EVRAZ Announces Preliminary Audited Financial Results for 2013
OREANDA-NEWS. EVRAZ plc (“EVRAZ” or “the Company”) (LSE: EVR) today announces its preliminary audited results for the year ended 31 December 2013 (“the Period”).
The financial information contained in this document for the year ended 31 December 2013 does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The audited statutory accounts for the year ended 31 December 2012 have been delivered to the Registrar of Companies and those for 2013 will be delivered following the Company's annual general meeting convened for 12 June 2014.
The auditor has reported on the statutory accounts for year ended 31 December 2013. The auditor's report was unqualified.
Commenting on the financial results in respect of 2013, Alexander Frolov, Chief Executive of EVRAZ, stated:
“2013 was another challenging year for the global steel and coal mining industries, characterised by strong cyclical headwinds, which EVRAZ was not immune to. Although we managed to increase external steel sales by 1% to 15.5 million tonnes and substantially grew the output of coking coal by 22% to 18.9 million tonnes, our EBITDA was USD 1,821 million in 2013, 10% less than in 2012.
Whereas many factors are beyond our control, EVRAZ possesses certain fundamental value drivers that we believe will define the Company’s future performance and ultimately create value for our shareholders. Management’s response to the current market situation has encompassed a thorough review of EVRAZ’s balance sheet, strategic options and business portfolio.
In terms of the financial strategy, our priority was to address the debt leverage by focusing on the generation of positive free cash flow, which reached USD 458 million in 2013. Important contributors to the free cash flow in 2013 were the positive effects of the operating efficiency and cost cutting programmes which we initiated during the year – all of which yielded total savings of approximately USD 303 million.”
Steel segment revenue of USD 12,541 million (-7% vs. 2012)
Crude steel production of 16.1 million tonnes (+1%)
Total external sales of steel products of 15.5 million tonnes (+1%)
Decline in steel and steel products prices led to a USD 798 million decrease in consolidated revenue
Mining segment revenue of USD 3,120 million (+18% vs. 2012)
Raw coking coal production of 18.9 million tonnes (+22%) including 7.8 million tonnes from Raspadskaya
Production of saleable iron ore products was 20.4 million tonnes (-1%) on the back of lower output by the Russian operations largely driven by the disposal of high cost operation EVRAZ VGOK
Decline in prices for mining products led to a USD 182 million decrease in consolidated revenue
Vanadium segment revenue of USD 550 million (+6% vs. 2012)
The vanadium division produced 21,077 tonnes (+0.1%) of vanadium slag and sold 23,287 tonnes (+10%) of vanadium products
Capital expenditure of USD 902 million (vs. USD 1,261 million in 2012) following the thorough revision of investment plans
Rail mill modernisation at EVRAZ ZSMK completed in January 2013 with ramp-up mostly finished
PCI project at EVRAZ NTMK fully reached design parameters in May 2013, while construction work on PCI at EVRAZ ZSMK continued
Yerunakovskaya VIII coking coal mine launched in February 2013 and fully ramped up by February 2014
Development of Mezhegey coking coal deposit continued
Hot tests at Vostochny rolling mill in Kazakhstan commenced
Completion of acquisition of an indirect controlling interest in OJSC Raspadskaya bringing effective interest to 81.95% for USD 964 million in equity and cash
Acquisition of the 51% stake in Timir iron ore project for a USD 159 million cash consideration
Disposal of structurally high costs assets in iron ore and coal mining – EVRAZ VGOK, Abakan and Teya mines of Evrazruda and the Gramoteinskaya steam coal mine for cash consideration of ca.USD 20 million
Disposal of EVRAZ Vitkovice Steel based on the enterprise value of USD 287 million
Debt and liquidity:
Net debt of USD 6,534 million vs. USD 6,376 million as at 31 December 2012 including additional USD 400 million of net debt contributed in 2013 from the consolidation of Raspadskaya
Cash and short-term deposits of USD 1,611 million (see Appendix 2 for calculation)
Placed USD 1,000 million Eurobonds due in 2020 with the lowest ever coupon rate achieved by EVRAZ of 6.50% p.a.
Prepaid USD 950 million structured credit facility due 2015 with certain covenants on net leverage
The directors recommend a dividend of 6 cents per share to be consistent with their intention of distributing, where appropriate, a proportion of the margin on disposals as dividends, and as an indication of confidence in the Company’s position. The USD 90.4 million represents the approximate cash portion of the proceeds from the sale of EVRAZ Vitkovice Steel, leaving USD 196.6 million for the reduction of debt.