EVRAZ : announces unaudited interim financial results for H1 2021

5 August 2021 EVRAZ announces unaudited interim financial results for H1 2021

Unaudited interim financial results for H1 2021

5 August 2021 - EVRAZ plc ('EVRAZ' or 'the Group'; LSE: EVR) today announces its unaudited interim financial results for the six months ended 30 June 2021 ('the Period').

H1 2021 HIGHLIGHTS

• The Group reported solid free cash flow¹ of US$836 million, compared with US$315 million in H1 2020.
• Consolidated EBITDA¹ totalled US$2,082 million, up 94.0% YoY from US$1,073 million in H1 2020. The EBITDA margin¹ rose to 33.7% from 21.5% in H1 2020. Supporting factors included higher steel, vanadium and coal product sales prices. Cost-cutting and customer focus initiatives also generated an effect of US$256 million in EBITDA.
• Total debt¹ dropped by US$307 million to US$4,676 million, while net debt¹ fell by US$95 million to US$3,261 million.
• Net profit totalled US$1,212 million, compared with US$513 million in H1 2020.
• The cash cost of steel and raw materials in Russia was the following:
  • The cash cost of slabs¹ increased to US$283/t from US$210/t in H1 2020
  • The cash cost of washed coking coal¹ increased to US$36/t from US$34/t in H1 2020
  • The cash cost of iron ore products¹ increased to US$40/t from US$38/t in H1 2020
• An interim dividend for 2021 of US$802.3 million (US$0.55 per share) has been declared, reflecting the Board's confidence in the Group's financial position and outlook.

Financial Highlights

(US$ million)	H1 2021	H1 2020	Change, %
Consolidated revenues	6,178	4,983	24.0
Profit from operations	1,749	891	96.3
Consolidated EBITDA1	2,082	1,073	94.0
Net profit	1,212	513	n/a
Earnings per share, basic (US$)	0.82	0.35	n/a
Net cash flows from operating activities	1,410	781	80.5
Free cash flow1	836	315	n/a
CAPEX1	430	337	27.6
	30 June 2021	31 December 2020
Net debt1	3,261	3,356	(2.8)
Total assets	9,125	8,710	4.8

¹ For the definition, see «Definitions of selected alternative performance measures».

Commenting on the results, EVRAZ' Chief Executive Officer, Alexander Frolov, said:

The recovery on the global steel market observed since the second half of 2020 accelerated in the first half of 2021. Activity in steel-consuming industries continued returning to pre-pandemic levels, driving steel prices and demand.

Amid this rebound, EVRAZ achieved EBITDA of US$2.1 billion, up 94% year-on-year and a half-year record for the last decade. Contributing to this were higher steel, vanadium and coal product sales prices, as well as our cost-cutting and productivity improvement initiatives and customer focus efforts, which generated a total effect of US$256 million in EBITDA.

In the reporting period, we continued to implement our main development initiatives. The upgrade of the rail and beam mill at EVRAZ NTMK and construction of new long rail mill at EVRAZ Pueblo projects continued according to schedule and made good progress. Overall CAPEX stood at US$430 million, including US$258 million for development projects.

In addition, we improved our debt position, reducing net debt by US$95 million to US$3,261 million. This brought our ratio of net debt to last twelve months (LTM) EBITDA to 1.0x.Given the positive results in favourable market conditions, the Board of Directors is recommending an interim dividend for 2021 of US$0.55 per share, totalling around US$802.3 million, which is in line with the dividend policy.

EVRAZ' core values are health and safety of its people. Regretfully, I have to report that there were six fatalities on our premises in the first half of 2021. These are tragedies that should not happen. We are making every possible effort to achieve our strategic goal of zero fatalities. The root causes of these fatalities have been thoroughly investigated and corrective measures introduced to mitigate further risks.

As for the demerger of our coal business - we've made further progress here and confirming our intention to complete transaction by the end of the year, subject to receiving all necessary approvals. The details will be announced later in due course.

In the second half of 2021, we expect global markets to remain fairly healthy, despite a possible correction in steel prices.

Alexander FrolovEVRAZ' Chief Executive Officer