IMH 1H 2014 Financial Results Presentation August, 2014 - - PowerPoint PPT Presentation
IMH 1H 2014 Financial Results Presentation August, 2014 - - PowerPoint PPT Presentation
IMH 1H 2014 Financial Results Presentation August, 2014 Disclaimer The materials contained in this document (together, the Presentation) has been prepared by OJSC KOKS (the Company) and ar e given in conjunction with a live
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Disclaimer
The materials contained in this document (together, the “Presentation”) has been prepared by OJSC KOKS (the “Company”) and are given in conjunction with a live presentation and should not be taken out of context. Some of the information in this Presentation may contain projections or other forward-looking statements regarding future events or the future financial performance of the Company. You can identify forward looking statements by terms such as "expect", "believe", "anticipate", "estimate", "intend", "will", "could," "may" or "might" the negative of such terms or other similar expressions. The Company wishes to caution you that these statements are only predictions and that actual events or results may differ materially. The Company does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of the Company, including, among others, general economic conditions, the competitive environment, risks associated with operating in Russia, rapid technological and market change in the industries the Company operates in, as well as many other risks specifically related to the Company and its operations. Neither this Presentation nor any copy of it may be taken or transmitted, directly or indirectly, into the United States, Australia, Canada, Japan or the Russian Federation. This Presentation does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase or subscribe nor shall it (or any part of it) or the fact of its distribution, form the basis of, or be relied on in connection with, any contract therefor. The offer and the distribution of these materials and other information in connection with the listing and offer in certain jurisdictions may be restricted by law and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such
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This Presentation is not an offer for sale of any securities in the United States. Securities may not be offered or sold in the United States or to, or for the account or benefit of, U.S. person (as defined in Regulation S under the Securities Act of 1933) absent registration or an exemption from registration under the U.S. Securities Act of 1933. The Company has not registered and does not intend to register any portion of any offering in the United States or to conduct a public offering of any securities in the United States. The Presentation is only addressed to and directed at persons in member states of the European Economic Area who are “qualified investors” within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC) (“Qualified Investors”). In addition, in the United Kingdom, the Presentation is being distributed only to, and is directed only at, Qualified Investors (i) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) and Qualified Investors falling within Article 49(2)(a) to (d) of the Order, and (ii) to whom it may otherwise lawfully be communicated (all such persons together being referred to as “Relevant Persons”). The Presentation must not be acted on or relied on (i) in the United Kingdom, by persons who are not Relevant Persons, and (ii) in any member state of the European Economic Area other than the United Kingdom, by persons who are not Qualified Investors.
21,394 (14,854) 4,539 (833) (2,459) 21,046 (15,535) 2,588 (96) (3,803) Revenue Cost of Sales EBITDA Net loss Capex* 1H 2013 1H 2014
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1H 2014 Operational and Financial Results
Key Driving Factors and Results
mln RUR
Key Operational Results
Production, million tonnes 1H 2013 1H 2014 1H 2014 / 1H 2013, % Pig iron 1.02 1.094 +7 Coke* 1.24 1.224 (1) Iron Ore Concentrate 1.08 1.048 (3) Iron Ore 2.36 2.348 (1) Coking coal 0.78 0.903 +15
* Coke 6% moisture content including metallurgical coke, foundry coke, coke nut, coke
breeze, coke dust
- 15% increase in captive coal production to compare with 1H 2013 due to
Butovskaya mine’s successful operations and 7% growth in pig iron production due to better equipment performance after maintenance in 2013
- progressing decrease in coke prices, less export sales to compare with
2013 since domestic market offered better prices
- further increase in gross profit margin due to higher revenue and decreased cost
- f sales and one of the highest EBITDA margin results in Russian M&M industry
- increase in operating profit margin due to higher revenue and decreased
- perating costs
- further decrease in capital expenditures due to a thorough capex program
revision
Key Financial Indicators
Source: IFRS consolidated financial information for the 6 months ended 30 June 2013 * Purchase of property, plant and equipment
Key Margin Indicators, %
29 10 15 24 7 13 28 4 15 31 8 21 Gross profit margin Operating margin EBITDA margin 2011 2012 2013 1H 2014
2,588 4,539
821 4,380 15,549 644 9,647 3,651 639 1517 1,401 (11%) (2%) 19% (26%) 36% 4
1H 2014 Financial Results
Key Financial Highlights EBITDA Bridge, RUR mln Operating Costs Structure in 1H 2014
*Changes in finished goods and work in progress included; actual decrease in raw materials and supplies vs 1H 2013 is 7% **Wages and salaries including administrative salaries and associated taxes
Revenues Costs
% increase vs 1H 2013 millions of RUR 1H 2013 1H 2014 1H 2014/1H 2013, % Revenue 21,046 21,394 +2 Cost of Sales (15,535) (14,854) (4) EBITDA 2,588 4,539 +69 % Margin 12 21
- Profit/ (Loss) for the
period (833) (96) (88) Net Debt* 26,571 28,562 7 Adjusted EBITDA LTM** 5,635 8,990 60
* As of December 31, 2013 ** Adjusted EBITDA is calculated as earnings before income tax, interest expense, exchange gain/loss, depreciation, amortization, impairment and other non-cash items.
Increase in revenue was due to:
- successful operations in high margin market niche of high quality pig iron and coke
- pig iron sales volumes growth
- advantageous RUR exchange rate
Decrease in operating costs was due to:
- raw material prices falling
- Butovskaya mine’s increasing high quality coal extraction volumes
- increased productivity of personnel
- efficient operating costs optimization program
Raw materials & supplies 53% Wages & salaries including associated tax 14% Energy 3% Distribution costs 8% Depreciation & Amortisation 9% General & Administrative 9% Taxes other than income tax 2% Others 2%
Source: IFRS consolidated financial information for the 6 months ended 30 July 2013
*Changes in finished goods and work in progress included
30 29 32 40 50 49 8 10 14 9 8 17 5 6 6 3 4 5 7 6 8 9 7 12 31 35 35 28 21 40 17 7 8 2 2
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2009 2010 2011 2012 2013 1H 2014
USA TURKEY AND MIDDLE EAST SPAIN ITALY OTHER EUROPE ASIA
Globally Diversified Customer Base
Source: Company’s and traders’ data
Geographical Breakdown of Pig Iron Export Sales Pig Iron Sales
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In 2012-2014 the Group successfully focused on selling high quality pig iron grades to foundry mills in Russia and abroad
- Pig iron export sales volumes were slightly up to
more than 2.0 million tones on an LTM basis.
- Main pig iron consumers are located in USA and
Europe
- Further increase in demand from the US is
expected on the back of general increase in steel production activity there
- Shrinking supplies from Ukraine is a primary
market driving factor for 2H14
- Company’s railway deliveries are not exposed to
military operations in eastern Ukraine; no delays in deliveries are expected; we have alternative convenient ports and railway routes via Russian territory to use in case of worsening of Ukrainian crisis
- The company is not exposed to China intensively
but it has successful track record of sales to Asia
OTHER END USERS; 7% SEVERSTAL COLUMBUS; 4% SAUDI ARABIAN DUCTILE; 4% GALLATIN STEEL; 5% NORTH STAR BLUESCOPE; 19% 6
World’s Leading Steel Companies, Foundries and Traders Consume IMH Pig Iron
39% 61% End user Trader
OTHER TRADERS; 19 TECHSERVICE; 3% PICART & BEER; 3% FUNSIDER; 4% NIZI; 5% AVEKS; 6% CONSOLIDATED MILL SUPPLY, 21%
The share of supplies to end users increased by 5% in 1H 2014 to compare with FY 2013
2,413 1,244 11,473 13,652 214 117 80 767 2000 4000 6000 8000 10000 12000 14000 16000 1H 2014 1H 2013 Coke & coking products Pig iron & pig iron products Chrome & powder metallurgy products Coal and other 2,984 2,873 1,588 2,025 810 558 822 820 1000 2000 3000 4000 5000 6000 7000 1H 2014 1H 2013 Coke & coking products Pig iron & pig iron products Coal & concentrate Other 6,276 6,204 14,770 15,190 5000 10000 15000 20000 25000 1H 2014 1H 2013 Export Domestic 7
Revenue by Products
Domestic Sales* Export Sales*
RUR mln RUR mln
Export Sales Slightly Increased*
* External revenue
29%
Total: 21,046 Total: 21,394 Total: 14,770 Total: 15,190 Total: 6,204 Total: 6,276
71% 70% 30% RUR mln 48% 26% 13% 13% 46% 32% 9% 13% 8% 90% <1% 16% 78% >1% 5%
Source: IFRS consolidated financial information for the 6 months ended 30 July 2014
>1%
22% 18% 53% 7%
Coal Coke Ore & Pig iron Polema, IMT, Other
821 767 4,639 4,380 13,005 15,549 482 644 2,153 1H 2014 1H 2013 IMT, other Polema Ore & Pig iron Coke Coal
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Segmental Overview
External revenue, RUR mln EBITDA by segments
1H 2013 total: RUR 2,588 mln
EBITDA margin*, %
Total: 21,394 Total: 21,046
1H 2014 total: RUR 4,539 mln
*Including inter-segment revenue 4 % 20 % 73% 2 % 3 % 10 % 62% 22 % 11 12 19 18 16 5 10 5 Coal Coke Ore & Pig iron Polema, IMT, Other 1H 2014 1H 2013
Source: IFRS consolidated financial information for the 6 months ended 30 July 2014
4 %
9% 22% 64% 4%
Coal Coke Ore & Pig iron Polema, IMT, other
327 92 105 43 168 125 50 100 150 200 250 300 350 400 2014 2015 2016 2017 2018 and after Debt Eurobond
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Debt Portfolio as of 30.06.2014
Current Debt Maturity Profile Debt by Currency
(US$m)
Debt by Creditor
- Confirmed undrawn facilities as of June 30, 2014 was above RUR 18.5 billion
- RUR bonds were paid back using the company’s cash flow and bank loans
- Average loan interest rate as of June 30, 2014 was 7.94%
Debt by Security Type
Total debt: $860 m
46% 54%
RUR debt US debt
38% 29% 17% 16%
Eurobond Sberbank Gazprombank Bank of Russia
37% 25% 38%
Secured Unsecured Erobond
Source: Management Accounts
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Company’s Debt Dynamics
24,714 27,180 30,538 27,074 28,821 01.06.2012 01.12.2012 01.06.2013 01.12.2013 01.06.2014
One of the Company’s main priorities is deleveraging. The highest level of debt was reached when the company was completing construction of Butovskaya mine put into operation in May, 2013.
RUR million
30.06.2012 31.12.2012 30.06.2013 31.12.2013 30.06.2014
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Overview of Key Financials
Income Statement Highlights Balance Sheet Highlights
millions of RUR 1H 2013 1H 2014 Revenue 21,046 21,394 Cost of sales (15,535) (14,854) Gross profit 5,511 6,540 Gross profit margin 26% 31% Operating profit 1,510 1,762 Operating profit margin 7% 8% Profit /(Loss) (833) (96) Adjusted EBITDA LTM* 5,635 8 990 millions of RUR December 31, 2013 June 30, 2014 Total Assets 57,936 57,727 Total Liabilities 38,553 38,486 Total Equity 19,383 19,241 Property Plant & Equipment 36,172 35,858 Total Debt 27,074 28,821 Cash & Cash Equivalents** 503 259 Net Debt 26,571 28,562
** Cash & cash equivalents including restricted cash
Cash Flow Highlights
millions of RUR 1H 2013 1H 2014 (Loss) /Profit before income tax (881) 379 Operating cash flows before working capital changes 2,851 4,678 Net cash from operating activities 3,011 2,747 Net cash used in investment activities (4,046) (2,621) Net cash from /(used in) financing activities 1,064 (500)
* Adjusted EBITDA is calculated as earnings before income tax, interest expense, exchange gain/loss, depreciation, amortization, impairment and other non-cash items. Source: IFRS consolidated financial information for the 6 months ended 30 June 2014