MMK CORPORATE PRESENTATION APRIL 2016 MMK THE VALUE STORY 9 MMK - - PowerPoint PPT Presentation

MMK CORPORATE PRESENTATION

APRIL 2016

…Should Change in Future due to Long Term Sustainability …But Still Undervalued … MMK – Fully Renewed Story…

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MMK – THE VALUE STORY

 One of TOP-30 global steel players  High EBITDA margin  Late CAPEX cycle, since major modernization in 2007-2011  Sustainable generation of high FCF  Significantly improved balance sheet - Net Debt / EBITDA ratio of

• nly x0.67

 Still history-driven discount to peers in terms of EV/EBITDA multiple, possible reasons:  Market perception legacy (“heavy CAPEX / low dividends”)  Moderate liquidity of shares (ADTV)  Low vertical integration  High domestic market dependence  Hidden value – MMK Metalurji (Turkey)  Sustainable margin advantage compared to global peers  Anticipated steel demand growth prospects (rebound after 2015-2016 decline) in Russia  #1 local market share  Low cost producer  High HVA products share  Well positioned in terms of local consolidation  No need for large CAPEX in 2016-2025

Mln USD 2012 2013 2014 2015 Revenue 9,328 8,190 7,925 5,839 EBITDA 1,363 1,223 1,607 1,668 EBITDA margin 14.6% 14.9% 20.2% 28.6% CAPEX 674 622 497 348 FCF 519 310 759 1 008 Net Debt 3 518 3 026 2 038 1 124 Company EV/EBITDA, as of 31/12/2015 3.0 5.0 6.0 4.8

29,4% 20,9% 25,8% 20,8% 14,4% 14,6% 14,9% 20,2% 28,6% 22,5% 20,9% 11,5% 14,7% 12,6% 10,0% 10,6% 12,9% 12,3% 0,0% 10,0% 20,0% 30,0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 MMK EBITDA margin Average margin for Top30 Steel Names

Source: ММК, Alfa Bank

ММК POSITION IN GLOBAL METALS&MINING UNIVERSE

Source: ММК, World Steel, Alfa Bank

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MMK forms a JV with Atakas (Turkey) to construct a plant with capacity of 2.3 mln tonnes of steel

TIMELINE: FROM LARGE-SCALE INVESTMENT TO EFFICIENCY AND ENVIRONMENT

Launch of reversing cold-rolling mill and continuous hot-dip galvanizing unit Reconstruction of rolled steel production (mills 170, 370, 450) Transition to continuous casting, substitution of open- hearth furnaces with EAFs Listing of MMK‘s shares on London Stock Exchange Launch of the second stage of cold-rolling mill 2000 Launch of the first stage of cold-rolling mill 2000 Commissioning of EAF with annual capacity of 2.3 mln tonnes of steel in Turkey; increase of share in the Turkish project to 100% Commissioning of thick-plate Mill 5000 MMK receives controlling stake in Belon MMK acquires 100% of ZAO Profit, Russia’s largest scrap collector Major environmental project - sludge decantation complex

• f oxygen-converter

plant Commissioning of two major environmental facilities: coke gas chilling plant and sulphur capture unit Decrease in Debt Debt/EBITDA ratio to 0.6x Launch of pressed components mill and service metal centre in St. Petersburg

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Source: ММК Historical record in pig iron production – 10.3 mln tonnes per year Launch of new labour efficiency and cost

• ptimisation programmes

Mln USD 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Revenue 1,713 1,733 2,065 3,047 4,829 5,380 6,424 8,197 10,550 5,081 7,719 9,306 9,328 8,190 7,925 5,839 EBITDA 444 286 418 1,015 1,735 1,511 2,005 2,407 2,204 1,309 1,606 1,336 1,363 1,223 1,607 1,668 EBITDA margin 25.9% 16.5% 20.2% 33.3% 35.9% 28.1% 31.2% 29.4% 20.1% 25.8% 20.8% 14.4% 14.6% 14.9% 20.2% 28.6% CAPEX 236 287 204 202 395 562 697 1,216 2,112 1,613 2,209 1,154 674 622 497 348 FCF

• 15
• 106
• 2

383 615 693 380

• 717
• 501
• 764
• 1,236
• 698

519 310 759 1 008 Net Debt

• 199

101

• 272
• 649
• 499

666 1 210 620 1 953 3 033 3 992 3 518 3 026 2 038 1 124 Dividends

• 2
• 2
• 5
• 14
• 947
• 1 077
• 547
• 313
• 16
• 198
• 121
• 96
• 117
• 103

THE MMK BD EXPERTISE IS GUARANTIED BY PROFESSIONAL AND WELL-RECOGNISED DIRECTORS

5 Name Education Experience

Victor Rashnikov, 67

Chairman of the MMK BD Magnitogorsk Institute of Mining and Metallurgy

Zumrud Rustamova, 45

Deputy General Director of Polymetal Moscow Economic and Statistics Institute

Valeriy Martsinovich, 42

CEO at Hay Group Eastern Europe Gdańsk University (Poland)

Morgan Ralph Tavakolian, 47

Partner at Baring Vostok Capital Partners

Ruben Aganbegyan, 44

President of Otkritie Holding Moscow State Law Academy

Kirill Liovin, 47

Deputy Chairman of the Management Board of Rosselkhozbank Moscow Aviation Institute named after Ordzhonikidze

Olga Rashnikova, 39

MMK Head of Treasury

Pavel Shilyaev, 45

MMK Chief Executive Officer (CEO) Chelyabinsk State Technological University, Stockholm School of Economics in Russia (St. Petersburg)

Sergey Sulimov, 38

MMK Chief Financial Officer (CFO)

Nikolai Lyadov, 59

MMK Chief Sales Officer (CSO) Magnitogorsk Institute of Mining and Metallurgy

Executive Non-executive

MMK COMPARISON TO GLOBAL STEEL PEERS (BASED ON FY15 RESULTS)

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Sales, mln tonnes 11.8 10.8 15.9 84.6 21.5 35.3 42.3 19.86 6,4 17.0 Revenue, mln USD 5,839 6,396 8,008 63,578 25,727 48,780 42,540 16,439 9,436 13,280 EBITDA, mln USD 1,668 2,096 1,948 5,231 2,559 4,976 4,591 1,822 477 1,345 EBITDA margin,% 28.6% 32.8% 24.3% 8.2% 10.0% 10.2% 10.8% 11.1% 5% 10.1% Net profit, mln USD 421 562 968 (7,946) 374 160 1,767 358 (50) (245) Net debt/EBITDA 0.67 0.38 0.56 3.00 2.94 2.5 3.65 1.50 4.43 FCF, mln USD 1,008 1,441 1,056 (1,394) (917) 4,457 1,836 1,783 32 1,474 FCF yield, % 35.2% 20.7% 20.7%

• 36.2%

9.6% 13.9% 2% 107% CAPEX, mln USD 348 412 595 2,707 3,838 212 2,495 374 368 708 CAPEX / Revenue, % 6.0% 6.9% 7.4% 4.0% 14.9% 0.4% 5.9% 2.3% 4% 5.3% Slab Cash Cost, USD/t 191 203* 190

• Steel Capacities

Utilization rate, % 85% 92% 90%

• 83%

91% 98% 80% 90% 81% Iron ore integration 18% 90% 70% 45% 0% 40% 25% 0% 0% 40% EBITDA/tonne, USD** 141 194 123 51 150 141 108 92 71 79 Market Capitalization, as

• f 31/12/2015, mln USD

2,891 6,953 5,100 7,016 14,161 12,323 19,028 12,820 1,672 1,375

• Div. yield, %

3% 9% 12% 6% 3% 6% 2% 4% 1% 8% ATV 6M, mln USD 6.9 16.7 7.5 117.2 57.6 61.9 98.9 105.3 12.3 7.8 EV/EBITDA (FY16) 3.0 5.0 6.0 6.3 9.3 6.2 8.9 9.3 3.5 5.8

Source: ММК, Companies’ data, Alfa Research, Bloomberg * - non-integrated basis ** - average EBITDA/t for TOP30 Global Steel Makers amounted to 77 USD/t

Hotrolled steel 10% Galvanized flat products 56% Color-coated rolled products 34%

MMK METALURJI - $ 1 BN+ OF HIDDEN VALUE

Source: MMK Istanbul

Iskenderun Europe Middle East Africa Priority markets Important export markets

Total: 795 ths tonnes HVA products, 90%

Key sales markets HRC/Scrap spread recovers in early 2016, USD/t Production structure of MMK Metalurji, 2015

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200 400 600 800 1000 1200 2005 2007 2009 2011 2013 2015

• Apr. 2016

HRC (SBB) Scrap

358 272 211 160 200 521

Iskenderun

• Full-cycle steel making plant (2.3 mtpa) & rolling facilities
• Metal service centre
• Sea port facility

Istanbul

• Metal service centre

Main operations of the company

• Steelmaking/Casting
• Acid pickling/Cold rolling
• Galvanizing/Color coating
• Primary processing (cutting and slitting) of coils
• Steel re-sale/Sale of scrap (from cutting operations)
• Service of cargo

2 407 2 204 1 309 1 606 1 336 1 363 1 223 1 607 1 668 29,4% 20,9% 25,8% 20,8% 14,4% 14,6% 14,9% 20,2% 28,6% 22,5% 20,9% 11,5% 14,7% 12,6% 10,0% 10,6% 12,9% 12,3% 0,0% 5,0% 10,0% 15,0% 20,0% 25,0% 30,0%

• 1 000

2 000 3 000 4 000 2007 2008 2009 2010 2011 2012 2013 2014 2015 EBITDA EBITDA margin Average for Top30 Steel Names

MMK MARGINS SUSTAINABILITY

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Source: ММК, Bloomberg

Historical MMK EBITDA Dynamics, mln$

Even in adverse market conditions MMK’s EBITDA margin never went below 14%

Arguments in Favour of Long-term EBITDA Margin Sustainability

MMK has structural advantage in all stages of business process: Structural surplus of key raw materials on the local market Proximity to suppliers and net-back pricing Low prices for energy resources Economy on scale High capacity utilization rates Low energy efficiency (i.e. coking coal) Low productivity High HVA products share Proximity to end markets Natural hedge due to net-back pricing for local sales

+40-50 $/t

• 20 $/t

+20-30 $/t

Sales & Marketing Production Process Raw Materials

Net effect – +40-60 $/t

For instance: in 2015 MMK EBITDA/t was $141, while Top30 Global steel makers had only $77 of EBITDA/t

       

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BENEFITS COMING FROM DOMESTIC MARKET

Source: ММК

Total effect on EBITDA $300 mln

Due to surplus of main raw materials on local market and netback pricing mechanism MMK has price advantage to main peers from China and EU. Compared to Chinese steel makers MMK‘s cost advantage amounts to:

• $8 per tonne of iron ore

concentrate;

• $20 per tonne of pelets;
• $10 per tonne of coking coal
• $10 per tonne of scrap

MMK’s focus on Russian market and proximity to end customers in the middle of Russia result in higher average realized price (due to netback pricing mechanism).

Total effect on EBITDA $360 mln

Structural surplus of main raw materials in Russia, mln tonnes

97,6 97,5 84,6 86,2 40,0 80,0 120,0 2014 2015 Iron Ore Supply Iron Ore Demand 55,2 53,9 39,4 39,1 0,0 40,0 80,0 2014 2015 Coking Coal Supply Coking Coal Demand

• 1. Sales: Just in time (+/-3 days)

2.Baby Capex and Lean

• 4. Focus on core business, sale of non-core assets (FMG, MMK Metalurji)
• 5. Supply. Delivery just in time
• 6. Personalisation in resource management (Micro Cost Centre project)
• 7. Zero tolerance of health and safety violations
• 8. Employees’ health promotion
• 9. Clean city program
• 10. Solution of the single-industry city issue

STRATEGIC PROJECTS PORTFOLIO HAS BEEN DEVELOPED TO ENACT FURTHER OPERATIONAL EFFICIENCY GROWTH, 2016-2025 STRATEGY 10

Source: ММК

Total effect - 907 mln $

• r 2-3% p.a.

3.Digital Operations, IoT

mln $

345 136 239 187

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YANDEX – “SNIPER” PROJECT

Source: ММК

5,1 5,1 3,9 2,7 3,5 5,1 6,4 8,4 4 8 12 2000 2005 2010 2015F Рынок РФ (с СНГ) Экспорт

Russia and CIS Export

mln t 8,7 10,2 10,2 11,0 + 4.9 mln

• 2.4 mln

Changes in 2015/2000

MMK Group sales structure, mln tonnes

MMK SUBSTITUTE IMPORTS AND WILL BENEFIT FROM DOMESTIC DEMAND RECOVERY IN FUTURE

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Source: ММК, Russian Steel

• 27
• 25
• 25
• 24
• 25
• 27
• 26

60 61 63 62 65 64 61 5 7 7 7 5 4 2 38 42 45 46 45 41 37

• 40
• 20

20 40 60 80 2010 2011 2012 2013 2014 2015 2016F Export Production Import Apparent Steel Use

Products balance in Russia, mln tonnes …but after 2016 gradual recovery is expected

0% 40% 80% 120% 160% Pipe-making Machnery Car-making Construction

• 9%
• 25%
• 15%
• 14%
• 12%
• 11%

1%

• 30%
• 25%
• 20%
• 15%
• 10%
• 5%

0% 5% Total Car-maki ng White Goods Pipe-mak ing Machine Building Construction Metal Hardware

Russian steel consumption significantly declined in 2015…

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MMK IS WELL POSITIONED FOR LOCAL CONSOLIDATION

Company Major business Areas of synergy Estimated value of synergy (on EBITDA level) Capacity management Sales management Purchasing Steel / Mining Steel / Mining Steel / Mining Pipe making Pipe making Iron ore / Steel Iron ore

Source: ММК

500-700 m $ 300-500 m $ 100-300 m $ 100-300 m $ 100-300 m $ 100-300 m $ 100-200 m $

(2) Supporting documents

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APPENDICES

(1) Latest financials

KEY HIGHLIGHTS FOR MMK GROUP

Revenue USD 5,839 mln down 26.6% y-o-y Cost of sales USD 4,054 mln down 34.7% y-o-y EBITDA USD 1,668 mln up 3.8% y-o-y EBITDA margin 28.6% up 8.4 p.p. y-o-y Net profit USD 421 mln as compared to loss of USD 44 mln in FY 2014 Net debt USD 1,124 mln down by USD 914 mln as compared to 31.12.2014 Net debt / EBITDA 0.67x down from 1.27x as of 31.12.2014 Free cash flow (FCF) USD 1,008 mln up 32.8% y-o-y CAPEX USD 348 mln down 30.0% y-o-y Revenue USD 1,181 mln down 21.4% q-o-q Cost of sales USD 893 mln down 13.8% q-o-q EBITDA USD 275 mln down 36.0% q-o-q EBITDA margin 23.3% down 5.3 p.p. q-o-q Net loss USD -125 mln as compared to profit of USD 78 mln in Q3 2015 Cash cost of slab USD 191 per tonne down 2.6% q-o-q Free cash flow (FCF) USD 68 mln down 88.1% q-o-q CAPEX USD 108 mln up 27.1% q-o-q

Q4 2015 Financial results FY 2015 Financial results

Source: ММК

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HIGH CAPACITY UTILISATION

• MMK Group’s finished steel products output in FY 2015 was

down 8% y-o-y.

• MMK Group High Value Added (HVA) steel products output in FY

2015 was 5,224 thousand tonnes. The share of HVA products in total output volume was 46.7% in FY 2015.

• The total steel-making capacity utilization rate at the main

production site in Magnitogorsk in FY 2015 was approx. 85%. * - incl. made from ММК steel

Key production indicators, ths tonnes MMK Group finished products dynamics, ths tonnes Key capacities utilisation rates in FY 2015, %

Source: ММК Q4 ‘15 Q3 ‘15 % FY ‘15 FY ‘14 % Cast iron 2,541 2,656

• 4.3%

10,132 10,280

• 1.4%

Crude steel incl. 2,897 3,141

• 7.8%

12,236 13,031

• 6.1%

MMK 2,897 3,141

• 7.8%

12,236 13,031

• 6.1%

MMK Metalurji

• Finished products

2,668 2,890

• 7.7%

11,188 12,158

• 8.0%

MMK 2,597 2,894

• 10.3%

11,012 11,650

• 5.5%

MMK-Metiz* 98 117

• 16.2%

418 508

• 17.7%

ММК Metalurji* 213 198 7.6% 795 690 15.2% HVA products 1,214 1,351

• 10.1%

5,224 5,480

• 4.7%

Belon coking coal concentrate 790 730 8.2% 2,822 2,942

• 4.1%

88% 95% 73% 88% 94% 35% 100% 100% 0% 25% 50% 75% 100% Total by products Coated steel products CRC HRC Long Steel Steel EAF Steel BOF Blast Furnace 2 919 3 227 3 131 2 914 2 946 2 683 2 890 2 668 43,9% 44,4% 45,4% 46,1% 46,3% 48,3% 46,7% 45,5% 0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% 500 1 000 1 500 2 000 2 500 3 000 3 500 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Steel products HVA Products Share

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MMK GROUP SALES STRUCTURE ON THE RUSSIAN AND CIS MARKET

Sales structure on the Russian and CIS market, ths tonnes Russia and CIS market sales by region, ths tonnes

• Total sales volume on the Russian and CIS market in Q4 2015 was 1,957

ths tonnes, down 370 ths tonnes q-o-q. This was primarily due to overall seasonal decline in domestic demand for steel during the quarter.

• Sales of thick plate produced at Mill 5000 in Q4 2015 decreased by 119 ths

tonnes, or 46.0%, q-o-q, which was due to the irregular supply schedule of large-diameter pipes for the construction of major Gazprom projects. This factor also resulted in lower share of shipments to pipe makers in the

• verall sales structure.
• The increase in the share of cold-rolled steel in shipments for Q4 2015 was

due to a recovery in demand following a significant decline in shipments of this product in Q3 2015.

Russia and CIS market sales by sector, ths tonnes

Source: ММК

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18% 18% 20% 19% 35% 35% 37% 37% 12% 15% 11% 7% 13% 13% 10% 14% 22% 19% 22% 23% Q1 2015 Q2 2015 Q3 2015 Q4 2015 Downstream products Flat cold-rolled products Mill 5000 products Flat hot-rolled products Long products

HVA 44% HVA 43% HVA 47% HVA 47%

1,957 2,327 1,947 2,197 37% 40% 40% 36% 25% 24% 24% 22% 9% 9% 9% 12% 9% 8% 10% 9% 7% 6% 6% 8% 13% 13% 11% 13% 1Q 2015 2Q 2015 3Q 2015 4Q 2015 CIS Other Siberia Central Region Volga Region Ural 1,957 2,327 2,197 1,947 23% 24% 28% 31% 8% 9% 7% 9% 29% 32% 31% 22% 7% 7% 6% 7% 5% 4% 3% 4% 2% 1% 1% 1% 10% 8% 11% 11% 3% 2% 2% 2% 13% 13% 11% 13% 1Q 2015 2Q 2015 3Q 2015 4Q 2015 CIS sales Other Construction sector Railway build. Automobile sector Machine building Pipe production Hardware and semi- integrated factories Service metal service 1,957 2,327 1,947 2,197

MMK GROUP POSITION ON KEY INTERNATIONAL MARKETS

Sales structure on international markets, ths tonnes International sales structure by region, ths tonnes Sales share by market, ths tonnes

• Sales on international markets in Q4 2015 amounted to 710 ths tonnes.

This increase was due to a seasonal decline in domestic demand, which was

• ffset by an increase in export sales. The share of hot-rolled products

increased to 62% of exports, while the share of HVA products decreased to 37%.

• The decrease in export sales of HVA products was due to sufficient

domestic demand for these products.

• In Q4 2015, the Company increased its proportion of sales to the Middle

East as compared to the previous quarter. Sales to Europe were flat q-o-q.

Source: ММК

80% 87% 88% 82% 79% 82% 84% 84% 77% 73% 80% 75% 20% 13% 12% 18% 21% 18% 16% 16% 23% 27% 20% 25% 0% 25% 50% 75% 100% Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Domestic market (Russia + CIS) Export

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2,6% 2,7% 5,0% 4,4% 2,6% 1,3% 60,9% 53,5% 54,1% 61,8% 7,5% 11,3% 9,4% 9,2% 24,0% 28,1% 33,9% 27,7% Q1 2015 Q2 2015 Q3 2015 Q4 2015 Downstream products Flat cold-rolled products Flat hot-rolled products Long products Slabs and billets HVA 37% HVA 43% HVA 39% HVA 32% 748 736 562 710 0% 3% 2% 0% 49% 49% 62% 69% 44% 33% 25% 26% 7% 15% 11% 5% 1Q 2015 2Q 2015 3Q 2015 4Q 2015 Africa Europe Middle East Asia and Far East 710 562 736 748

134 171 165 173 139 152 132 131 500 1 000 1 500 2 000 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 1 774 2 047 2 013 1 574 1 415 1 574 1 431 1 092 500 1 000 1 500 2 000 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015

KEY FINANCIAL HIGHLIGHTS OF MMK GROUP

• Revenue for Q4 2015 amounted to USD 1,181 mln, down 21.4% q-o-q. The key factors were the seasonal decline in domestic demand and a lower

average sales price (down 11.9%).

• 23.7%
• 0.8%

Coal segment revenue, mln USD Consolidation, mln USD Steel segment revenue (Russia), mln USD Steel segment revenue (Turkey), mln USD

Source: ММК

69 72 65 65 43 68 53 53 500 1 000 1 500 2 000 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015

• 98
• 79
• 108
• 85
• 86
• 149
• 114
• 95
• 2 200
• 1 700
• 1 200
• 700
• 200

Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015

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1 570 28 11

• 2

1 559 36 72 1

• 10

490 990 1 490 Steel (Russia) Steel (Turkey) Coal Mining Eliminations 12M 14 12M 15 402 12 16 248 6 18 3

• 10

90 190 290 390 Steel (Russia) Steel (Turkey) Coal Mining Eliminations Q3 15 Q4 15

469 478 471 385 311 345 299 294 96 126 169 131 153 178 143 96 200 400 600 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 COGS EBITDA/tonne

KEY FINANCIAL HIGHLIGHTS OF MMK GROUP

• A decrease in global steel prices and seasonal weakening of the business on

the domestic market in Q4 2015 contributed to decrease in the average sales price and EBITDA per tonne of metal

• EBITDA for the steel segment (Russia) in Q4 2015 declined q-o-q due to a

decrease in sales amid lower prices

• EBITDA for the steel segment (Turkey) in FY 2015 amounted to USD 36 mln,

up 28.6% y-o-y. This was mainly due to an increase in sales.

• EBITDA of the coal segment in FY 2015 increased more than 6.5x y-o-y driven

by an increase in sales prices and a reduction in the company’s costs. MMK Group’s EBITDA for Q4 2015 amounted to USD 275 mln, down 36.0% q-o-q MMK Group’s EBITDA for FY 2015 was USD 1,668 mln, up 3.8% y-o-y

565 604 640 516 464 523

EBITDA/t vs metal sale price, USD/t Annual EBITDA dynamics, mln USD Quarterly EBITDA dynamics, mln USD

442 Source: ММК 390

20

• 79

159 26

• 150

196 272 78

• 125
• 170
• 70

30 130 230 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 196 191

• 3
• 1
• 1

100 110 120 130 140 150 160 170 180 190 200 Slab cash-cost Q3 2015 Raw materials price Raw materials structure Other factors Slab cash-cost Q4 2015

ANALYSIS OF KEY FINANCIAL HIGHLIGHTS

Cash-cost of slab dynamics, USD/t Net profit dynamics, mln USD Analysis of revenue, Q4 2015 q-o-q, mln USD

• The key factors impacting revenue in Q4 2015 were a decrease in sales

volumes and steel prices.

• In Q4 2015, the Company’s loss amounted to USD 125 mln. Key factors

included an FX loss of USD 53 million and creation of provisions for impairment of raw materials and land recultivation totaling USD 165 mln. Excluding these items, the profit for Q4 2015 was USD 93 mln.

• In FY 2015, profit amounted to USD 421 mln, as compared to loss of USD

44 mln in FY 2014.

• The cash cost of slab decreased by 2.6% in Q4 2015, mainly due to the

decrease in raw material prices.

• 2.6%

A loss in Q4 2015 was due to

• ne-off non-cash factors

Source: ММК 1 276 1 179 1 179 1 181 1 502

• 61
• 131
• 33
• 46
• 51

3 500 1 000 1 500 Q3 2015 Revenue Price change effect Products volumes FX Other MMK factors Other "Steel Russia" MMK Metalurji + Coal… Q4 2015 Revenue

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DEPRECEATION AND CAPEX DYNAMICS

Quarterly CAPEX dynamics, mln USD CAPEX decrease following the end of the investment cycle, mln USD Quarterly depreciation dynamics, mln USD

• MMK Group’s capex in Q4 2015 amounted to USD 108 mln. The increase
• n the previous quarter was due to scheduled maintenance at blast

furnace no. 9.

• In FY 2015 capex decreased by 30.0% y-o-y to USD 348 mln – below the

level of USD 400 mln announced earlier.

• Capex volume in 2016 will remain between USD 0.4 bln and USD 0.5 bln

– fully in line with the long-term development strategy of the Company.

Source: ММК

1 216 2 112 1 613 2 209 1 154 674 622 497 348 500 1 000 1 500 2 000 2 500 2007 2008 2009 2010 2011 2012 2013 2014 2015 130 91 130 270 131 150 112 104 64 91 85 108 100 200 300 Q1 '13Q2 '13Q3 '13Q4 '13Q1 '14Q2 '14Q3 '14Q4 '14Q1 '15Q2 '15Q3 '15Q4 '15 246 242 237 244 184 202 208 152 123 142 127 143 50 100 150 200 250 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15

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1 668 1 356 1 008 17 329 348 500 1 000 1 500 2 000 2 500 EBITDA WoC Net financial cost, tax, etc. FFO PPE FCF 12M '15 1 262 1 245 1 214 967 1 031 1 203 748 812 200 400 600 800 1 000 1 200 1 400 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15

MMK BENEFITS FROM ONE OF THE HIGHEST FREE CASH FLOW YIELDS IN THE SECTOR

Net working capital dynamics, mln USD Highest FCF in the Company’s history, mln USD

As of the end of Q4 2015 net working capital / revenue ratio amounted to 17.2%

FCF 1,008 MC as of 31.12.2015 2,867 FCF yield 35.2%

Source: ММК

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HIGH OPERATIONAL PERFORMANCE SUPPORTS EFFICIENT DECREASE OF THE DEBT LOAD, mln USD

• MMK Group’s net debt as of the end of 2015 decreased to USD 1,124 mln, down by USD 914 mln compared to 31.12.2014.
• At the end of FY 2015, net debt/EBITDA decreased to 0.67x, the lowest since 2008, but somewhat higher than the debt load level of key peers.
• The Company plans to further reduce the debt load in 2016 by using its cash funds and cash flow from operations.

Source: ММК

4 416 3 880 3 180 2 587 1 847 3 992 3 518 3 026 2 038 1 124 2,99 2,59 2,47 1,27 0,67 0,00 0,50 1,00 1,50 2,00 2,50 3,00 3,50 1 000 2 000 3 000 4 000 31.12.2011 31.12.2012 31.12.2013 31.12.2014 31.12.2015 Total Debt Net Debt Net Debt/EBITDA (RHS)

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369 893 354 1 014 212 500 1 000 1 500 2 000 Liquidity sources Short-term Debt Cash Sort-term deposit Credit lines FMG Stake 321 185 105 96 96 67 8 277 315 56 199 114 8 250 500 750 1 000 2016 2017 2018 2019 Q1 Q2 Q3 Q4 344 502 46 132 156 88 3 1 250 500 750 31.12.2014 31.12.2015 USD EUR RUB TYR

ММК GROUP’S DEBT PROFILE

High level of liquidity, mln USD Debt maturity schedule, mln USD Debt and cash funds structure by currency, mln USD

• The share of debt which is denominated in foreign currencies (USD+EUR)

amounted to approx. 85% as of 31.12.2015.

• The volume of cash funds and short-term deposits in the MMK Group’s

balance sheet (USD 723 mln) almost fully covers the short-term debt of MMK Group.

• The debt maturity schedule does not presume any significant one-time

payments. 893 681 1,949 C&CE and Deposits 723 549

Source: ММК

177 1 515 1 189 518 372 554 286 500 1 000 1 500 2 000 2 500 3 000 31.12.2014 31.12.2015 USD EUR RUB Debt 1,847 2,587

25

STRUCTURE OF OPERATING COSTS AND CASH COSTS

• In Q4 2015, the share of metal scrap (due to a decrease in capacity utilisation
• f EAFs) decreased in the structure of OJSC MMK’s material costs.
• The share of coal and pellets decreased due to maintenance at blast-furnace

No.9 which started in December 2015.

• The 12.7% decrease in operating costs in Q4 2015 q-o-q was due to the

decline in production volumes, the ruble weakening and cost-optimization efforts.

Cost of sales, mln USD OJSC MMK material costs, mln USD MMK Group operating costs, mln USD

Source: ММК

26

1Q 15 2Q 15 3Q 15 4Q 15 Cost of sales 1,018 1,107 1,036 893 Selling expenses 99 131 111 107 General and administrative expenses 61 56 51 53 Other operating expenses

• 11

3 8 Total operating expenses 1,167 1,297 1,206 1,053 78,2% 69,9% 68,6% 66,1% 12,5% 13,8% 13,2% 14,7% 11,8% 12,6% 11,9% 15,2% 2,5% 2,9% 1,3% 5,5%

• 5,0%

0,8% 5,0%

• 1,3%

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Other production costs Depreciation Labour costs Material costs

Change in work in progress

893 1,036 1,018 1,107 12,3% 12,7% 13,1% 14,7% 11,5% 14,7% 14,2% 14,1% 16,5% 24,2% 22,6% 23,0% 19,2% 8,8% 10,8% 6,8% 20,8% 18,8% 17,9% 18,0% 8,2% 9,6% 9,8% 10,7% 8,5% 8,7% 9,1% 10,4% 3,0% 2,5% 2,5% 2,3% Q1 2015 Q2 2015 Q3 2015 Q4 2015 Power from outside sources Fuel from outside sources Auxiliary materials Other main materials Scrap Сoals Iron ore (pellets) Iron ore (sinter) 770 779 678 617

(2) Supporting documents

9

27

APPENDICES

(1) Latest financials

KEY ISSUES / TRENDS IN GLOBAL METALS&MINING

Source: ММК

Key Questions MMK View

 Iron Ore Price Dynamics? Will be on low levels ($40-$50) in mid term period (2-3 years) but will grow up to $55-$65 in a longer run due to market balancing  Global Steel Demand and Overcapacity Forecast? Global demand for steel is expected to grow by 0.7% y-o-y in 2016 and will be influence by demand coming from China. Capacity utilizations will remain weak (≈70%) until excessive steel making capacities are removed, first of all in China.  Protectionism Dynamics? Protectionism will be growing in the coming years especially in US and EU regions. Targeted mostly against Chinese steel producers.  Worst Case Scenario for Russian Steel? Simultaneous growth of oil price (≈70 $/t) and rouble strengthening against the background of low iron ore price (≈40$/t) will result in margins compression. Likelihood – 10%. Political ban on Russian steel exports. 30 mln t of steel under risk (Russian production/consumption is 70 vs. 40 mln t.) Likelihood – 1%  Sources of Value Creation in Steel in Future? Local consolidation to arrange excessive capacities and increase pricing power. Digital operations to drive costs down.

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29

1,04 0,55 2003 2014

• 47%

LTIFR fell by 47%

MMK HAS ACHIEVED SIGNIFICANT IMPROVEMENTS IN LABOUR PRODUCTIVITY, SAFETY AND ENVIRONMENTAL IMPACT

36,6 18,1 2000 2015F

• 51%

Emission rate fell by 51 % (kg/t)

33,5 18,5 2000 2015F

• 45%

Headcount at OJSC declined by 45% (ths people) (incidents per 1,000 people/y)

Source: ММК

0,7 1,2 2,1 1,6 2,2 1,2 0,7 0,6 0,5 0,35 0,0 0,5 1,0 1,5 2,0 2,5 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

2016 - 2019 New sintering plant 2015-2017 New continuous hot-dip galvanizing unit 2016 - 2018 Oxygen unit

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

2018-2023 New blast-furnace 2018-2021 New coke battery 2016 – 2018 Reconstruction of Mill 2500 2015 - 2017 Metal desulphurization plant

Infrastructure, energy and environmental projects Modernization and launch of new rolling capacities Modernization at sintering-coking- blast furnace production capacities

Investment programme principles:

• Rigorous approach to projects selection, based
• n DCF valuation and with risk assessment
• Balanced costs distribution, with no peaks
• Investment not exceeding operational profit
• Debt/EBITDA ratio of no more than 2x
• Dividend payment of no less that 20% IFRS net

profit

CAPEX of MMK, 2006 - 2025

30

INVESTMENT IN 2016-2025 WILL BE AIMED AT INCREASING EFFICIENCY AND DECREASING COST OF SALES

Source: ММК

From 2016 till 2025 MMK Group plan to maintain its CAPEX within the range of 0.4- 0.6 bln $ per year (including maintenance CAPEX of 0.2-0.25 bln $), subject to FX.

H/r steel 36% Long steel products 19% Thick plate 12% Coated & Downstream products 21% C/r steel 12% 2,1 8,4 3,7 2,6 2 4 6 8 10 1996 2000 2004 2008 2012 Domestic market (Russia + CIS) Export

MAXIMISING DOMESTIC SALES SHARE

Source: MMK MMK has been organically increasing share

• f domestic sales, while maintaining a

significant share of export HVA products, 44% Total: 8,424 ths tonnes Total: 8,424 ths tonnes

MMK sales by market, mln tonnes MMK domestic sales structure MMK domestic sales by region, 2015 MMK domestic sales structure by sector, 2015

31

Pipe production 29% Spot sales in Russia 26% Spot sales in CIS 12% Construction sector 10% Machine / Railcar building 8% Metalware and semi-integrated factories 8% Automobile sector 4% Ship building 1% Bridge building 1% Other 1%

19% 57% 24% 0% 25% 50% 75% 100% 2015 Top 8 Customers Rest of the Domestic Market Export Market

DIVERSIFIED DOMESTIC SALES

Source: MMK Top eight clients account for just 19% in MMK sales Total: 2,134 ths tonnes The largest external client accounts for less than 5%

Export sales

Key clients Minor clients

Shipments to end-customers (85%) Spot sales (15%)

MMK Steel Trade AG MMK Trading 100%

Dealers Regional distribution network

Domestic sales

Top eight clients, ths tonnes Share of top eight clients in shipments, %

32

Chel Pipe; 471 Severski Pipe Plant (TMK); 284 [ИМЯ КАТЕГОРИИ] (TMK); [ЗНАЧЕНИЕ] Stalepromyshle nay Company; 180 Uraltrubprom; 219 Lysvenski Steel Plant; 199 Naberezhnochel

• n. Pipe Plant; 164

Metal Profile Company; 160

MAINTAINING GOOD PROGRESS ACHIEVED IN SELF-SUFFICIENCY

Source: MMK

33

2007 Self-sufficiency Level, % 2015 Self-sufficiency Level, %

10% 85% 90% 100% 100% 15% 0% 25% 50% 75% 100% Iron Ore Coal Scrap Electricity Own Purchased

MMK has been active in terms of increasing the level of vertical integration, particularly in respect of raw materials, since its IPO

• Acquisition of 100% share in “Profit” scrap company in June 2009
• Increase of stake in Belon coal company to 82.6% in October 2009 and to 95% in September 2013
• Increase of in-house production of iron ore to 19% (mining and tailings processing) but the majority of iron ore needs are covered by supplies from

Metalloinvest and ERG (former ENRC) under long-term contracts

• Generation of c. 73% of electricity supplies in 2015

Impressive progress has been achieved over the past 5 years

19% 37% 100% 73% 81% 63% 27% 0% 25% 50% 75% 100% Iron Ore Coal Scrap Electricity Own Purchased

1,8 1,7 2,6 3,3 2,5 4,5 4,8 5,1 4,6 4,2 1 2 3 4 5 6 2012 2013 2014 2015 2018E Demand for LDP Demand for MDP 799 843 924 953 200 400 600 800 1 000 2012 2013 2014 2015

EMPHASIZED DIRECT EXPOSURE TO NICHE SEGMENTS

Source: MMK

LDP & MDP Demand in Russia, m tonnes Mill 5000 Production Dynamics, th. tonnes

34

MMK Share in Supplies to Russian Pipe Industry in 2015 Product Mix Supplied to Pipe Industry in 2013-2015, th. tonnes

Demand for LDP remains strong

Healthy demand for thick plate supports Mill 5000 utilization rates +5,5% +9,6% MMK was the biggest supplier to Russian pipe industry in 2015 +3,1% 1 488 543 100 71 1 764 757 121 105 1 305 820 160 82 500 1 000 1 500 HRC Thick Plate (m. 5000) H/r Plate CRC 2013 2014 2015 Import; 6% MMK; 36% Others; 58%

DOMESTIC MARKET PRICE PREMIUM DYNAMICS

HRC FOB Black Sea vs. HRC Domestic Price Dynamics, $/t

Source: MetalExpert, AlfaBank estimates, Russian Steel

35

Domestic Price Premium Performance, $/t

728 533 320 749 578 282 200 300 400 500 600 700 800 HRC domestic, $/t HRC FOB Black Sea, $/t

• Historically local producers enjoyed domestic market

premium which recovered shortly after being compressed due to strong domestic competition (2013) or rouble devaluation (2014).

• In spite of significant domestic market premium prices for

the clients in Russia were lower, compared to prices on international markets

Domestic HRC Price, $/t

9 56 30 42 19 8 26

• 15

22

• 2 -3
• 40

14 0

• 36

103 48 68

• 60
• 40
• 20

20 40 60 80 100 120 1Q11A 4Q11A 3Q12A 2Q13A 1Q14A 4Q14A 3Q15A

Average price premium for the period

NORTH AMERICA, EUROPE AND SOUTHEAST ASIA ARE THE MAJOR REGIONS THAT HAVE INTRODUCED TRADE BARRIERS ON RUSSIAN STEEL

Source: ved. gov.ru, Goldman Sachs Global Investment Research

36

Country/Region Products Status Start Date End Date Comments

Indonesia HRC Import duty 27-Dec-13 26-Dec-18 SVST- 5.58%; NLMK - 8.96%, MMK - 20%, others - 20% USA HRC Import duty 19-Dec-14 16-Jun-16 SVST - 73.59%; others- 184.56% Thailand HRC Import duty 25-May-15 22-May-20 NLMK - 24.2%; SVST & others- 35.17% Malaysia HRC Import duty 2-Jul-15 1-Jul-18 Jul-15 - July-16 - 17.4%; July-16 - July-17 - 13.9%, July-17 - July 18 - 10.4% Canada HRC Import duty 7-Dec-15 n.a. SVST - 15.3%; others - 98.1% USA CRC Import duty 22-Dec-15 n.a. SVST excluded; NLMK & others - 6.33% Morocco CRC Import duty 31-Dec-15 31-Dec-18 Jan-16 - Dec-16 - 20%; Jan-17 - Dec-17 - 18%, Jan 18 - Dec 18 - 16% Turkey HRC Investigation 28-Jan-15 n.a. Potential import duty - 14% India HRC Investigation 7-Sep-15 n.a. Temporarily import duty implemented from 14-Sep-15 EU CRC Preliminary duty 28-Jan-16 28-Jun-21 6-month period before the duties become final (assuming no objections from Russia) USA Thick plates Review 1-Oct-14 n.a. Mexico Flat products Review 7-Sep-15 n.a. Import duty was charged from 22-Sep-10 to 21-Sep-15. Import duties on coiled steel products are steel active

DISCLAIMER

• THIS PRESENTATION IS FOR INFORMATION ONLY.
• THIS PRESENTATION IS FOR DISTRIBUTION IN UK ONLY AMONG THE PEOPLE HAVING PROFESSIONAL SKILL IN THE ISSUES RELATED TO INVESTMENTS WITHIN THE

MEANING OF ARTICLE 19(5) OF DIRECTIVE ON FINANCIAL ADVERTISEMENT APPROVED IN 2005 ON THE BASIS OF LAW ON FINANCIAL SERVICES AND MARKETS 2000, OR THOSE PEOPLE, AMONG WHICH IT MAY BE LAWFULLY DISTRIBUTED. THIS INFORMATION IS CONFIDENTIAL AND PROVIDED TO YOU EXCLUSIVELY FOR YOUR REFERENCE. BY ACCEPTANCE OF THIS INFORMATION THE RECIPIENT HEREOF CONFIRMS THAT HE OR SHE IS A SPECIALIST IN THE SPHERE OF INVESTMENTS WITHIN THE MEANING OF ARTICLE 19(5) OF DIRECTIVE ON FINANCIAL ADVERTISEMENT APPROVED IN 2005 ON THE BASIS OF LAW ON FINANCIAL SERVICES AND MARKETS 2000, ACTING IN HIS OR HER NATURE.

• THIS PRESENTATION DOES NOT CONSTITUTE AN OFFER OR A PART THEREOF, OR INVITATION TO SELL OR TO ISSUE, OR TO SUBSCRIBE FOR OR OTHERWISE PURCHASE ANY

SHARES IN THE COMPANY OR ANY OTHER SECURITIES AND NOTHING CONTAINED HEREIN SHALL FORM THE BASIS OF ANY CONTRACT OR COMMITMENT WHATSOEVER.

• THE INFORMATION CONTAINED HEREIN IS SUBJECT TO VERIFICATION, COMPLETION AND MAY BE SIGNIFICANTLY CHANGED. NONE OF THE PERSONS IS LIABLE TO UPDATE

OR MAINTAIN TOPICALITY OF THE INFORMATION CONTAINED HEREIN, AND THIS INFORMATION AND OPINIONS REFLECTED THEREIN COULD BE CHANGED WITHOUT ANY NOTIFICATION THEREABOUT.

• THIS INFORMATION DOES NOT CONSTITUTE AN OFFER OF THE SECURITIES TO BE SOLD IN RUSSIA, THE UNITED STATES OR ANY OTHER JURISDICTION. THE SECURITIES

HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE US SECURITIES ACT OF 1933,AS AMENDED, AND MAY NOT BE OFFERED OR SOLD INTO THE UNITED STATES EXCEPT IN A TRANSACTION REGISTERED UNDER SUCH ACT, OR NOT REQUIRED TO BE REGISTERED THERE UNDER, OR PURSUANT TO AND EXEMPTION FROM REGISTRATION REQUIREMENTS THEREOF. NO OFFERING OF SECURITIES IS BEING MADE INTO THE UNITED STATES. NO SECURITIES WILL BE REGISTERED UNDER THE APPLICABLE SECURITIES ACT OF ANY STATE OR TERRITORIAL ENTITY OF CANADA AND JAPAN. THIS PRESENTATION IS NOT SUBJECT TO MAILING, TRANSFERRING OR OTHER TYPE OF DISTRIBUTION IN THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA AND JAPAN, OR TO THE TERRITORY OR FROM THE TERRITORY OF THE SPECIFIED COUNTRIES TO THE NAME OF ANY ANALYST IN THE SPHERE OF SECURITIES OR OTHER PERSON IN ANY OF THE SPECIFIED JURISDICTIONS. YOU AGREE TO AVOID FROM DISTRIBUTION OF ANY REPORT RESULTING FROM THE SURVEY OR SIMILAR DOCUMENTS ON THE TERRITORY OF THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA AND JAPAN, SAVE AS IN ACCORDANCE WITH THE FEDERAL LAWS OF THE UNITED STATES ON SECURITIES INCLUDING SECURITIES ACT, AS WELL AS THE APPLICABLE LAWS OF CANADA, AUSTRALIA AND JAPAN, ACCORDINGLY.

• THIS PRESENTATION INCLUDES THE STATEMENTS RELATED TO THE FUTURE, WHICH REPRODUCE THE INTENTIONS, OPINIONS AND CURRENT EXPECTATIONS OF THE
• COMPANY. THE STATEMENTS FOR THE FUTURE INCLUDE ANYTHING, WHICH IS NOT A FACT OCCURED. THE COMPANY TRIED TO HIGHLIGHT SUCH STATEMENTS RELATED TO

THE FUTURE BY MEANS OF THE WORDS, SUCH AS “MAY”, “WILL”, “SHOULD”, “EXPECT”, “INTEND”, “EVALUATE”, “ASSUME”, “PLAN”, “TO HAVE AN OPINION”, “TRY”, “FORECAST”, “CONTINUE” AND SIMILAR WORDS OR THEIR NEGATIVE FORMS. SUCH STATEMENTS HAD BEEN DONE BASING ON THE ASSUMPTIONS AND ASSESSMENTS, WHICH MAY OCCUR FAULTY, THOUGH THE COMPANY CONSIDERS THEM REASONABLE AT THE CURRENT MOMENT.

• SUCH STATEMENTS RELATED TO THE FUTURE ARE LINKED TO THE RISKS, UNCERTAINTIES AND ASSUMPTIONS, AS WELL AS TO OTHER FACTORS, WHICH MAY LEAD TO THE

EVENT THAT ACTUAL RESULTS OF THE COMPANY’S ACTIVITY AND ACTIVITY OF THE MARKETS, ON WHICH IT OPERATES OR INTENDS TO OPERATE IN, THEIR FINANCIAL STATUS, LIQUIDITY, CHARACTERISTICS, PROSPECTS AND ABILITIES COUILD MATERIALLY DIFFER FROM THOSE, WHICH ARE EXPRESSED WITH THE HELP OF SUCH STATEMENTS RELATED TO THE FUTURE. THE IMPORTANT FACTORS, WHICH MAY RESULT IN SUCH DIFFERENCES, INCLUDE, INTER ALIA, CHANGING BUSINESS CONDITIONS AND OTHER MARKET CONDITIONS, COMMON ECONOMIC CONDITIONS IN RUSSIA, EU COUNTRIES, THE UNITED STATES OF AMERICA OR ANYWHERE ELSE, AS WELL AS THE ABILITY OF THE COMPANY TO MEET THE TRENDS IN THE INDUSTRY. THE MATERIAL DIFFERENCE OF THE ACTUAL RESULTS, FEATURES AND ACHIEVEMENTS MAY BE THE RESULT OF ADDITIONAL FACTORS. THE COMPANY AND ALL ITS DIRECTORS, OFFICERS, EMPLOYEES AND ADVISORS HEREWITH STATE THAT THEY ARE NOT OBLIGED TO ISSUE ANY UPDATE OF OR REVISE ANY STATEMENTS RELATED TO THE FUTURE CONTAINED HEREIN, OR DISCLOSE ANY CHANGES IN THE FORECASTS OF THE COMPANY OR EVENTS, CONDITIONS AND CIRCUMSTANCES, WHICH SUCH STATEMENTS RELATED TO THE FUTURE ARE BASED ON, SAVE AS IN THE CASES PROVIDED FOR BY THE APPLICABLE LAWS.

• RECEIPT OF ANY COPY OF THIS INFORMATION TESTIFIES THE ACCEPTANCE OF THE ABOVE LIMITATIONS.

37