2. Evraz Group in Brief 2
◦ World-class steel and mining company, one of the 15 largest steel companies in the
world in 2008
◦ 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
◦ One of the leading producers in the global vanadium market
◦ In 2009, Evraz produced 15.3 million tonnes of crude steel, 11.3 million tonnes of
pig iron and 14.3 million tonnes of rolled products
◦ 2008 consolidated revenue amounted to $20.4 billion
◦ 2008 EBITDA reached $6.3 billion
4. 9M09 Financial Summary 4
US$ mln unless otherwise stated 9M 2009 9M 2008 Change
Revenue 7,118 17,100 (58)%
(58)%
Adjusted EBITDA* 874 5,951 (85)%
(85)%
Adjusted EBITDA margin 12% 35%
Net Debt** 7,256 9,565 (24)%
(24)%
Steel Sales*** (million tonnes) 10.7 13.7 (22)%
(22)%
Source: Management accounts
* Adjusted EBITDA represents profit from operations plus depreciation and amortisation, impairment of assets and loss (gain) on disposal of PP&E, forex
gains/(losses).
** As of the end of the period
*** Segment sales volumes to third parties
5. 9M09 Financial Highlights 5
◦ Group revenue decreased by 58% vs. 9M08 to Consolidated Revenue and EBITDA
US$7.2bn driven largely by decrease in average prices US$ mln
and sales volumes of steel products 7,000 6,533
◦ Geographical diversification of the business helped to 6,000
stabilise operations in crisis environment 5,000
4,000 3,280
◦ International assets bottomed out in 2Q with 3,000 2,251 2,413 2,226 2,479
subsequent gradual recovery 2,000
1,000 372 305 163 406
◦ Recovery of export demand for semi-finished steel 0
helped to fully utilise Russian assets as from 1 July 3Q08 4Q08 1Q09 2Q09 3Q09
2009
Revenue EBITDA
9M09 Steel Segment Sales Volumes by Product 9M09 Steel Segment Revenue by Product
‘000 tonnes US$ mln
15,000 13,673
516 15,000 13,498
12,500 579 528
2,146 10,707
296 12,500 1,082
10,000 1,830 528 2,628
1,495 10,000
7,500 1,166 1,737
4,439 7,500 5,866
3,110 158
5,000 4,415 822
5,000
1,040 820
2,500 4,163 4,112 2,500 1,544
3,108
0 1,482
0
9M08 9M09 9M08 9M09
Semi-finished Construction Railway Flat-rolled Tubular Other steel Semi-finished Construction Railway
Flat-rolled Tubular Other steel
Source: Management accounts
6. Execution of Management Action Plan 6
◦ Production optimisation
◦ Shutdown of inefficient capacity
◦ Shift of production to semi-finished products, where demand is relatively high
◦ Take advantage of flexibility between billet and slab production depending on market situation
◦ Full utilisation of available capacity in Russia (13.2 mtpa of crude steel) achieved from 1 July 2009
◦ Cost saving measures
◦ Cash cost of one tonne of semi-finished steel products in Russia decreased by 35%
◦ Labour costs decreased by 32% compared to 1H08
◦ Services and auxiliary materials costs decreased by 42% compared to 1H08
◦ Capex savings
◦ Capex in 9M09 was US$321 million (64% down vs. 9M08) out of US$500m FY2009 guidance
◦ Exit from Cape Lambert Project in Australia
◦ Financial management
◦ Total debt decreased to US$8.2 billion, net debt decreased to US$7.4 billion as of 31 December 2009
◦ US$965m raised from concurrent GDR and five-year convertible bond offerings in July 2009
◦ RUB20 billion (approx. US$688m) raised from five-year bond offering in October 2009
◦ One-year extension of US$1.8 billion VEB loan due in 4Q09 approved
7. Maintaining Cost Leadership 7
◦ Constant review of product and resources flows for Cash Cost*, Slabs & Billets
potential efficiency gains US$/t
375
◦ Mining segment cash costs have reduced significantly: 400
345
◦ Approximately 75% of consolidated cost is rouble 300
248
denominated 221
200
◦ Russian-based assets have benefited from
declines in utilities and staff costs 100
◦ Low proportion of fixed costs in the US operations with
0
key raw materials being scrap and our own slab Slab, Russia Billet, Russia
1H08 1H09
* Average for Russian steel mills, excl. SG&A and amortisation
Cost of Revenue, Steel Segment Cash Cost, Coal Products and
US$ mln 100% Fe Iron Ore Products
US$/t
7,000 6,172
9%
120 107
6,000
7%
5,000 4% 90
8% 3,953 73
4%
4,000 18%
8% 60 50
3,000 12%
68% 9% 30
2,000 5% 30
1,000 48%
0 0
1H08 1H09 Coal products Iron ore products, 100% Fe
Raw materials Transportation Staff costs Depreciation Energy Other 1H08 1H09
%% is given to total Steel Segment Cost of Revenue
Source: Management accounts
8. Debt Maturities and Liquidity Profile 8
◦ Total debt of approx. US$8.2 billion, net debt of US$7.4 billion as of 31 December
2009
◦ Short-term debt is approx. US$1.9 billion
◦ Cash and cash equivalents amounted to approximately US$746 million as of 31
December 2009
Debt Maturities Schedule Breakdown of Short-term Debt
Breakdown of Short-term Debt
Short-
Short-
Debt Maturities Schedule
US$ mln US$ mln
2000 1,870 1,883
1800
1600 417
1400 1,240
1200 805
1000
800 704 675 661
595
600 509
400
200 17 15
0
648
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
1Q 2Q 3Q 4Q $3.2bn syndicated loan Revolving debt Term loans
Source: Management accounts
9. Recent Capital Market Developments 9
◦ One-year extension of VEB US$1.8 billion loan facility initially due in 4Q09 approved
◦ RUB20 billion (approx. US$688 million) five-year bond issued in October
◦ Evraz signed US$950 million three-year credit facility with Gazprombank in October
(currently not utilised)
◦ VTB RUB10 billion (approx. US$344 million) loan was repaid in November 2009
◦ US$225 million 4-year ABL facility signed for Evraz Inc. NA in December 2009
◦ The remaining current maturities are expected to be covered by free cash flows and
refinancing of current debts
◦ Evraz successfully amended certain covenants on bonds and bank debt, allowing flexibility
to implement current strategy
10. Market Improvement in 2009 10
◦ Recovery in prices for semi-finished Steel Prices in 2009
products is driven by demand from Asia, US$/t
the Middle East and North Africa
600
◦ Steelmaking capacity utilisation at the
beginning of 2010 : 550
◦ Russia – 100% 500
◦ Ukraine – 100% 450
◦ North America – 87% 400
◦ South Africa – 90% 350
◦ Russian mining assets are running at 100% 300
capacity in coal and 87% in iron ore
250
◦ Crude steel output in 2H09 grew by 25%
and rolled product output grew by 15% 200
compared to 1H09 due to the restart of Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
blast furnace in Russia and gradual Slabs, FOB Far East
recovery in some steel markets Billets, FOB Far East
Rebars, RF market
◦ Prices for semi-finished products in 2H09
were higher than 1H09
Source: Metal Courier
11. 4Q09 and FY09 Operational Results 11
◦ In 4Q09, consolidated crude steel output was flat at 2008-
Production of Rolled Products, 2008-2009
4.3 mt vs. 3Q09 with a 7% increase in North America ‘000 tonnes
and a 6% increase in South Africa 6,000 +22% -18%
◦ Consolidated rolled product production was 5,000
marginally unchanged q-o-q and decreased 11% y- 4,000
-36% -22%
o-y 3,000
◦ Compared to 3Q09, 4Q09 production of railway 2,000
-20% -29%
products increased by 15%, of tubular goods – by 1,000
19%, of flat-rolled goods – by 6% and declined by
0
approximately 4% for semi-finished and construction Semi- Construction Railway Flat-rolled Tubular Other steel
products. finished
◦ Production of ‘semis grew by 22% in 2009 vs.2008 2008 2009
‘000 tonnes Production of Rolled Products by Quarter
1,500
1,200
900
600
300
0
Semi-finished Construction Railway products Flat-rolled products Tubular products Other steel
products products products
1Q09 2Q09 3Q09 4Q09
12. Steel Production: Russia 12
◦ Low stock levels after winter holidays and expectations of export price growth
◦ The main growth driver for billet prices is increasing world scrap and iron ore prices. Finished products
started following the same trend as well
◦ Demand for semis is coming mainly from the Far East and Middle East
◦ Revival of seasonal demand should support higher finished steel prices in Russia
◦ Russian government infrastructure spending can become a major driver of demand for construction
steel and railway products in the Russian market in 2010
Production of Rolled Products
‘000 tonnes
2,897
2,845
122 125
2,309 2,364 79 263 76
72 127 321
43 306 71 285 936 868
843 798
1,497 1,455
1,046 1,084
1Q09 2Q09 3Q09 4Q09
Semi-finished Construction Railway Flat-rolled Other steel
13. Steel Production: North America 13
◦ Relatively good performance at the beginning of 2009 with subsequent deterioration and gradual
improvement in line with market trends through the year
◦ Overall economic conditions in the steel market are better now than in 2009, but are still at less than
normal levels across all Evraz steel consuming markets
◦ Steel prices are likely to recover in 2010 on account of higher input costs
◦ Stability of demand for large diameter pipes in Canada due to long contracts (Keystone XL project)
◦ Evraz is expected to benefit from government infrastructure investments
Evraz Inc. NA’s Production of Rolled Products
NA’
‘000 tonnes
606
490 498
454
266
117 139
153
160 186 195
115
112 121 79 71
69 65 108 92
1Q09 2Q09 3Q09 4Q09
Construction products Railway products Flat-rolled products Tubular products
14. Steel Production: Europe and South Africa 14
Production of Rolled Products, Europe Production of Rolled Products, South Africa
‘000 tonnes ‘000 tonnes
284
264 4
175
6
6
157
149
202 2 5
192
4
7 121
2 55 107
246 98
226 42
183 34
168 12
64 59 50 62
17 33 33 3
16
1Q09 2Q09 3Q09 4Q09 1Q09 2Q09 3Q09 4Q09
Other steel products Other steel products
Flat-rolled products Flat-rolled products
Construction products Construction products
Semi-finished products
15. Leveraging Recovery in Commodity Prices 15
◦ Full self-coverage in raw materials achieved, Mining Segment Performance
allowing cash preservation US$ mln
2,500
◦ Mining segment remained EBITDA positive
2,000
2,012
even at the bottom of raw material prices’
cycle 1,500
1,000 837
◦ Benefitting from growth of iron ore and coking
500
652
coal prices 94
0
1H08 1H09
Revenue EBITDA
Iron Ore and Coking Coal Coverage* Cost of revenue, Mining Segment
‘000 tonnes US$ mln
14,000 12,147
12,000 11,271 1400
8,859
1,196
10,000 8,809 1200
8,000 18%
6,250 1000
9%
6,000 4,915 4,795
3,597 93% 800 16% 685
4,000 99%
600 14%
2,000 20% 14%
79% 133%
0 400 6% 27%
1H08 1H09 1H08 1H09 200 31% 26%
9%
10%
Coking coal Iron ore 0
1H08 1H09
Consumption Production Raw materials Transportation Staff costs Depreciation Energy Other
Source: Management accounts %% is given to total Mining Segment Cost of Revenue
* Self-coverage is calculated as a sum of coking coal production by Mine 12, Yuzhkuzbassugol production and pro rata to Evraz’s ownership production of Raspadskaya , in coal
concentrate equivalent, divided by Group’s total coking coal consumption excluding coal, used in production of coke for sale to third parties
16. Summary 16
◦ Gradual improvement of economic environment compared to the first half of 2009
◦ Increased geographical diversification of business helped to stabilise the situation
◦ Strengthening global demand for semi-finished steel allows us to fully utilise Russian
steelmaking
◦ Prices for semi-finished steel products are improving on the back of higher input costs
◦ Vertical integration into iron ore and coking coal allows to leverage market recovery and
benefit from the growth of raw material prices
◦ Effective management of business in terms of cost savings and working capital release
◦ Decrease in debt level and amendment of debt covenants allow the management
sufficient flexibility to continue implementation of its strategy
18. Revenue by Market 18
First Half of 2008 First Half of 2009
4% 3%
7%
12%
3%
28%
5%
2%
1%
4% 40%
10%
14% 2%
9% 3%
5%
16% 2% 30%
Russia Ukraine Other CIS Americas Russia Ukraine Other CIS Americas
Europe Middle East China Thailand Europe Middle East China Thailand
Other Asian Africa & RoW Other Asian Africa & RoW
19. Disclaimer 19
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 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.
