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H2 2012 |
H1 2013 |
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*The results of Mapochs mine are accounted for in the Steel segment within EVRAZ Highveld
**Self-coverage, %= total production divided by total steel segment consumption
***The data in this chart is derived from the unaudited monthly management accounts of EVRAZ in respect of the indicated periods
H1 2013 Financial Results |
16 |
Mining: coking and steam coal
External sales volumes of coal products increased in H1 2013 by 350% due to additional 2 million tonnes of coking coal concentrate from Raspadskaya and higher sales of steam coal products
In H1 2013 ca. 68% of coking coal consumption was satisfied by own operations compared with 48% (including coal from Raspadskaya) in H1 2012
Cash costs of washed coking coal averaged $68/t in H1 2013
Coking coal products sales volumes, kt
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6,348 |
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2,710 |
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Raspadskaya |
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Coking coal, internal |
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2,591 |
1,085 |
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Coking coal concentrate, |
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internal |
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558 |
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Coking coal, external |
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434 |
1,856 |
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1599 |
375 |
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Coking coal concentrate, |
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external |
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322 |
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H1 2012 |
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H1 2013 |
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Washed coking coal (concentrate) self-coverage*, kt
SC* |
140% |
145% |
163% |
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6,294 |
Consumption of |
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5,322 |
5,465 |
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EVRAZ |
3,806 |
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3,774 2,561 |
2,836 |
Production of |
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2,666 |
3,868 |
Yuzhkuzbassugol |
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1 |
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Production of |
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Raspadskaya |
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2,656 |
2,904 |
3,458 |
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H1 2012 |
H2 2012 |
H1 2013 |
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Cash cost, Russian washed coking coal, $/t** |
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275 |
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Cash cost, washed |
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235 |
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coking coal |
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(concentrate) |
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195 |
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Selling price, EXW |
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155 |
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115 |
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75 |
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35 |
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H1 2011 |
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H2 2011 |
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H1 2012 |
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H2 2012 |
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H1 2013 |
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*Self-coverage, %= total production (incl. 100% production volumes of Raspadskaya) divided by steel segment consumption (excluding consumed for coke for sale)
**The data in this chart is derived from the unaudited monthly management accounts of EVRAZ in respect of the indicated periods
H1 2013 Financial Results |
17 |
Performance by regions
EBITDA, EVRAZ Russia, $m
1,052 |
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882 |
H1 2012 |
H1 2013 |
EBITDA, EVRAZ North America, $m
216 |
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81 |
H1 2012 |
H1 2013 |
EBITDA, EVRAZ Ukraine, $m |
EBITDA, EVRAZ Europe, $m |
EBITDA, EVRAZ South Africa, $m |
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40 |
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21 |
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16 |
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6 |
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(3) |
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(6) |
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H1 2012 |
H1 2013 |
H1 2012 |
H1 2013 |
H1 2012 |
H1 2013 |
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*H1 2012 numbers are not restated
**Consolidated EVRAZ plc EBITDA also includes Unallocated EBITDA of $(100)m and $(1)m other regions in H1 2013
***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
H1 2013 Financial Results |
18 |
Capex and Investment Projects