Evraz

APRIL 01, 2015
RUSSIA > EQUITY RESEARCH > METALS & MINING
FLASH NOTE: 2014 RESULTS REVIEW
Evraz
Natalia Sheveleva
[email protected]
RUS
Konstantin Asaturov
[email protected]
SIA
EBITDA met expectations; $375 mln tender offer
proposed with 10% premium
>
EQ
MET ALS & MIN ING
UIT
Evraz today released strong 2014 IFRS results, including a 15.3% HoH
increase in EBITDA in 2H14, in line with our and consensus expectations.
Net debt/EBITDA and FCF improved significantly in 2H14. Separately, an
unexpected share tender offer for $375 mln was proposed for 8% of equity
capital with a 10% premium to the market. Overall, we consider the
publication as moderately positive.
Y
RES
TICKER
EVR LN
Closing price, $
2.8
EAR Target price, $
1.8
CH
Upside
-36%
Recommendation
NEUTRAL
Revenues to fall 6.7% HoH in 2H14 on weak prices
Source: Bloomberg, Gazprombank estimates
Despite a moderate increase in steel sales volumes, revenues decreased 8.1%
HoH to $6,256 mln in 2H14 amid a weak price environment and product mix
deterioration. Revenues differed only marginally from our and Interfax
consensus estimates.
SELECTED STOCK DATA
EBITDA up 15.3% HoH, 2% more than we expected
Cash opex was aided by weaker currencies (ruble -17% HoH, hryvnia -23%
HoH) and decreased 12.5% HoH. EBITDA rose 15.3% HoH to $1,245 mln, or
2.0% more than we forecast and 1.6% below the Interfax consensus. The
EBITDA margin improved by 4 pps in 2H14 compared with 1H14. Net income
was affected by non-cash items.
MCap, $ mln
4,108
Net debt, $ mln
5,814
EV, $ mln
10,354
52-week high, $
2.9
52-week low, $
1.1
Source: Bloomberg
Evraz share price performance vs. MICEX
Index
EVRAZ GROUP
MAR 15
JAN 15
FEB 15
DEC 14
NOV 14
SEP 14
OCT 14
JUL 14
AUG 14
JUN 14
MAR 14
Net debt totaled $5,814 mln, with the net debt/EBITDA ratio improving from
3.1x as of 1H14 to 2.5x as of end 2014, marking good progress. However, the
ratio is the highest among Russian steel majors, while the macro environment
is rather challenging. We note that Evraz agreed to refinance $500 mln of its
debt due in 2016. Evraz was scheduled (as of end 2014) to pay $1,369 mln in
2016. FCF improved to $0.6 bln in 2H14 compared with $0.2 bln in 1H14
thanks to better performance on the operating level, working capital inflow
and decreased capex. We note that the cash position stood at $1,086 mln as
of end 2014, while debt repayments in 2015 total $982 mln.
MAY 14
Net debt/EBITDA and FCF generation improved significantly
APR 14
260%
240%
220%
200%
180%
160%
140%
120%
100%
80%
MICEX
Source: Bloomberg
$375 mln tender offer proposed at a 10% premium to market
Evraz unexpectedly announced a tender offer worth up to $375 mln, equivalent
to 8% of the company’s equity capital ($3.1 per share) and marking a 10%
premium to yesterday’s market price. The tender offer closes on April 17, with
proceeds expected to be received by April 23.
Evraz 2014 IFRS results, $ mln
2H14
1H14
HOH
2014
2013
YOY
2H14E
A/E
Revenues
6,256
6,805
-8.1%
13,061
14,411
-9.4%
6,349
-1.5%
EBITDA
1,245
1,080
15.3%
2,325
1,821
27.7%
1,221
2.0%
Net income
-1213
38
–
-1175
-522
125.1%
356
–
EBITDA margin
19.9%
15.9%
4.0 pps
17.8%
12.6%
5.2 pps
19.2%
0.7 pps
Source: Company, Gazprombank estimates
Research Department
1
Copyright © 2003-2015. Gazprombank
(Joint Stock Company)
APRIL 01, 2015
Conference call details
Evraz will hold a webcast/conference call with the management to discuss the results
today at 5:00 pm Moscow time (3:00 pm London, 10:00 am New York). Dial-in
numbers: 0 800 694 0257 (UK toll-free); 8 10 800 2097 2044 or 8 800 775 6818
(Russia toll-free); 1 866 966 9439 (US toll-free); +44 (0) 1452 555 566 (international).
Conference ID: 93291084.
2
RUSSIA > EQUITY RESEARCH > METALS & MINING
HQ: 16/1 Nametkina St., Moscow 117420, Russia. Office: 7 Koroviy val St.
Research Department
+7 (495) 983 18 00
EQUITY SALES
FIXED INCOME SALES
+7 (495) 988 23 75
+7 (495) 983 18 80
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FIXED INCOME TRADING
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+7 (499) 271 91 04
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