Corporate PresentationCorporate PresentationCorporate PresentationCorporate Presentation
November-December 2011
1
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 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 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 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,
DisclaimerDisclaimerDisclaimerDisclaimer
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 the Group’s 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 the Group 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.
EVRAZ in BriefEVRAZ in BriefEVRAZ in BriefEVRAZ 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
2
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
◦ #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
InvestmentInvestmentInvestmentInvestment HighlightsHighlightsHighlightsHighlights3
◦ Strong position in growing Russian market
◦ Successful track record of strategic acquisitions
◦ Multiple opportunities to drive growth
◦ Focus on HSE
North AmericaNorth AmericaNorth AmericaNorth America
EuropeEuropeEuropeEurope
Russia/CISRussia/CISRussia/CISRussia/CIS
6,4206,4206,4206,420402402402402
4,2084,2084,2084,208
1,0541,0541,0541,0542,6072,6072,6072,607
Global Operating ModelGlobal Operating ModelGlobal Operating ModelGlobal Operating Model
240240240240
400400400400 590590590590
4
South AmericaSouth AmericaSouth AmericaSouth America AfricaAfricaAfricaAfrica
AsiaAsiaAsiaAsia
410410410410
110110110110
110110110110
Sea Ports
Vanadium
Coal Mining
Iron Ore Mining
Steel Mills
Mezhegey Coal Mill in Development
Third Party Steel Products Sales (Kt), 2010#### Internal Supply of Slabs and Billets from Russian Steel Mills (Kt)####
Russia &
CIS
42%
Africa
3%
Asia
29%
North
America
17%
Europe
9%
2010 Steel Sales Volume2010 Steel Sales Volume2010 Steel Sales Volume2010 Steel Sales Volume
by Geographyby Geographyby Geographyby Geography
Tubular
6%
Other
4%
Semi-
finished
29%
Flat-
rolled
17%
Railway
12%
Construction
32%
2010 Steel Sales Volume2010 Steel Sales Volume2010 Steel Sales Volume2010 Steel Sales Volume
by Productby Productby Productby Product
5
Cost LeadershipCost LeadershipCost LeadershipCost Leadership
◦ Increased costs in 1H 2011 reflected mostly growth in raw materials prices
◦ High level of vertical integration into iron ore and coking coal helped to partially mitigate negative impact of escalating prices
◦ Approx. 60% of consolidated operating costs are rouble denominated
◦ EVRAZ enjoys a position on the global cost curve well within the first quartile
294
349371 355
200179
216
271 280
333356 369
395
438401
354
441 459
364
246 256 265
317298
350378
411437 446479
100
200
300
400
500
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
Slab Billet
Cash Cost*, Slabs & BilletsCash Cost*, Slabs & BilletsCash Cost*, Slabs & BilletsCash Cost*, Slabs & BilletsUS$/t
*Average for Russian steel mills, integrated cash cost of production, EXW
Source: World Steel Dynamics
Consolidated Cost of Revenues by Cost ElementsConsolidated Cost of Revenues by Cost ElementsConsolidated Cost of Revenues by Cost ElementsConsolidated Cost of Revenues by Cost Elements
1H 2011, 1H 2011, 1H 2011, 1H 2011, % % % %
of of of of total total total total CoRCoRCoRCoR
1H 2010, 1H 2010, 1H 2010, 1H 2010, % % % %
of of of of total total total total CoRCoRCoRCoR
Raw materials, including 39% 37%
Iron ore 7% 6%
Coking coal 12% 11%
Scrap 14% 13%
Other raw materials 6% 7%
Semi-finished products 7% 4%
Transportation 5% 6%
Staff costs 12% 12%
Depreciation 7% 8%
Electricity 5% 5%
Natural gas 4% 4%
Other costs 21% 24%
Sep’11 Average Steel Slab Cash Cost by Region (EXW)Sep’11 Average Steel Slab Cash Cost by Region (EXW)Sep’11 Average Steel Slab Cash Cost by Region (EXW)Sep’11 Average Steel Slab Cash Cost by Region (EXW)
Cash Cost ($/metric tonne)
0
120
240
360
480
600
720World Average: 597
Cumulative Capacity
Mid
. E
ast
Mexi
co
Russia
&
CIS
India
Bra
zil
Canada
US
A
E. E
uro
pe
Austr
alia
South
Kore
a
Asia
W. E
uro
pe
(3)
Japan
S.A
merica
Afr
ica
Chin
a
*Average for Russian steel mills, integrated cash cost of production, EXW
6.27.9
8.6
0
5
10
15
2009 2010 2011(f)
Construction Steel Consumption in RussiaConstruction Steel Consumption in RussiaConstruction Steel Consumption in RussiaConstruction Steel Consumption in Russia
MMt
◦ EVRAZ is the leading producer of long products in
Russia
◦ Market share of 86% in H-beams, 66% in
channels, 89% in rails and 36% in wheels as of
H1 2011
◦ Russian construction steel demand expected to reach
pre-crisis levels in 2012
◦ Expected robust growth in the railway steel market
◦ We expect construction steel demand to reach
approximately 11 MMt in 2015
Exposure to Growth in Construction and Exposure to Growth in Construction and Exposure to Growth in Construction and Exposure to Growth in Construction and
InfrastructureInfrastructureInfrastructureInfrastructure
6
32
26
13
0
20
40
2009 2010 2011(f)
Consumption of Construction Steel in Russia
Russian Government Capital InvestmentsRussian Government Capital InvestmentsRussian Government Capital InvestmentsRussian Government Capital Investments
US$ bn
(1) RUB 895 bn
approximately 11 MMt in 2015
◦ Over US$30 bn of capital investments by the Russian
Government planned for 2011
◦ Key programs include construction related to the Sochi
2014 Winter Olympics, infrastructure development for
the APEC 2012 summit in Vladivostok, Skolkovo
innovation centre
◦ Russia committed to invest over $US50 bn in
preparation for the 2018 FIFA World Cup (estimated
steel requirement of 2.0-2.5 MMt)
◦ Russian Railways approved investment programme for
2011-2013 of $US18.4 bn
(1)
Source: Russian Government, press
Move to Premium ListingMove to Premium ListingMove to Premium ListingMove 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
7
(1) Three GDRs represents one Existing Share
◦ 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
646 609730
3Q 2010 2Q 2011 3Q 2011
1,2291,299 1,351
3Q 2010 2Q 2011 3Q 2011
448 550 517
3Q 2010 2Q 2011 3Q 2011
Steel ProductsSteel ProductsSteel ProductsSteel Products(1)(1)(1)(1)
kt
SemiSemiSemiSemi----Finished ProductsFinished ProductsFinished ProductsFinished Productskt
Construction ProductsConstruction ProductsConstruction ProductsConstruction Productskt
Flat Rolled ProductsFlat Rolled ProductsFlat Rolled ProductsFlat Rolled Productskt
Railway ProductsRailway ProductsRailway ProductsRailway Productskt
3,5373,780 3,670
3Q 2010 2Q 2011 3Q 2011
805780 767
3Q 2010 2Q 2011 3Q 2011
3Q 2011 Production Volumes3Q 2011 Production Volumes3Q 2011 Production Volumes3Q 2011 Production Volumes8
Railway
Construction
Semi-Finished
Flat Rolled Products
Other
Iron OreIron OreIron OreIron Orekt
CoalCoalCoalCoalkt
VanadiumVanadiumVanadiumVanadiumkt
(1) Net of re-rolled volumes
(2) Calculated as 40% of total Raspadskaya production
4,9815,396 5,435
3Q 2010 2Q 2011 3Q 2011
3,032 3,197
2,611
3Q 2010 2Q 2011 3Q 2011
Coking Coal
Steam Coal Raspadskaya
8,696
10,490 10,108
3Q 2010 2Q 2011 3Q 2011
Vanadium in Slag
Vanadium in Final Products
(2)
9
Trading Update for 3Q and 9M 2011Trading Update for 3Q and 9M 2011Trading Update for 3Q and 9M 2011Trading Update for 3Q and 9M 2011
(US$ million) 3Q 2011 9M 2011 9M 20109M 2011/9M 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%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 30 Sep As of 30 Sep As of 30 Sep
2011201120112011
As of 31 Dec As of 31 Dec As of 31 Dec As of 31 Dec
2010201020102010
Change, %Change, %Change, %Change, %
Total debt 7,214 7,811 -7.6%
Cash and cash equivalents 578 683 -15.4%
* External sales
◦ We are observing resilient demand across major
product groups in our markets
◦ Current steelmaking capacity utilisation:
◦ Russia – 100%
◦ Ukraine – 70%
◦ Czech Republic – 70%
◦ North America –100%
◦ South Africa – 100%
EVRAZ Selling PricesEVRAZ Selling PricesEVRAZ Selling PricesEVRAZ Selling Prices
US$/t
400
600
800
1,000
1,200
Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11
Recent Market Developments UpdateRecent Market Developments UpdateRecent Market Developments UpdateRecent Market Developments Update
Slabs, Russia, export (1)
Billets, Russia, export (1)Rebars, Russia, FCA
Plate, North America, FCA
10
◦ South Africa – 100%
◦ We continue to enjoy vertical integration model
advantages which mitigate the effects of raw
materials prices volatility
◦ Global steel inventories significantly below mid-2008
levels decreasing to 2.5 months in August, a level
slightly below the 5-year average
◦ EVRAZ order book (external sales) currently stands at
approx. US$300 mln representing 2.5 months’
production
Raw Material Prices (Domestic Markets)Raw Material Prices (Domestic Markets)Raw Material Prices (Domestic Markets)Raw Material Prices (Domestic Markets)Raw Material Prices (Domestic Markets)Raw Material Prices (Domestic Markets)Raw Material Prices (Domestic Markets)Raw Material Prices (Domestic Markets)
Source: Company data
Source: Metall Expert
(1) Weighted average contract prices
0
100
200
300
400
500
Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11
US$/t
Scrap, Russia, CPT
Scrap, USA, CPTIron ore concentrate, Russia, ExW
Coking coal concentrate, Russia, FCA
11
Growth ProjectsGrowth ProjectsGrowth ProjectsGrowth Projects
Projects in ProgressProjects in ProgressProjects in ProgressProjects 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 products
Projects in Final Stage of CompletionProjects in Final Stage of CompletionProjects in Final Stage of CompletionProjects in Final Stage of Completion
◦ Rail mill modernisation enabling production of high value-added products
◦ PCI installation at Russian steel mills
Projects under ConsiderationProjects under ConsiderationProjects under ConsiderationProjects 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
800
1,000
1,200
12
CAPEX DynamicsCAPEX DynamicsCAPEX DynamicsCAPEX Dynamics
1,1031,1031,1031,103
832832832832
◦ 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
-
200
400
600
800
2008 2009 2010 1H 2011
Maintenance, Steel and other operations Coal mine development **
Iron ore mine development Investment projects*
441441441441462462462462
* 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
2011 Budget 2011 Budget 2011 Budget 2011 Budget
CAPEXCAPEXCAPEXCAPEX
Iron ore & coalIron ore & coalIron ore & coalIron ore & coal
ProjectProjectProjectProject
Total CAPEXTotal CAPEXTotal CAPEXTotal CAPEX
$$$$US US US US mmmmlnlnlnln
Cum CAPEX by 30.06. Cum CAPEX by 30.06. Cum CAPEX by 30.06. Cum CAPEX by 30.06.
2011201120112011
$$$$USUSUSUS mlnmlnmlnmln
2011 Planned CAPEX2011 Planned CAPEX2011 Planned CAPEX2011 Planned CAPEX
$$$$USUSUSUS mlnmlnmlnmln (1)(1)(1)(1) Project TargetsProject TargetsProject TargetsProject Targets
Expansion of Kachkanar Mine
� Capacity of 950k tonnes of high-speed rails, including 450k
tonnes of 100 metre rails
� On-stream by 2013
� Production of higher-quality rails
� 550k tonnes capacity
� On-stream by 2012
80 19 54
TBD 71 (2) 16
Update on Key Investment ProjectsUpdate on Key Investment ProjectsUpdate on Key Investment ProjectsUpdate on Key Investment Projects13
SteelSteelSteelSteel
Iron ore & coalIron ore & coalIron ore & coalIron ore & coal
Yerunakovskava Mine Construction 590 4 52� Coal production of 2 mtpa
� On-stream by mid-2013
ProjectProjectProjectProject
Total CAPEXTotal CAPEXTotal CAPEXTotal CAPEX
$$$$US US US US mmmmlnlnlnln
Cum CAPEX by 30.06. Cum CAPEX by 30.06. Cum CAPEX by 30.06. Cum CAPEX by 30.06.
2011201120112011
$$$$USUSUSUS mlnmlnmlnmln
2011 Planned CAPEX2011 Planned CAPEX2011 Planned CAPEX2011 Planned CAPEX
$$$$USUSUSUS mlnmlnmlnmln (1)(1)(1)(1) Project TargetsProject TargetsProject TargetsProject Targets
� Iron ore production to be increased to 55 mtpa
� On-stream by 2012
Development of Mezhegey and Eastern Field Coal
Deposits (Tyva, Russia)
� Maintaining self-sufficiency in high-quality hard coking coal
after depletion of existing deposits
� On-stream by 2015 and 2021 respectively
ProjectProjectProjectProject
Total CAPEXTotal CAPEXTotal CAPEXTotal CAPEX
$$$$US US US US mmmmlnlnlnln
Cum CAPEX by 30.06. Cum CAPEX by 30.06. Cum CAPEX by 30.06. Cum CAPEX by 30.06.
2011201120112011
$$$$USUSUSUS mlnmlnmlnmln
2011 Planned CAPEX2011 Planned CAPEX2011 Planned CAPEX2011 Planned CAPEX
$$$$USUSUSUS mlnmlnmlnmln (1)(1)(1)(1) Project TargetsProject TargetsProject TargetsProject Targets
(1) Total 2011 planned capex is ca. $US1.2 bn
(2) Acquisition of Mezhegey and Mezhegey East licences
SteelSteelSteelSteel
Construction of Yuzhny and Kostanay
Rolling Mills
� Capacity: 450 ktpa of construction products each mill
� On-stream by mid-2013
Reconstruction of Rail Mill at United ZSMK
(Former NKMK)
� Capacity of 950k tonnes of high-speed rails, including 450k
tonnes of 100 metre rails
� On-stream by 2013
Reconstruction of Rail Mill at NTMK
� Production of higher-quality rails
� 550k tonnes capacity
� On-stream by 2012
Pulverised Coal Injection (PCI)
at NTMK and ZSMK
� 20% lower coke consumption
� Save annually up to 650 mcm of natural gas at NTMK and up
to 600 mcm at ZSMK
� On-stream by end-2012
Reconstruction of Mechanical Area at
NTMK Wheel & Tyre Mill
� Production of higher-quality wheels
� On-stream by 2011
260 12 73
485 259 146
60 46 14
320 88 182
40 21 19
14
OutlookOutlookOutlookOutlook
Global economy and the steel industry continue to face challenges and remain very volatile
EVRAZ retains a strong order book and high capacity utilisation
Inventories at traders and at our mills and ports are very low
4Q 2011 trading is being impacted by the seasonal change in the product mix in favour of lower-margin 4Q 2011 trading is being impacted by the seasonal change in the product mix in favour of lower-margin
semi-finished products and slightly lower prices for main product groups due to volatile global economic
environment
EVRAZ continuously assesses the market environment and has significant flexibility in CAPEX plans
4Q 2011 EBITDA is expected to be in the range of US$500-600 million
15
SummarySummarySummarySummary
Strong 1H 2011 results reflecting the recovery of steel and raw material markets
Obtaining benefits from enhanced raw material prices due to the Group’s high level of vertical
integration
Improved liquidity position and reduced debt level following continuous refinancing in 1H2011
Renewed investment into enhancing the mining base, production modernisation and product quality will
enable to achieve positive results in 2012 and beyond enable to achieve positive results in 2012 and beyond
No significant deterioration of the market at the moment
The premium share listing in London and potential FTSE 100 inclusion to improve liquidity and
shareholder base
Company now on sound footing to achieve further growth and is well prepared to efficiently operate
even in the prolonged period of market uncertainty
1H 2011 Operating and Financial Results Overview
17
Revenue 8,380 6,379 31313131%%%%
Gross profit 2,197 1,460 50505050%%%%
1,154 41414141%%%%Consolidated adjusted EBITDA* 1,629
Adjusted EBITDA margin 19.4% 18.1%
0.42EPS (US$ per GDR) 0.62
1H 20111H 20111H 20111H 2011 1H 20101H 20101H 20101H 2010US$ mln unless otherwise stated ChangeChangeChangeChange
1H 2011 Summary1H 2011 Summary1H 2011 Summary1H 2011 Summary
176Net Profit** 263 49494949%%%%
48484848%%%%
* Consolidated adjusted EBITDA represents profit from operations plus depreciation and amortisation, impairment of assets, foreign exchange loss (gain) and loss (gain) on disposal of
PP&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 profit would have been US$494 million
*** Here and throughout the presentation steel sales volumes to external customers only if not stated otherwise
0.42EPS (US$ per GDR) 0.62
Steel sales volumes*** (’000 tonnes) 7,946 7,714 3333%%%%
48484848%%%%
Interim Dividend (US$ per GDR)
Short-term Debt 604
Net Debt 6,042 7,127
714
(15)%
(15)%
0.2 0
As of As of As of As of
30 June 201130 June 201130 June 201130 June 2011
As of As of As of As of
31 Dec 201031 Dec 201031 Dec 201031 Dec 2010 ChangeChangeChangeChange
18
1H 2011 Financial Highlights1H 2011 Financial Highlights1H 2011 Financial Highlights1H 2011 Financial Highlights
Consolidated Revenue byConsolidated Revenue byConsolidated Revenue byConsolidated Revenue by SegmentSegmentSegmentSegment Consolidated AdjustedConsolidated AdjustedConsolidated AdjustedConsolidated Adjusted EBITDAEBITDAEBITDAEBITDA
◦ 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
803 744
390
96255
(3)
83
62
(157)(156)
-300
0
300
600
900
1,200
1,500
1,800
1H 2010 1H 2011
Steel Mining Vanadium Other operations Unallocated & Eliminations
5,7967,492
1,120
2,040
290
320
414
482
(1,241) (1,954)
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
1H 2010 1H 2011
Steel Mining Vanadium Other operations Eliminations
Consolidated Revenue byConsolidated Revenue byConsolidated Revenue byConsolidated Revenue by SegmentSegmentSegmentSegment
US$ mln
Consolidated AdjustedConsolidated AdjustedConsolidated AdjustedConsolidated Adjusted EBITDAEBITDAEBITDAEBITDA
6,3796,3796,3796,379
8,3808,3808,3808,380
1,1541,1541,1541,154
1,6291,6291,6291,629
US$ mln
19
FCF GenerationFCF GenerationFCF GenerationFCF 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
1,6701,629 41
(210)
1,594
134
1400
1600
1800
2000
*Free cash flow comprises cash flows from operating activities less interest paid, costs of early repurchase of debts and cash flows from
investing activities
(386)
(462)
5 751
0
200
400
600
800
1000
1200
EBITDA 1H
2011
Non-cash
items
EBITDA (excl.
non-cash
items)
Changes in
working
capital, excl
income tax
Income tax
paid
CF from
operating
activities
Interest paid
and costs of
early
repurchase of
debts
Capex CF from
investing
activities
(excl. capex)
Free cash
flow*
20
◦ 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 growth
Dividend PolicyDividend PolicyDividend PolicyDividend Policy
◦ Under the revised dividend policy EVRAZ will target to maintain a long-term average 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
Revised Dividend Revised Dividend Revised Dividend Revised Dividend
PolicyPolicyPolicyPolicy
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 shareholders
◦ Interim dividend: US$0.2 per GDR
◦ Special dividend: US$0.9 per GDR
◦ Record date: 28 October 2011
◦ Paid in November 2011
Key Parameters of Key Parameters of Key Parameters of Key Parameters of
Dividend Dividend Dividend Dividend
AnnouncementAnnouncementAnnouncementAnnouncement
21
Liquidity and Debt Maturity ProfileLiquidity and Debt Maturity ProfileLiquidity and Debt Maturity ProfileLiquidity 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$2.3
billion of bank loans
Debt* Maturities Schedule (as of 30 June 2011)Debt* Maturities Schedule (as of 30 June 2011)Debt* Maturities Schedule (as of 30 June 2011)Debt* Maturities Schedule (as of 30 June 2011)Debt* Maturities Schedule (as of 30 June 2011)Debt* Maturities Schedule (as of 30 June 2011)Debt* Maturities Schedule (as of 30 June 2011)Debt* Maturities Schedule (as of 30 June 2011)
* Principal debt (excl. interest payments)
US$ mln
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
0
500
1000
1500
2000
2011 2012 2013 2014 2015 2016 2017 2018 2019-2022
Public debt Bank loans
22
Improved Business FundamentalsImproved Business FundamentalsImproved Business FundamentalsImproved Business Fundamentals
31 December
2009
30 June
2011
Net Debt US$7,230m US$6,042m
Leverage (Net Debt/LTM
EBITDA)5.8x 2.1x
Average Maturity 3.4 years 3.8 years
Short-term Debt US$1,992m US$604m
◦ EBITDA and EBITDA margin progression
◦ Focus on financial management
◦ Reduction of total debt level
◦ Significant improvement of leverage
◦ Successful refinancing of short-term debt using debt
instruments with longer term maturities
◦ EVRAZ credit ratings upgraded: S&P to B+, Stable;
Moody’s to B1, Positive; Fitch to BB-, Stable
1,6291,1961,154
769468
19%17%18%
15%
10%
0
500
1,000
1,500
2,000
1H2009 2H2009 1H2010 2H2010 1H2011
0%
5%
10%
15%
20%
EBITDA and EBITDA Margin PerformanceEBITDA and EBITDA Margin PerformanceEBITDA and EBITDA Margin PerformanceEBITDA and EBITDA Margin Performance
US$ MM
EBITDA EBITDA Margin (RHS)
%
23
2011 vs 20082011 vs 20082011 vs 20082011 vs 2008----2009200920092009
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$300 million to be paid till 2011 year-end as of 30
September 2011)
10.00
15.00
20.00
25.00
30.00
35.00
40.00
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
2008 2009 2010 2011
USD/RUB Exchange RatesUSD/RUB Exchange RatesUSD/RUB Exchange RatesUSD/RUB Exchange RatesUSD/RUB Exchange RatesUSD/RUB Exchange RatesUSD/RUB Exchange RatesUSD/RUB Exchange Rates
24
53%68%
47%32%
0
1,000
2,000
3,000
4,000
5,000
6,000
1H 2010 1H 2011
Domestic Export
Steel: CISSteel: CISSteel: CISSteel: CIS
5,5325,5325,5325,532 5,5415,5415,5415,541
Steel Product Sales, Domestic vs. ExportSteel Product Sales, Domestic vs. ExportSteel Product Sales, Domestic vs. ExportSteel Product Sales, Domestic vs. Export
‘000 tonnes◦ Full utilisation of Russian and Ukrainian steelmaking
capacities maintained in 2011
◦ In 1H 2011 domestic steel sales accounted for 68% of
EVRAZ’s Russian and Ukrainian mills’ steel sales
compared to 53% in 1H 2010, reflecting improving
demand in the CIS market and the shift to sales of higher
margin products
◦ High market share in domestic sales through own
distribution network
◦ Prices of key products strengthened in response to
demand recovery and growth in raw material prices
2,260 1,838
2,1002,378
785 813
387 512
0
1,000
2,000
3,000
4,000
5,000
6,000
1H 2010 1H 2011
Semi-finished Construction Railway Other
Steel Product RevenuesSteel Product RevenuesSteel Product RevenuesSteel Product RevenuesSteel Product Sales VolumesSteel Product Sales VolumesSteel Product Sales VolumesSteel Product Sales Volumes
5,5325,5325,5325,532 5,5415,5415,5415,541
‘000 tonnes
ProductsProductsProductsProductsRevenue,Revenue,Revenue,Revenue,
US$mUS$mUS$mUS$m
Revenue per tonne,Revenue per tonne,Revenue per tonne,Revenue per tonne,
US$US$US$US$
1H 20101H 20101H 20101H 2010 1H 20111H 20111H 20111H 2011 1H 20101H 20101H 20101H 2010 1H 20111H 20111H 20111H 2011
Semi-finished 1,112 1,1591,1591,1591,159 492 630630630630
Construction 1,275 1,8331,8331,8331,833 607 771771771771
Railway 541 734734734734 689 903903903903
Other steel 247 422422422422 638 824824824824
TotalTotalTotalTotal 3,175 4,1484,1484,1484,148 574 749749749749
demand recovery and growth in raw material prices
25
Steel: North AmericaSteel: North AmericaSteel: North AmericaSteel: 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$266/t)
◦ Pricing of steel products generally follows scrap price trends
197 165
181 242
462511
436403
0
200
400
600
800
1,000
1,200
1,400
1H 2010 1H 2011
Construction & other steel Railway Flat-rolled Tubular
1,2761,2761,2761,276 1,3211,3211,3211,321 ProductsProductsProductsProductsRevenue,Revenue,Revenue,Revenue,
US$mUS$mUS$mUS$m
Revenue per tonne,Revenue per tonne,Revenue per tonne,Revenue per tonne,
US$US$US$US$
1H 20101H 20101H 20101H 2010 1H 20111H 20111H 20111H 2011 1H 20101H 20101H 20101H 2010 1H 20111H 20111H 20111H 2011
Construction
and other 154 153153153153 782 927927927927
Railway 172 249249249249 950 1,0291,0291,0291,029
Flat-rolled 400 578578578578 866 1,1311,1311,1311,131
Tubular 601 589589589589 1,378 1,41,41,41,461616161
TotalTotalTotalTotal 1,327 1,5691,5691,5691,569 1,040 1,1,1,1,188188188188
Steel Product RevenuesSteel Product RevenuesSteel Product RevenuesSteel Product RevenuesSteel Product Sales VolumesSteel Product Sales VolumesSteel Product Sales VolumesSteel Product Sales Volumes
‘000 tonnes
26
511631
92
109
0
100
200
300
400
500
600
700
800
1H 2010 1H 2011
Steel: Europe, South AfricaSteel: Europe, South AfricaSteel: Europe, South AfricaSteel: Europe, South Africa
‘000 tonnes
603603603603
740740740740
Steel Product Sales Volumes, Steel Product Sales Volumes, Steel Product Sales Volumes, Steel Product Sales Volumes,
European OperationsEuropean OperationsEuropean OperationsEuropean Operations◦ EVRAZ’s European mills sales volumes increased by
23% in 1H 2011 vs. 1H 2010
◦ European flat-rolled product sales volumes increased
by 23%, which largely reflected the increased
demand picture in the European market
◦ Sales of EVRAZ Highveld’s steel products were
effectively flat as domestic demand in the South
African market remained weak
Flat-rolled Other
97 108
183
52
195
10
-
50
100
150
200
250
300
350
400
1H 2010 1H 2011
Construction Flat-rolled Other
‘000 tonnes
302302302302
343343343343
ProductsProductsProductsProductsRevenue,Revenue,Revenue,Revenue,
US$mUS$mUS$mUS$m
Revenue per tonne,Revenue per tonne,Revenue per tonne,Revenue per tonne,
US$US$US$US$
1H 20101H 20101H 20101H 2010 1H 20111H 20111H 20111H 2011 1H 20101H 20101H 20101H 2010 1H 20111H 20111H 20111H 2011
European European European European OOOOperationsperationsperationsperations
Flat-rolled 345 598598598598 675 948948948948
Other 74 104104104104 804 954954954954
TotalTotalTotalTotal 419 702702702702 695 949949949949
South African South African South African South African OOOOperationsperationsperationsperations
Construction 70 89898989 721 824824824824
Flat-rolled 138 159159159159 708 869869869869
Other 7 36363636 700 692692692692
TotalTotalTotalTotal 215 284284284284 712 828828828828
Steel Product Sales Volumes, Steel Product Sales Volumes, Steel Product Sales Volumes, Steel Product Sales Volumes,
South African OperationsSouth African OperationsSouth African OperationsSouth African Operations
Steel Product RevenuesSteel Product RevenuesSteel Product RevenuesSteel Product Revenues
◦ As of 1H 2011 EVRAZ was 99% self-sufficient in iron ore and
62% in coking coal (88% including 40% share of production
from Raspadskaya)
◦ Cash cost of washed coking coal went up in 3Q 2011 due to
drop in production volumes and increased repair costs
◦ EVRAZ’s strategy is to expand its mining division increasing
self-sufficiency
◦ The company is developing a number of projects including
the Mezhegey and Yerunakovsky VIII coal deposits and the
Kachkanar iron ore deposit
Mining:Mining:Mining:Mining: Integrated Portfolio of Iron Ore and Integrated Portfolio of Iron Ore and Integrated Portfolio of Iron Ore and Integrated Portfolio of Iron Ore and
Coking CoalCoking CoalCoking CoalCoking Coal
27
20
30
40
50
60
70
80
90
100
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
Cash Cost, Russian Iron Ore Products and CoalCash Cost, Russian Iron Ore Products and CoalCash Cost, Russian Iron Ore Products and CoalCash Cost, Russian Iron Ore Products and Coal
US$/t
8,859
10,397 10,6359,981
10,455
8,8099,955
9,60810,191 10,355
0
4,000
8,000
12,000
H1 2009 H2 2009 H1 2010 H2 2010 H1 2011
99%99%99%99% 96%96%96%96% 90%90%90%90% 102%102%102%102% 99%99%99%99%
(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
Kachkanar iron ore deposit
‘000 tonnes
Iron Ore SelfIron Ore SelfIron Ore SelfIron Ore Self----CoverageCoverageCoverageCoverage (1)(1)(1)(1), 2009, 2009, 2009, 2009----H1 2011H1 2011H1 2011H1 2011Iron Ore SelfIron Ore SelfIron Ore SelfIron Ore Self----CoverageCoverageCoverageCoverage (1)(1)(1)(1), 2009, 2009, 2009, 2009----H1 2011H1 2011H1 2011H1 2011
Consumption Production Consumption Production Excl. Raspadskaya Raspadskaya Production
4,0533,850
3,2993,4992,4042,5062,191
4,021
3,4023,642
5,288
4,218
4,795
3,5013,229
0
3,000
6,000
Washed Coking Coal (Concentrate) SelfWashed Coking Coal (Concentrate) SelfWashed Coking Coal (Concentrate) SelfWashed Coking Coal (Concentrate) Self----Coverage Coverage Coverage Coverage (2)(2)(2)(2)Washed Coking Coal (Concentrate) SelfWashed Coking Coal (Concentrate) SelfWashed Coking Coal (Concentrate) SelfWashed Coking Coal (Concentrate) Self----Coverage Coverage Coverage Coverage (2)(2)(2)(2)
‘000 tonnes
137%137%137%137% 125%125%125%125% 90%90%90%90% 80%80%80%80% 88%88%88%88%
78%(3)100%(3)54%(3) 62%(3) 62%(3)
H1 2009 H2 2009 H1 2010 H2 2010 H1 2011
‘000 tonnes‘000 tonnes‘000 tonnes
Iron ore products (Fe 58%) Washed coking coal (concentrate)