2. Disclaimer 02
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.
3. Evraz Group in Brief 03
◦ World-class steel and mining company, 14-th largest steel company globally in 2009
◦ 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 2010, Evraz produced 16.3 million tonnes of crude steel and sold 14.7 million
tonnes of rolled products
◦ 2009 consolidated revenue amounted to US$9.8 billion; EBITDA was US$1.2 billion
◦ GDRs listed on London Stock Exchange; market capitalisation over US$18 billion
5. 1H 2010 Financial Highlights 05
Consolidated Revenue and EBITDA
◦ In 1H10 Group revenue rose by 38% vs. 1H09, largely
US$ mln
driven by increase in sales volumes of steel products and
10,723
higher average prices 10,000
9,657
◦ 1H10 Group EBITDA advanced by 147% reflecting 8,000
6,379
revenue expansion and cost control 6,000 5,133
4,639
◦ 1H10 Mining segment EBITDA more than quadrupled, 4,000
3,706
2,509
largely due to the growth in iron ore and coal prices 2,000 1,154
468 769
◦ EBITDA margin improved from 10% in 1H09 to 18% in 0
1H08 2H08 1H09 2H09 1H10
1H10
Revenue EBITDA
Revenue Drivers in 1H10 vs. 1H09 Consolidated Adjusted EBITDA
US$ mln
US$ mln
7,000 1,121 6,379
1,400 1,154
6,000 619
1,200 85
81
5,000 4,369
1,000
390
4,000
800
468
3,000 600
70
2,000 400 94
738
1,000 200 389
0 0 (34)
(51) (140)
1H09 Revenue Volumes Prices 1H10 Revenue -200
1H09 1H10
Steel Mining
Vanadium Other operations
Unallocated subsidiaries & eliminations
6. Cost Dynamics 06
◦ Growth in scrap, coking coal and iron ore prices in 1H Cash Cost*, Slabs & Billets
2010 increased steelmakers’ costs US$/t
◦ This cost increase was significantly offset by Evraz’s
450
400
402
430
high level of vertical integration into iron ore and coking 394
420
341
350
coal 285
300
◦ Consolidated cost, approx. 65% of which is Rouble 250
253 324
denominated, was negatively impacted by 10% Rouble 200 224
268
appreciation vs. US dollar compared to 1H09
150
◦ Increase in cash cost of coking coal concentrate 1H08 2H08 1H09 2H09 1H10
resulted from lower production volumes due to
Slab Billet
postponed long wall repositioning at the Ulyanovskaya
mine * Average for Russian steel mills, integrated cash cost of production, EXW
Consolidated Cost of Revenue, 1H 2010 Cash Cost, Russian Coking Coal and
7% Iron Ore Products
13% US$/t
10%
75
15% 69
63
12% 65
56 55
55 61
6% 5%
47
5% 43
11% 45 50
7% 47
4% 5% 43
35
Iron ore Coking coal Scrap
1H08 2H08 1H09 2H09 1H10
Ferroalloys Purchased semis Auxilliary materials
Electricity Natural gas Staff costs Coal concentrate Iron ore products, 58% Fe
Transportation Depreciation Other
Source: Management accounts
7. 07
4Q and FY 2010 Operational Results
◦ 2010 vs. 2009:
◦ 2010 consolidated crude steel output was 16.29 mt, +6.6% vs. 2009
◦ Finished goods production increased by 15-35% depending on product category as a result of demand recovery
in the key markets
◦ The Russian steel mills were 100% utilised in 2010
◦ The growing demand for finished products were met by reducing semi-finished output by 28.4%
◦ 4Q10 vs. 3Q10:
◦ Production of steel and rolled products recovered following completion of scheduled maintenance at Russian
steel mills
◦ Pricing for major products groups increased or remained flat
◦ Coking coal production recovered as 4Q10 was devoid of any negative one-offs of the previous quarters
‘
Production of Rolled Products, 2009-2010 Production of Rolled Products by Quarters, 2010
‘000 tonnes ‘000 tonnes
14,665
14,275 1,400
15,000
1,200
12,000
1,000
9,000 800
6,000 600
400
3,000
200
0 0
2009 2010 Semi-finished Construction Railway Flat-rolled Tubular Other steel
Semi-finished products Construction products products products products products products products
Railway products Flat-rolled products
1Q10 2Q10 3Q10 4Q10
Tubular products Other steel products
8. Benefiting from Rising Prices for Iron Ore and Coal 08
Raw Material Prices (Domestic Markets)
Raw Material Prices (Domestic Markets)
◦ 1H10 Mining segment revenue doubled and EBITDA US$/t
400
quadrupled vs. 1H09 reflecting the growth in prices
◦ Volumes of coking coal mined decreased 27% in 2010
300
vs. 2009 due to a few negative exceptional factors, 200
e.g. sale of Tomusinskaya mine, shutdown of 100
Yubileynaya mine, delayed long wall repositioning in
Ulyanovskaya mine, temporary mine closures for safety 0
Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec-
inspections after the Raspadskaya explosion 10 10 10 10 10 10 10 10 10 10 10 10
◦ Coking coal production recovered in 4Q10 with a Scrap, Russia, CPT Scrap, USA
36.7% increase over 3Q10 Iron ore concentrate, Russia, ExW Coking coal concentrate, Russia, FC
Iron Ore and Raw Coal Production Mining Segment Revenue* and EBITDA, 1H09-1H10
‘000 tonnes
US$ mln
18,000
2,015
15,000 2,131 1,479 1,120
2,351 1,200
12,000 4,998 3,854 1,000
5,301 3,655
800 652
9,000
600
6,000 390
9,955 9,608 10,191 400
8,809
3,000 200 94
0 0
1H09 2H09 1H10 2H10 1H09 1H10
Iron ore products Raw coking coal Raw steam coal Revenue EBITDA
* Includes intersegment sales
9. 09
Russian Government Infrastructure Spending
◦ The Russian Government plans to spend US$30bn on RF Capital Investments in 2011
capital investments in 2011, including US$23bn on US$bn
construction
35
◦ Sochi 2014 Olympic construction objects consume 30
approx. 8% of Evraz’s Russian construction product 26
26
sales 20 21
◦ Such new projects as construction of various objects 18
11
13
related to 2018 World Cup, an academic city in
9
Yekaterinburg, a space centre in the Russian Far East, a
high speed railway Moscow-St Petersburg will have 0
considerable state financing 2006 2007 2008 2009 2010 2011
◦ Russia committed to invest total $50bn into
preparation for World Cup 2018, including $3.82bn to
construct stadiums and $11bn on infrastructure Construction Spending in 2011
projects 23%
◦ According to Evraz estimates, 2018 World Cup steel 30%
needs for construction of stadiums (13 new to be built
and 3 to be renovated), hotels, local infrastructure
5%
(highways, bridges) may amount to 2.5-3 mt
◦ Being a large producer of construction products in
16% 12%
Russia, Evraz will be one of the beneficiaries
14%
Infrastructure Housing for the military
Residential housing Healthcare, education, recreational objects
Power objects Other
Source: Federal Capital Investment Programme, Morgan Stanley
10. Consumption of Construction Steel in Russia 10
12 100
mln.t. mlm sq.m.
90
10
1,0 1,1
0,8 1,0 80
0,9 1,6
8 1,6 1,3 1,6
0,8 1,3 70
1,4 1,1 0,6 1,3
1,1 1,3
6 0,5 1,1 60
1,0
0,9 0,9
0,8
0,7 50
4
5,8 6,2 5,8 6,1 40
5,5
4,5 4,9
2 4,1
30
0 20
2007 2008 2009 2010B 2011F 2012F 2013F 2014F
Rebar Channels Angles Beams Buildings completion, mln.m2
Recovery of construction steel product consumption began in 2010
Increase of shaped sections demand vs. rebar might be greater in the next years due to infrastructure projects
development
Russian demand for construction steel is expected to be approx. 10% higher in 2010 than in 2009
Sources: Rosstat, Railway statistics, Customer service statistics, Metal Courier, Rusmet
11. Expansion of Rolling Capacities 11
In December 2010, Evraz announced plans to build two new rolling mills:
Yuzhny Rolling Mill (Rostov region, Russia)
○ Capacity of 450k tonnes of long steel, including 315k tonnes of rebar and 135k tonnes of
angles/channels out of billets supplied by DMZ, Evraz’s steel mill in Ukraine
○ CAPEX of US$158 million
○ The plant is expected to be launched in mid-2013
○ Yuzhny Mill will provide Evraz with a presence in the fast-growing area of Southern Russia
Kostanay Rolling Mill (Kazakhstan)
○ Evraz will have 65% with 35% belonging to its local partner Caspian Group
○ Capacity of 450k tonnes of rebar
○ Zapsib and NKMK, Evraz’s steel mills in Siberia, will supply billets to the mill
○ CAPEX of US$131 million
○ The plant is expected to be launched in mid-2013
○ Evraz will have an exposure to Kazakhstan local rebar market
Construction of the mills will allow Evraz to expand its presence in the CIS long products market
12. Strengthening Distribution Network 12
In December 2010, Evraz acquired Inprom, a leading metal service company in Russia, and created a
combined company (Evraz 75%, Inprom shareholders 25%) consisting of Inprom and EvrazMetal assets
Inprom is a leading metal service company with
◦ 27 metal centres in industrially developed regions of Russia
◦ 20,000 customers
◦ 12 types of steel processing services
◦ Main markets - South and Central Russia.
◦ Sales in 2010 ~400 kt
◦ Evraz is a major Inprom’s supplier with Evraz’s products accounting for 1/3 of sales
◦ EvrazMetal (former Carbofer Metall) is a network of metal trading companies acquired by Evraz in
October 2009:
◦ 33 branches in Russia and the CIS (Kazakhstan)
◦ Specialised distributor of long products (in particular rebars)
◦ Sales in 2010 ~800 kt
The combined company will be the biggest steel retailer in CIS with steel sales of 1.2 million tonnes in
2010 increased profitability from high margin steel product sales
As a result of the deal, Evraz will be able to expand its presence in the steel retail trade in Russia
13. Recent Market Developments 13
US$/t
Evraz Selling Prices
◦ Overall growing trend in steel prices is driven by
demand recovery and increases in input costs 900
◦ International prices for semi-finished steel declined in
800
700
May-June due to seasonal and regulatory factors but
600
stabilised in July
500
◦ Steelmaking capacity utilisation in January 2011: 400
◦ Russia >95%
300
200
◦ North America 95% Jan-
10
Feb-
10
Mar-
10
Apr-
10
May-
10
Jun-
10
Jul-
10
Aug-
10
Sep-
10
Oct-
10
Nov-
10
Dec-
10
◦ Czech Republic 95% Slabs, Russia, export* Billets, Russia, export*
◦ South Africa 70%
Rebars, Russia, FCA Plate, North America, FCA
◦ Russian mining assets are running at 75% capacity in * Weighted average contract prices
coal concentrate and 90% in iron ore
Vanadium Prices, FeV, LMB
◦ Vanadium expected to perform better than steel as
vanadium usage rates in the emerging markets’ steel US$/kg V
production sector approach the levels of industrially
developed countries 40
◦ Larger steel production volumes and better pricing in 35
4Q10 vs 3Q10 may be offset by increased costs 30
◦ 4Q10 EBITDA is expected to be in line with 3Q10 25
EBITDA of US$612 million 20
15
Jan- Feb- Mar- Apr- May- Jun- Jul-10 Aug- Sep- Oct- Nov- Dec-
10 10 10 10 10 10 10 10 10 10 10
14. Capital Market Developments 14
◦ RUB15bn (equivalent to US$500 million) 3-year bonds issued in March 2010, swapped into US dollars to
minimise Rouble currency exposure
◦ In May 2010, Evraz drew down US$950 million 5-year Gazprombank loan and repaid US$1,007million VEB loan
◦ In June-July 2010, Evraz refinanced US$357 million Nordea Bank loan due 4Q10 with new 4-year Nordea loan
facilities in the amount US$404 million
◦ RUB15bn (equivalent to US$490 million) 5-year bonds issued in November 2010
◦ 5-year structured credit facility for US$950 million signed in November 2010
Proportion of Short-term Debt to Total Debt
Proportion of Short-term Debt to Total Debt
US$ mln
10,000 100%
8,482 7,923 7,873
8,000 80%
6,000 46% 60%
4,000 25% 40%
22%
2,000 20%
0 0%
30-Jun-09 31-Dec-09 30-Jun-10
Total Debt Short-term Debt, % of Total Debt
15. Successful Debt Refinancing 15
◦ Total debt of approx. US$7.9bn, net debt of US$7.2bn as of 30 September 2010
◦ Consolidated cash balance of not less than US$500 million constantly maintained
◦ Declining cost of capital (bond yields have decreased from approx. 10% in October 2009 to around 6%) reflects
improvements in Evraz’s performance and market conditions
◦ After refinancing activities in 2010 there are no significant debt repayments until 2013.
◦ We intend to further decrease our leverage and extend debt maturities
Debt* Maturities Schedule
Debt* Maturities Schedule Debt* Maturities Schedule
Debt* Maturities Schedule
(as of 31 December 2008)
(as of 31 December 2008) (as of 31 December 2010)
(as of 31 December 2010)
US$ mln US$ mln
3,860
4,000 4,000
3,000 3,000
2,376
2,084 2,077
2,000 1,568 1,733
2,000
802 747 764 700
1,000 1,000 628 509
23 13 11 307
23 16
0 -
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016 2017 2018
Q1 Q2 Q3 Q4
* Principal debt (excl. interest accrued)
Source: Management accounts
16. Growth Strategy 16
Product mix improvements
◦ Modernisation of rail mills enabling the production of high value-added products
◦ Upgrade of wheel shops
◦ Shift to production of American Petroleum Institute certified slabs and other enhanced quality higher
margin steel products
◦ Product mix expansion geared to local market demand (new rebar grades, beams, pipe blanks, sheet)
◦ Exploring opportunities for development of construction steel rolling capacities in regions with high
demand
Raw material base development
◦ Development of a coal deposit in Yerunakovsky region of Kuzbass
◦ Expansion of resource base and development of the Mezhegey coking coal deposit and the Eastern field
of the Ulug-Khemsky coking coal deposit
◦ Increase of own iron ore production and supplementary exploration at existing sites
Cost-saving measures
◦ Implementation of pulverised coal injection projects at the Russian steel mills to eliminate usage of
natural gas in blast furnaces and reduce consumption of coking coal. Added effect will be an increase
in pig iron production volumes and, therefore, crude steel production
◦ Cost saving programmes in place, yielding US$20-30m efficiency gains a year at each plant
Increase in production volumes
◦ Reconstruction of 4th converter and 3rd slab machine at NTMK completed in November 2010
increased crude steel output by up to 0.7 mtpa
◦ Considering construction of a second converter shop at NTMK with additional crude steel capacity of
1.5-2.0 mtpa
17. Key Investment Projects 17
◦ CAPEX in 2010 expected to be around US$950m vs. US$441m in 2009
◦ Approximately US$550m of 2010 CAPEX directed to increasing productivity and
development projects, key projects being:
Project Total CAPEX 2010 CAPEX Project Targets
Reconstruction of rail mill at US$440m US$220m ◦ Capacity of 950k tonnes of high-speed rails, including 450k
NKMK tonnes of 100 metre rails
◦ On-stream by 2013
Reconstruction of rail mill at US$60m US$43m ◦ Production of higher-quality rails
NTMK ◦ 550k tonnes capacity
◦ On-stream by 2012
Pulverised coal injection (PCI) US$320m US$40m ◦ Lower coke consumption from 420 to 320 kg/tonne
at NTMK and ZSMK ◦ No need for gas consumption
◦ On-stream by 2013
BOF workshop and caster No3 US$365m US$20m ◦ Modernisation of production
reconstruction at NTMK ◦ Increasing total converter shop capacity from 3.8 to 4.5 mtpa
and caster No3 capacity to 4.2 mtpa
◦ On-stream by 2013
Construction of Yuzhny and US$289m US$0m ◦ Capacity: 900 ktpa of construction products
Kostanay rolling mills ◦ On-stream by mid-2013
Reconstruction of wheel & tyre US$40m US$8m ◦ Production of higher-quality wheels
mill (mechanical area) NTMK ◦ On-stream by 2011
Development of Mezhegey and TBD ◦ Maintaining self-sufficiency in high-quality hard coking coal
Eastern field coal deposits after depletion of existing deposits
(Tyva, Russia) ◦ On-stream by 2015 and 2021 respectively
18. Summary 18
◦ Strategic focus on infrastructure markets and vertical integration into raw
materials
◦ Gradual recovery in the key markets after the crisis
◦ Rapidly rising raw material prices provide support for steel prices and create
cost pressure, especially for non-integrated steel producers
◦ Increase in the proportion of finished products in the mix reflecting demand
improvement in key markets of Russia and North America
◦ Focus on operational efficiency, modernisation of existing capacities,
development of mining base and integration of international assets
◦ Improved demand and stronger pricing environment together with our cost
leadership leave us well positioned to fully capitalise on the market recovery
20. 1H 2010 Financial Summary 20
US$ mln unless otherwise stated 1H 2010 1H 2009 Change
Revenue 6,379 4,639 38%
Cost of revenue (5,296) (4,297) 23%
SG&A (750) (595) 26%
Adjusted EBITDA* 1,154 468 147%
Adjusted EBITDA margin 18% 10%
Net Profit/(Loss)** (270) (999)
EPS (US$ per GDR) (0.64) (2.52)
Net Debt*** 7,198 7,783 (9)%
Short-term Debt*** 1,740 3,937 (56)%
Steel sales volumes**** (’000 tonnes) 7,714 6,823 13%
* Adjusted EBITDA represents profit from operations plus depreciation and amortisation, impairment of assets, revaluation deficit, foreign exchange loss (gain) and
loss (gain) on disposal of PP&E. See the appendix on p.29 for reconciliation of profit (loss) from operations to Adjusted EBITDA
** If cost model of accounting for PP&E were applied, net result would have been a profit of approximately US$146 million for the 1H 2010
*** As of the end of the reporting period
**** Here and throughout this presentation segment sales data refers to external sales unless otherwise stated
21. Revenue by Geography of Customers 21
1H 2009 1H 2010
Africa & Africa &
RoW RoW
Other Asian
3% Other Asian 3%
7%
Thailand 11%
3% Russia
China 28% Thailand Russia
5% 4% 34%
China
Middle East 3%
10% Middle East
4%
Ukraine
2%
Europe
Other CIS 9%
Europe Ukraine
3%
9% 4%
Other CIS
Americas Americas 4%
30% 24%
22. Cost Structure by Segment 22
Cost Structure of Steel Segment
Cost Structure of Steel Segment
◦ Rapid rises in coking coal, iron ore and scrap prices
caused an increase in the contribution of raw 19%
11%
9%
materials to steel segment costs 8% 11%
◦ Vertically integrated model largely protects
12%
10%
8%
6%
5%
steelmaking segment from escalation in raw material 5%
10%
6%
14%
prices 5%
11% 13%
◦ Exception is scrap prices, although portion of increase 8%
12% 17%
is managed through the scrap-based price formula for
certain products 1H09 1H10
Iron ore Coking coal Scrap
Other raw materials Semi-finished products Transportation
Staff Depreciation Energy
Other
Cost Structure of Mining Segment
Cost Structure of Mining Segment Cost Structure of Vanadium Segment
Cost Structure of Vanadium Segment
18% 19%
14% 16%
27% 22%
69% 58%
26% 25%
15%
11%
7% 11%
10% 11%
5% 7% 13% 1% 15%
1H09 1H10 1H09 1H10
Raw materials Transportation Staff costs
Transportation Staff costs Depreciation
Depreciation Energy Other
Energy Other
23. Mining: Vertical Integration 23
◦ High level of vertical integration into iron ore sustained and continues to mitigate effect of rising raw material
prices
◦ Coking coal volumes decreased due to postponement of longwall repositioning at the Ulyanovskaya mine
◦ Third quarter volumes depressed due to temporary safety shutdowns and safety inspections
Washed Coking Coal (Concentrate) Self-Coverage* Iron Ore Self-Coverage*
‘000 tonnes ‘000 tonnes
117% 12,000
6,000 10,397 10,580
5,288 9,955 9,608
117%
10,000 9,011 8,809
5,000 4,504 84%
4,317 4,348
3,679 RASP 3,642 8,000
4,000
RASP
3,000 6,000
RASP
2,000 4,000
73%** 2,000
98% 96% 91%
1,000 87%** 50%**
0 0
1H09 2H09 1H10 1H09 2H09 1H10
Consumption Production Consumption Production
* Self-coverage, %= total production (for coal, plus 40% of Raspadskaya production) divided by total steel segment consumption
** Coking coal self-coverage excl. 40% Raspadskaya share