содержание .. 1 2 3 ..
ЕВРАЗ. Годовой отчет за 2021 год - часть 2
Meet EVRAZ
EVRAZ in figures
STRATEGIC REPORT
Corporate governance
Financial statements
Additional information
ANNUAL REPORT & ACCOUNTS 2021
EVRAZ
EVRAZ principles
Employee development
The basic working principles are
Employees have opportunities for learning
safety, respect, performance and
and development, as well as access to
BUSINESS SYSTEM
responsibility, customer focus and
the tools and knowledge needed to
effective teamwork.
achieve the target.
Ambitious
target setting
Every employee does the best to
EVRAZ Business System (EBS) is a combined approach based
Process
Efficient
improve the working process.
improvement
management
on a culture of continuous improvements which currently covers
Every employee views finding and
Managers support the continuous
implementing improvements as part of their
improvement process by acting in accordance
nearly all the Group’s main operations.
daily work.
with EVRAZ principles, as well as training and
encouraging their employees.
KEY EVENTS
Idea Factory results
Problem-Solving
Plant shops
Number of people
2021
RESULTS
Board results
involved in
completed an internship
transformation
at EBS teams
2021
IDEAS
PROBLEMS
Average
problem
elimination
Project activity with a high degree
•
term, days
of uncertainty was transferred to the
agile format.
100,072
56,611
40,252
28,789
20,807
submitted
accepted
implemented
submitted
eliminated
28
109
1,081
Deployed Azure software for agile
•
project management.
47
588
43
447
44,216
44,872
21,222
19,639
SIBERIA
25,819
24,223
20,373
13,756
47
588
DIVISION
20,360
17,053
•
Digital transformation projects are
2020
2021
33
days
2020
2021
26 days
gaining momentum.
2020
2021
2020
2021
43
30,433
40,273
3,961
4,759
Debureaucratization projects
32
388
•
URALS
21,997
27,297
3,752
3,148
43
311
388
startup.
DIVISION
17,202
21,361
2020
2021
15 days
2020
2021
60days
2020
2021
2020
2021
•
IT platform "Idea Factory 2.0" was
put into commercial operation.
VANADIUM
617
756
241
126
DIVISION
189
462
235
137
257
336
Development of the EBS-
•
2
2
8
2020
2021
39 days
2020
2021
30days
8
Transformation in ENA (rails, tubes,
2020
2021
2
2020
2021
8
rod) continues.
5,358
14,171
3,961
3,766
COAL
1,906
4,629
3,752
4,265
DIVISION
17
14
975
1,502
97
50
17
97
2020
2021
31 days
2020
2021
9 days
20
2020
2021
2020
2021
21
Meet EVRAZ
EVRAZ in figures
STRATEGIC REPORT
Corporate governance
Financial statements
Additional information
ANNUAL REPORT & ACCOUNTS 2021
MARKET
Global crude steel
In the reporting period, government stimulus
Iron ore, Fe 62%, CFR China,
Vanadium
production, million tonnes
US$/tonne
and supply chain issues pushed 62% Fe iron
OUTLOOK
ore fines prices to new record highs, peaking
200
In 2021, the MB FeV benchmark averaged
2,000
at over US$230/dry metric tonne in June. This
US$34.3/kgV, up 37% YoY. This was mainly
was followed by a record collapse in Q3 2021,
driven by historically high rebar production
150
1,951
mt
mainly driven by the sudden drop in Chinese
in China, as well as restocking throughout
1,500
steel demand and steel production. Iron ore
the supply chain in the automotive
GLOBAL MARKETS
prices fell to as low as US$90/tonne, before
industry. This and continued shipping
100
rebounding to over US$120/tonne towards
delays pushed the price to US$40/kgV
1,000
the year-end. Average iron ore prices climbed
in H1 2021. However, the market softened
Steel
by 48% to US$160/tonne, up from US$108/
50
in H2 2021 amid aggressive steel output
2017
2021
tonne in 2020.
cuts under China’s policy to zero growth
Rest of the world
According to the World Steel Association,
Based on hot-rolled coil (HRC) China FOB
500
in 2021 and a crisis in the country’s
North America
Source: CRU
in 2021 global crude steel production
contracts, steel prices averaged US$838/tonne
India
construction sector. The global shortage
increased to 1.951 billion tonnes, up 3.7% YoY.
in the reporting period, up 52% from US$553/
EU
of semiconductors also affected car
This was mainly driven by improvements
tonne in 2020. Based on the CFR slab FE&SEA
China
Coal
production in H2 2021 and limited demand
2017
2021 0
in countries outside China. Following
benchmark, they averaged US$764/tonne, up
for microalloyed automotive steel outside
Source: World Steel Association
a record 99.5 million tonnes in May, China
72.0% from US$444/tonne in the year before.
In China, domestic supply tightness
China.
had decreased its monthly steel production
and disruptions in coking coal imports
by 30% by November as a result of initiatives
drove prices to new record highs in 2021.
Coal, US$/tonne
Global vanadium demand reached
to reduce carbon emissions. In 2021,
Global finished steel
The country’s ban on coal imports from
an estimated 114,000 mtV in the reporting
consumption, million tonnes
350
the country’s production totalled 1.033 billion
Iron ore
Australia impacted demand and changed
period, up 7% YoY. The steel sector
tonnes, down 3.0% YoY. Curbs on steel output
trade flows, increasing price volatility.
was again the main driver of vanadium
300
2,000
were the most important driver of markets
In 2021, the iron ore market was primarily
The premium hard coking coal price
demand. Steel output recovered strongly
in H2 2021.
driven by demand-side fluctuations.
(CFR China) rose to a high of US$613/
250
in most regions outside China, as demand
1,828
mt
Chinese steel production soared in H1 2021,
tonne in late October. However, after
from key industries almost reached pre-
1,500
200
In the reporting period, global finished steel
and steelmakers struggled with iron ore
government intervention and improvements
pandemic levels. The market in China
consumption rose by 3.1% to 1.828 billion
availability at times. The situation changed
in supply, it tumbled and had almost
150
was supported by rapidly growing
tonnes, compared with 1.774 billion tonnes
quickly in H2 2021, mainly driven by the slump
caught up with the Australian benchmark
demand for vanadium-based energy
1,000
in 2020, according to CRU. The main
in Chinese steel demand and steel
in December. Hard coking coal (FOB
100
storage. Overall, the trading environment
2017
2021
growth driver was the economic recovery
production. This resulted in much weaker
Australia) averaged US$223/tonne
is expected to be fairly balanced
HCC, spot FOB Australia
following the first year of the pandemic. Steel
demand for iron ore and a spike in inventories
in the reporting period, compared
HCC, spot CFR China
in the medium term, supported by further
mills increased production in anticipation
across the supply chain. According to CRU,
500
Rest of the world
with US$124/tonne in 2020. The CFR China
demand growth from the automotive
of more robust demand, primarily from
global consumption of iron ore grew by 2.8%
EU+UK
price averaged US$337/tonne, up 135% YoY.
Source: CRU
and energy storage sectors.
Asia, excl. China
the construction and manufacturing
to 2.281 billion tonnes in 2021, while in China it
China
sectors. Consumption in China fell by 4.8%
fell by 1.9% to 1.395 billion tonnes. In other key
2017
2021 0
According to the report of the CRU dated
to 0.975 billion tonnes amid headwinds
markets, there were improvements: demand
November 2021, global metallurgical coal
Source: CRU
in the property sector. Global demand,
climbed by 22.9% in the US, 18.0% in India,
consumption climbed by 4.7% year-on-
excluding China, rose by 13.9% to 0.853 billion
14.3% in Europe and 2.1% in South Korea.
year to over 1.213 billion tonnes. In China,
tonnes.
consumption amounted to 826 million
Vanadium price (LMB FeV mid), US$/kg
Global iron ore exports grew by 2.3%
Steel price, US$/tonne
tonnes, 3.6% higher than in 2020.
Steelmakers struggled to keep up
to 1.688 billion tonnes in 2021. Australian
However, Chinese coking coal imports
2,000
100
with the pace of global demand.
shipments were broadly unchanged YoY,
slumped by 34.2% to 48 million tonnes
This brought steel margins to as high
as most major producers were operating
amid changing trade flows with Australia
1,500
80
as 40-50% in parts of the world, compared
at close to full capacity. In Brazil, Vale
and greater domestic supply.
Trends
with the normal level over a cycle of 5-10%.
managed to increase shipments slightly
1,000
60
In May, the FOB China hot-rolled coil index
following a muted performance in 2019
Global coking coal production climbed
on core markets
hit a record US$1,031/tonne. While prices
and 2020. Another key development
by 5.7% YoY to 1.204 billion tonnes
500
40
have subsequently declined well below
was a spike in the number of smaller
in the reporting period. China continued
those levels, they are still relatively high,
producers that took advantage of high prices.
to increase domestic metallurgical coal
0
20
supported by aggressive cuts to steel supply.
While demand in China is declining, output
2017
2021
supplies, which rose by 6.3% to 779 million
2017
2021
Following the Chinese market, steel prices
from major producers from Australia is rising
HRC US, FOB Midwest
tonnes. In Australia, they amounted
Source: Bloomberg
rose in North America, Europe and the CIS.
and an increase from Brazil may create
HRC Black Sea, FOB
to 172 million tonnes, down 1.1%, amid
The variations among regions were caused
oversupply.
Source: CRU
supply issues at core assets.
by trade barriers, lead times and logistical
22
constraints.
23
Meet EVRAZ
EVRAZ in figures
STRATEGIC REPORT
Corporate governance
Financial statements
Additional information
ANNUAL REPORT & ACCOUNTS 2021
TRENDS ON CORE MARKETS
Steel Russia
Coal Russia
Steel North America
up 1%, with growth in domestic production
North America prices, US$/tonne
offsetting reduced import volumes.
2,000
In 2021, Russian steel consumption taking
Russian steel consumption by product
After a challenging 2020 year, domestic coal
Through 2021, North American steel
Estimated North American demand for rod
type, million tonnes
into account pipes and primary materials
demand improved in 2021 as output recovered.
markets recovered from the impact
and bar products reached around 11 million
for pipes according to Metal Expert,
Estimated Russian mining volumes increased
of COVID-19, driven by improved demand
tonnes, up 5%. Strength in the non-
1,500
12,000
totalled 57.0 million tonnes, up 3.3% YoY,
to 103.4 million tonnes, up 14.7% YoY, while
and record-high steel prices. Estimated
residential construction sector and supply-
amid better economic conditions. Total
coking coal concentrate consumption reached
domestic steel production totalled
side constraints created a favourable
10,000
11,785
mt
apparent consumption for long products
around 38.9 million tonnes, as coke production
92.1 million tonnes, up 29% YoY, while
environment for EVRAZ North America’s
1,000
increased by 2.0% to 16.8 million tonnes.
rose amid the recovery following the first year
annualised US steel imports of finished
products. Wire rod prices averaged
8,000
In the railway segment trends were mixed.
of the pandemic. Coking coal exports climbed
products totalled 31.1 million tonnes, up
US$928/tonne, up 38%, while rebar prices
500
Russian rail market decreased by 37.7% in
by 7.3% to 30.3 million tonnes, reaching a record
61%. US steel mill utilisation ended the year
averaged US$989/tonne up 44%.
2017
2021
6,000
the year, but demand for wheels remained
high in August, with sales increasing most
at 81.1%, down from a two-year high of 85%
Rebar, domestic US
high. The construction sector recovered,
in Asian markets.
in September 2021. In addition to rising
In 2021, North American OCTG shipments
Plate, domestic US
4,000
with demand increasing by 10.7% for rebars,
raw material costs, tightness in domestic
totalled 3.8 million tonnes, up 28% year-
OCTG Carbon
while it decreased by 10.5% for structural
Russian prices of metallurgical coal followed
supply, strong demand and low service-
on-year. Line pipe shipments amounted
Structurals
Source: CRU, Pipelogix
2,000
steel amid delay of some industrial and
Rails
international benchmarks during the reporting
centre inventories supported strong
to 1.5 million tonnes, down 37%, driven
commercial construction projects in late
Beams
period. Prices started to rise more rapidly
price increases: the averages for carbon
largely by a decline in major pipeline
2017
2021 0
Rebar
2021 due to high prices volatility. Domestic
in Q2 2021. During the year, the FCA Kuzbass
plate and hot-rolled coil soared by 132%
projects. ERW OCTG and line pipe prices
EVRAZ market shares in North America
by key products, %
shipments of long products amounted
benchmark price averaged US$159/tonne
and 174% to US$1,536/tonne and US$1,734/
averaged US$1,800/tonne and US$2,300/
Source: Metal Expert
to 16.1 million tonnes, a historical high. There
for premium Zh-grade coking coal, up 99% year-
tonne, respectively.
tonne, up 60% and 64%, respectively.
was a significant improvement in the rebar
on-year, and US$126/tonne for the semi-hard
Average seamless OCTG prices rose by 44%
Large-
16
diameter
pipe
29
segment. Exports of long products
Russian steel prices, US$/t
GZh-grade, up 103%.
In the reporting period, US steel product
to US$1,980/tonne. Raw material cost
28
amounted to 4.4 million tonnes, compared
consumption totalled an estimated
increases, improved pipe demand and mill
Canadian
OCTG
17
1,200
with 3.9 million tonnes in 2020. This
Russian metallurgical coal consumption,
115.2 million tonnes, up 36% from
supply constraints supported strong price
45
Rails
million tonnes
48
marked the continuation of a positive trend
85.0 million tonnes in 2020. Total apparent
gains. In 2022, crude oil and gas prices look
1,000
for a second year, despite the introduction
demand for all long products rose by 41%
set to remain elevated, which will drive E&P
2021
40
of export duties on ferrous metals since
YoY. Estimated North American rail demand
spending, land rig deployment and OCTG
2020
800
1 August 2021.
amounted to around 900 thousand tonnes,
and line pipe demand.
35
Source: Company estimates
600
In the reporting period, crude steel
30
production in Russia amounted
US finished steel consumption,
400
million tonnes
to 76.0 million tonnes, up 6.1% YoY,
2017
2021
25
according to the World Steel Association
Rebar
120
data. Russian steel prices fluctuated
Structurals
20
in accordance with global benchmarks.
Beams
2016
2021
Average domestic prices for rebar were up
100
115.2
mt
Source: Metal Expert
Russian metallurgical coal consumption
by 71% YoY, for channels and angles up by
Russian metallurgical coal exports
48% YoY and for beams up by 58% YoY.
80
Source: Metal Expert
EVRAZ market shares in Russia by key
products, %
60
Railway
28
Coal prices, US$/tonne
wheels
25
40
97
Rails
200
Tubular
74
20
Semi-finished
Grinding
55
balls
65
Long
Flat
Structural
37
150
2017
2021
0
shapes
31
69
Beams
69
Source: Platts
10
100
Rebar
9
2021
50
2020
2017
2021
GZh
Source: Company estimates
Zh
24
Source: Metal Expert
25
Meet EVRAZ
EVRAZ in figures
STRATEGIC REPORT
Corporate governance
Financial statements
Additional information
ANNUAL REPORT & ACCOUNTS 2021
STRATEGIC
PRIORITIES
DEBT MANAGEMENT AND STABLE DIVIDENDS
Key projects
EVRAZ remains focused on the medium-
Net debt (net debt/EBITDA), US$ million
term debt management and stable dividend
payout approach:
2017
2018
2019
2020
2021
Long rail mill at EVRAZ
Rail and beam mill
Vanadium processing
•Dividend payout according to the stated
Pueblo
modernisation at EVRAZ
at EVRAZ Uzlovaya
Net debt
3,966
3,571
3,445
3,356
2,667
dividend policy: a minimum
NTMK
of US$300 million is annually provided
Net debt/EBITDA, x
1.5
0.9
1.3
1.5
0.5
provided that the net leverage ratio
Effect:
Effect:
Effect:
remains below 3.0x.
produce 630 ktpa of rails with a maximum
make high value-added products
process an additional 8.6 mtpa
length of 100 metres to maintain technical
(H-beams, sheet piles and HH rails)
of V-slag within EVRAZ, instead
•Medium-term net debt level below
Dividends, US$ million
leadership and continue shifting to a
instead of semi-finished products
of tolling parties
US$4,000 million.
higher-value product mix
2017
2018
2019
2020
2021
•Target average net debt/EBITDA
below 2.0x throughout the cycle.
Dividends
430
1,556
1,086
872
1,549
Total CAPEX:
Total CAPEX:
Total CAPEX:
Yield
9%
17%
11%
14%
13%
US$726 million
US$305 million
US$228 million
In 2021, the Group’s net debt amounted to
US$2,667 million.
In 2021, the Group generated solid free cash
flow of US$2,257 million. Coupled with the
Tashtagol iron ore mine
Wheel rolling mill no. 2 at
Integrated flat casting
net debt/EBITDA ratio below 2.0x, which
upgrade at EVRAZ ZSMK
EVRAZ NTMK (Allegro)
and rolling facility at
enabled EVRAZ to return US$1,549 million to
EVRAZ ZSMK
its shareholders in the form of dividends for a
dividend yield of 13%.
Effect:
Effect:
Effect:
increase Tashtagolsky deposit’s annual
launch a new wheel production line
produce 2.5 mtpa of premium 0.8-16
ore production through the partial
with a capacity of 200 kt.
mm flat products instead of slabs
switch to sublevel caving using mobile
LLC Allegro, a 50/50% joint venture
and billets
equipment
of EVRAZ and Rail Service Industrial
Group, has been established to set up a
railway wheel manufacturing facility.
PRUDENT CAPEX
Total CAPEX:
Total CAPEX:
Total CAPEX:
US$147 million
US$208 million
US$767 million
In 2021, EVRAZ invested a total
Annual CAPEX, US$ million
of US$920 million in CAPEX, of which
US$517 million was spent on maintenance
2017
2018
2019
2020
2021
projects and US$403 million
Maintenance
367
360
581
458
517
on development projects. Development
Development
236
167
181
199
403
CAPEX doubled year-on-year, mainly as
a result of an increase in spending on key
TOTAL
603
527
762
657
920
projects.
26
27
Meet EVRAZ
EVRAZ in figures
STRATEGIC REPORT
Corporate governance
Financial statements
Additional information
ANNUAL REPORT & ACCOUNTS 2021
RETENTION OF LOW-COST POSITION
Efficiency and cost-cutting remain
Breakdown of cost-cutting programme effect in 2021, US$ million
a primary focus for the Group. EVRAZ
is on pace to generate improvements
3
3 3
32
with an annual EBITDA effect of 3%
Increasing productivity and cost effectiveness
of the cost of goods sold.
Auxiliary materials & service costs of Urals and
34
Siberia divisions
In 2021, the EBITDA effect from cost-cutting
Procurement efficiency
initiatives totalled US$335 million
Various improvements at Coal beneficiating
plants & mines
US$335
m
Optimization of assets
36
General and administrative (G&A) costs and
non-G&A headcount
Auxiliary materials & service costs of North
224
American and Vanadium
Steel segment
Coal segment
Steel, North America segment
2021 key initiatives and results
2021 key initiatives and results
Launched a sustainability analysis of EBS
consumption optimisation at EVRAZ
Enhanced the efficiency of EVRAZ
Capital investments to modernise
•Increased blast furnace productivity
•
•
•Resumed work at Razrez Raspadsky,
•
•
and reduced overhaul days
tools with online tracking.
NTMK.
which had halted operations
Regina’s steelmaking operations.
equipment and expand production
at EVRAZ NTMK.
Started construction of a new vanadium
Improved the efficiency of expert systems
from May to September 2020.
Continued implementation of EBS
capacity also progressed at EVRAZ
•
•
•
production plant.
at EVRAZ ZSMK.
at EVRAZ Pueblo steelmaking, rail
Regina in Saskatchewan and EVRAZ Red
•Record production of pig iron, steel,
•Transferred operations at Esaulskaya
vanadium and wheels in new history of
•
Implemented various digital transformation
•
Implemented initiatives various costs
to the new longwall no. 29.
and rod / bar operations.
Deer in Alberta.
EVRAZ NTMK.
projects, including
reduction initiatives.
EVRAZ Pueblo’s new long rail mill
•Continued implementing EBS
•
predictive analytics, digital BOF efficiency
Urals and Siberia divisions implemented
transformation projects on schedule.
project continued according to schedule.
•Record value in terms of ore production at
•
•
EVRAZ KGOK.
management and ferroalloy
different measures to reduce energy
•Launched 54 digital transformation
consumption.
initiatives.
2022 key initiatives
2022 key initiatives
Implement initiatives aimed at reducing
Implement the clean air and water
Continue EVRAZ Pueblo’s long rail mill
Focus on development
•Implement the automated rolling
•
•
•Aim to achieve record raw coal
•
•
parameters control system of the wide
the costs of manufactured products.
protection programmes and construct
production volumes despite
project.
and implementation of Maintenance
beam shop and the converter shop.
Ensure the operational stability
a hazardous industrial waste storage
the increasingly difficult
Complete ongoing projects at EVRAZ
Reliability Program, operational
•
•
of production and maintain equipment
facility.
technological conditions.
Red Deer and EVRAZ Regina,
improvements and cost controls.
•Improve the efficiency of expert systems
and develop predictive and advanced
at necessary levels.
as well as scheduled projects at EVRAZ
Launch pilot digital transformation
•Increase coal exports to Asia
•
analytics.
and boost the percentage
Pueblo steelmaking operations.
projects in North America focusing
of innovative coal wagons.
•
Continue EBS implementation across
on automation and optimization
EVRAZ North America facilities.
of operations.
•Maintain steady production of GZh-
grade coal throughout the year.
•Implement four major investment
projects to develop current assets.
28
29
Meet EVRAZ
EVRAZ in figures
STRATEGIC REPORT
Corporate governance
Financial statements
Additional information
ANNUAL REPORT & ACCOUNTS 2021
Steel segment
DEVELOPMENT OF PRODUCT PORTFOLIO
AND CUSTOMER BASE
2022 key initiatives
•Expand the range of steel solutions for
•CRM implementation for wholesale
•Launch сhatbot project of trading unit
In 2021, EVRAZ worked to further improve
Customer focus programme EBITDA effect in 2021, US$ million
the construction industry.
customers.
for the prompt collection of feedback
customer service and develop new products
and satisfaction level of the order or
24
•Implement digital transformation projects
•WebShop development.
as part of its strategic objective to remain
for clients.
EVRAZ' services
8
•Expand consignment stocks project.
the leading manufacturer of infrastructural
120
•Develop new rails of increased hardness
•Continue Improvements in claims
steel. The Group remains focused
and plasticity for curves.
handling service.
Beams
on executing its development projects
50
Logistics optimisation
aimed at diversifying its product portfolio.
Sales improvements
US$255
m
New product development
Coal segment
Steel, North America segment
In 2021, the customer focus programme
Other
generated an EBITDA effect
of US$255 million
2021 key initiatives and results
53
•EVRAZ Group and Raspadskaya
•
Expanded leadership position in the North American rail market.
entered into a new, long-term coal
Maintained strong market share in the Canadian OCTG market.
•
offtake agreement.
Strengthened Quality organization and management systems across North
•
American sites.
•Launched claims handling unit.
Introduced standardized procedures
Continued working on developing new production capabilities and capacity
•
Steel segment
for dealing with customer’s requests.
to keep strong competitive position in the markets served.
In close cooperation with partners, continued cooperation on projects aimed
•Signed long-term agreements
•
with new customers in Europe
to reduce environmental impact of operations (e.g. Big Horn solar plant to power
2021 key initiatives and results
and Russia.
EVRAZ Pueblo facility).
•
Continued to develop the programme
-
Steel Radar: an online resource that
targeting the production of lighter, high-
aimed at promoting demand for beams
shows beam inventories in traders’
performance structures for buildings
and structural products in construction
warehouses and enables purchase
and civil engineering with potential
2022 key initiatives
and improving the availability of products
orders to be placed. The resource
advantages such as an increase
to clients, including a project to sell pre-
has been redesigned in accordance
in usable space, material and cost
Maintain and increase our leading market position in the rail and tubular
•Improve sales under long-term
•
engineered beam-based steel building
with the best E-Commerce practices.
savings, and a consequent reduction
contracts to premium markets.
markets.
solutions via EVRAZ Steel Building
20-fold increase in traffic to the site
in environmental impact.
Continue developing “green steel” products at EVRAZ Pueblo, the first EAF
•
for the medium-sized industrial, social
as a result of the promotion
EVRAZ and Russian Railways agreed
steel manufacturer powered by solar energy.
•
and commercial segment.
programme.
to join efforts in reducing GHG
Continue developing an ongoing dialogue with our customers, external experts,
•
Launched the EVRAZ Steel Box project,
EDI/EDO: EDI is a platform for placing
emissions through manufacturing
universities and research institutions to build a path forward to reaching ESG
•
-
which is targeted at selling small-sized
orders and handling administrative
and operating rails made of steel
objectives.
buildings.
tasks like amending documents
with a low carbon footprint.
Increase vertical integration in EVRAZ North America to maintain and improve
•
Maintained full capacity at the hub
and invoices, while EDO is a platform
Developed a new product, resistant
our competitive cost position.
•
•
launched in Nizhny Tagil in 2020
for exchanging legal documents.
rebar for the use in seismic areas.
to improve the availability of beams
The document flow for EDI of EVRAZ
Launched the transformation process
•
for customers, continued to work at full
TC increased from 52% to 89%.
of EVRAZ Market to increase sales
capacity; the hub places a priority
EVRAZ Webshop: a single
in the small wholesale segment
-
on orders for rare profiles.
e-commerce platform for all types
and provide better service for all types
Continued to serve customers
of customers. Achieved of 142%
of customers by changing the sales model
•
at the metal service centre launched
online sales goals. Significant
and developing digital services and tools.
in Noginsk in 2020, including small
changes in business processes
•
Carried out an assessment of the
metal fabrication facilities that do
and improvements to IT systems
economic effect of the new DT400IK
not have their own automated CNC
to serve retail customers.
rails. Operational tests completed.
line and large plants that need
In the vanadium business, EVRAZ
•
to increase production without investing
R&D Vanadium Centre has signed
in the purchase of expensive equipment.
an agreement for scientific
Continued initiatives to digitalise sales
research on a metallurgical project
•
channels, including the following key
with the Department of Engineering
projects:
of the University of Perugia, Italy,
30
31
Meet EVRAZ
EVRAZ in figures
STRATEGIC REPORT
Corporate governance
Financial statements
Additional information
ANNUAL REPORT & ACCOUNTS 2021
IMPACT
OF COVID-19
EVRAZ is closely monitoring the
and sales generated robust operating
for employees who have to come
pandemic and its impact on employees,
cash flow. EVRAZ has proactively
to work, including eye protectors,
operations and the broader stakeholder
addressed its upcoming obligations
respirators and gloves.
base. The Group is committed to doing
and maintained a strong liquidity
GOING CONCERN ASSESSMENT
•using thermal imaging devices
everything possible to protect the lives
position. As of 31 December 2021, cash
and pyrometers at facility entrances
and health of its employees, as well as to
and cash equivalents stood at around
to monitor people’s temperatures.
The Group’s financial position at 31 December 2021 including its cash flows, liquidity position and borrowing
minimise the effect on its enterprises and
US$1.4 billion, supported by operating
facilities are set out in these financial statements and the Financial Review section. The Group’s net debt
•changing approaches to all major
as at 31 December 2021 was $2,667 million (31 December 2020 and 2019: $3,356 million and $3,445 million,
the communities in which it operates.
cash flow and financing initiatives.
corporate, sporting and entertainment
respectively) and its cash plus committed undrawn facilities were $2,050 million (31 December 2020
For more details, see the “Financing
events (online or offline), depending
and 2019: $2,564 million and $1,870 million, respectively).
and liquidity” section.
on the particular situation
As disclosed in Note 30, macroeconomic uncertainty and instability have arisen due to the COVID 19
Impact on key markets
and imposed restrictions.
pandemic. However, the majority of the Group’s businesses were relatively unaffected with no significant issues
and operations
•increasing supplies of antiseptic
for production, supply or shipments. Moreover, during 2021 there was a very significant increase in demand
Measures to protect
and disinfectant products in communal
for, and prices of, almost all of the Group’s products leading to the Group’s strong financial performance.
COVID-19 has caused macroeconomic
the wellbeing
areas, as well as regularly sanitising
and safety of employees
The management of EVRAZ plc has considered the Group’s cash flow forecasts for the period to 30 June
uncertainty and instability. At the same
facilities and transport.
2023, the going concern assessment period, forecasting both liquidity and covenant compliance. It initially
and communities
time, in 2021, demand for and prices
•organising campaigns to raise
evaluated two financial performance scenarios, being a base case and a pessimistic case reflecting
of almost all of EVRAZ’ products
awareness among employees
a reduction in forecast prices to the lower end of market analysts' current forecasts. Both scenarios reflect
soared, resulting in a strong financial
To prevent the spread of COVID-19,
and contractors about behavioural
the effect of the highly probable demerger of the coal business (Note 13), the scheduled repayment
performance for the Group. For more
the Group has implemented a vaccination
guidelines, social distancing
of debt, most significantly $750 million of US-denominated notes due in 2023 (Note 22), and the effect
details about the performance of key
campaign. As of 31 December 2021,
and personal protection.
of the new excise tax on liquid steel and higher taxes on mineral extraction imposed by the government
of the Russian Federation from 1 January 2022 (Note 30). Management has considered whether the effects
markets in 2021, see the “Market review”
this covered 74% of employees
of risks associated with climate change, including decarbonisation (Note 6), will impact the going concern
section.
in Russia and over 50% of employees
In addition to caring for the physical
period, concluding that they will not have any significant impact. Under both scenarios, the Group
in North America. To support medical
health of employees and their families,
is forecast to maintain sufficient liquidity for the period to 30 June 2023 and to operate within its debt
As of 31 December 2021, there were 428
professionals, EVRAZ has arranged
EVRAZ is carefully assessing the possible
covenants. In the pessimistic case the amount of cash is assumed to be close to the minimum operating
active COVID-19 cases among employees.
regular donations of oxygen, medical
mental impact of the preventative
level in the first half of 2023. These scenarios do not however include actions at management’s disposal
Despite that, the majority of EVRAZ’
supplies and personal protective
measures undertaken amid the pandemic.
to strengthen projected liquidity, including the deferral of uncommitted capital expenditure.
businesses were relatively unaffected
equipment to regional hospitals.
As of 31 December 2021, more than 1,500
In order to further test the resilience of the going concern assessment to potential uncertainties, particularly
in the year, with no significant issues
of its employees were working remotely.
with respect to the worsening situation relating to Ukraine and heightened risk of the economic sanctions,
for production, supply or shipments.
In addition, the Group continues
management performed a severe downside sensitivity. This assumed that capital expenditure was reduced
to implement the measures that it
to $500 million per annum and then determined the extent to which EBITDA could fall throughout
the period, whilst maintaining an operating level of liquidity. Such a fall would reflect a highly material
introduced in 2020 to prevent the spread
interruption to the Group’s current business including reducing Russian export sales outside the CIS to nil
Impact on liquidity, solvency
of COVID-19. These include:
throughout the going concern period combined with a further reduction in EBITDA as a result of other
and access to financing
reducing domestic business travel
•
possible factors, including further international sanctions. The directors have also considered additional
and overseas trips.
mitigating actions that would be available in such circumstances including further reductions in costs, capital
In 2021, the pandemic had little effect
expenditure and the deferral of dividends.
•enabling remote working,
on the Group’s liquidity situation. Amid
as well as providing additional
None of the scenarios modelled reflect any new financing beyond that currently committed. In managing
positive market trends, operations
personal protective equipment
the financing of the Group, management continues to monitor opportunities for future raising of finance,
including as current notes mature.
The directors, having considered the scenarios above, conclude that the likelihood of a scenario that would
eliminate liquidity or breach covenants is remote. Based on this analysis and other currently available
facts and circumstances the directors and management have a reasonable expectation that the Company
and the Group have adequate resources to continue as a going concern.
32
33
Meet EVRAZ
EVRAZ in figures
STRATEGIC REPORT
Corporate governance
Financial statements
Additional information
ANNUAL REPORT & ACCOUNTS 2021
EVRAZ performance is assessed against several key performance indicators (KPIs),
KEY PERFORMANCE
which are linked to our strategic priorities.
INDICATORS
FINANCIAL
NON-FINANCIAL
KPI
Total segment
Free cash fow,
Effect from efficiency
Cash cost of coal
Labour
LTIFR (excluding
Cash cost of slab,
GHG intensity ratio,
EBITDA,1
US$ million
improvement
concentrate,
productivity,
fatalities),
US$ per tonne
tCO2e per tonne of crude
US$ million
programme, US$ million
US$ per tonne
steel, tonnes per person
per 1 million hours
steel
(cost cutting + customer focus)
US$5,015
m
US$2,257
m
US$590
m
308
US$/tonne
41
US$/tonne
367
1.21
1.90
2021
5,015
2021
2,257
2021
590
2021
308
2021
41
2021
367
2021
1.21
2021
1.90
2020
2,212
2020
1,020
2020
426
2020
213
2020
31
2020
376
2020
1.35
2020
1.95
2019
2,601
2019
1,456
2019
407
2019
236
2019
35
2019
392
2019
2.04
2019
1.94
HOW DID WE PERFORM IN 2021?
The increase in total segment
Free cash flow increased
The efficiency programme
Cash cost of slab increased
Coking coal concentrate
Labour productivity
As part of its efforts to improve
Overall GHG emissions
EBITDA was primarily
because of higher EBITDA
generated additional effect mostly
mainly due to higher raw
cash cost increased due to
decreased as a result of lower
the safety culture, EVRAZ
in the steel sector (the Steel
attributable to higher steel,
and cash flow from operating
through productivity growth, yield
material prices and change in
cost inflation and change in
production volumes coupled
focused on the approach
and Steel North America
vanadium and coal product
activities.
improvements and numerous
raw materials yields and mix.
production mix.
with a decline in the average
to engage employees
segments) were lower than
sales prices.
savings projects. Customer focus
number of employees
in the process of identifying
the 2020 level by nearly 3%
initiatives generated additional
at Steel and Steel, North
and mitigating risks. This
year-on-year and therefore
effect as result of sales efforts
America segments comparing
and other initiatives helped
the specific intensity of GHG
in railway products as well as
to the previous year
to bring the lost-time injury
emissions declined as overall
due to numerous improvements
frequency rate - a key health
steel production remained
in logistics and procurement
and safety metric - down
almost flat YoY.
efficiency.
to 1.21x. The Group surpassed
its target level of 1.36x.
RELEVANCE TO STRATEGIC PRIORITIES
Retention of low cost
Debt management and
Debt management and
Retention of low-cost
Retention of low cost
Retention of low-cost
Sustainable
Sustainable
position
stable dividend
stable dividend
position
position
position
development
development
Development of product
Development of product
Development of product
portfolio and customer
Prudent CAPEX
Prudent CAPEX
portfolio and customer
portfolio and customer
base
base
base
Retention of low cost
EVRAZ business system
position
Development of product
portfolio and customer
base
Further details on page 290
Further details on page 290
Further details on pages 28-31
Further details on page 292
Further details on page 292
1. Total EBITDA includes that from continuing operations (US$3,692 million in 2021 and US$1,830 million in 2020) and discontinued operations (US$1,323 millon in 2021
34
and US$382 million in 2020).
35
Meet EVRAZ
EVRAZ in figures
STRATEGIC REPORT
Corporate governance
Financial statements
Additional information
ANNUAL REPORT & ACCOUNTS 2021
FINANCIAL
Total segment revenues, US$ million
REVIEW
SEGMENT
2021
2020
CHANGE
CHANGE, %
Steel
10,188
6,969
3,219
46.2
Management have concluded that the
During 2021 the Coal business was an
Steel, North America
2,324
1,779
545
30.6
demerger of the coal business had
integral part of the Group and was
Coal
2,321
1,490
831
55.8
become highly probable within one year
managed on this basis. Due to this the
Other operations
535
410
125
30.5
and that Raspadskaya Group met all
analysis presented below is based on the
Eliminations
(1,209)
(894)
(315)
35.2
criteria to be classified as a disposal held
data disclosed in the Note 3 “Segment
for distribution to owners, as discussed
information” of the Consolidated financial
TOTAL
14,159
9,754
4,405
45.2
in more detail in Note 2 and Note 13
statements and follow the same logic as in
of the EVRAZ consolidated financial
all previous years.
statements, as at 31 December 2021.
Total segment revenues by region, US$ million
Consequently, in accordance with the
The reconciliation of these results with the
requirements of IFRS 5 “Non-current
amounts presented in the consolidated
REGION
2021
2020
CHANGE
CHANGE, %
Assets Held for Sale and Discontinued
statement of operations is provided in Note
Russia
5,521
3,722
1,799
48.3
Operations”, it was accounted for
13. It is limited to the presentation of the
as discontinued operations in the
results of the coal business as discontinued
Asia
3,684
2,949
735
24.9
consolidated financial statements.
operations.
Americas
3,016
1,915
1,101
57.5
Nikolay Ivanov
Chief Financial Officer
Europe
946
461
485
n/a
CIS (excl. Russia)
934
584
350
59.9
Africa and rest of the world
58
123
(65)
(52.8)
STATEMENT OF OPERATIONS
TOTAL
14,159
9,754
4,405
45.2
In 2021, EVRAZ’ total segment revenues
Free cash flow soared by 121.3% YoY
increase in sales prices. The latter
Total segment EBITDA1, US$ million
climbed by 45.2% YoY to US$14,159 million,
to US$2,257 million due to better operating
was offset by a 3.0% reduction in sales
compared with US$9,754 million in 2020.
results.
volumes, primarily in the semi-finished
SEGMENT
2021
2020
CHANGE
CHANGE, %
The increase was caused primarily
and tubular products, but compensated
Steel
3,609
1,930
1,679
86.9
by higher sales prices for semi-
In 2021, the Steel segment’s revenues
by improvements in sales of flat-rolled
finished and construction products,
(including intersegment sales) rose
products.
Steel, North America
321
(28)
349
n/a
as well as greater volumes for vanadium
by 46.2% YoY to US$10,188 million,
Coal
1,292
400
892
n/a
products. This increase was also attributable
which constitutes 66.3% of the Group’s
The Coal segment’s revenues increased
Other operations
19
15
4
26.6
to higher average realised prices and third
total before eliminations. The increase
by 55.8% YoY to US$2,321 million, mainly
Unallocated
(146)
(126)
(20)
15.9
party sales for coal.
was mainly attributable to higher revenues
driven by an increase of 68.8% in coal
from steel and vanadium products,
product sales prices and a decrease
Eliminations
(80)
21
(101)
n/a
The Group’s total segment EBITDA
which climbed by 45.5% and 47.6% YoY,
of 13.0% in sales volumes of coking coal
TOTAL
5,015
2,212
2,803
n/a
amounted to US$5,015 million during
respectively. This was primarily because
products.
the period, compared with US$2,212 million
average sales prices advanced by 50.4%
in 2020, boosting the EBITDA margin from
for steel products and by 38.8%
In 2021, higher prices for semi-finished,
22.7% to 35.4%. The increase in EBITDA
for vanadium. The effect of higher prices
construction and vanadium products almost
The following table details the effect of the Group’s cost-cutting initiatives:
was primarily attributable to higher steel,
on the Steel segment revenues were partly
doubled the Steel segment’s EBITDA,
vanadium and coal product sales prices.
offset by lower sales volumes, which edged
despite an increase in cost of sales.
down from 12.3 million tonnes in 2020
Effect of Group’s cost-cutting initiatives in 2021, US$ million
Total segment revenues and total segment
to 11.6 million tonnes in 2021 following
The Steel, North America segment’s EBITDA
Increasing productivity and cost effectiveness
224
EBITDA include the contribution of
planned decrease in production volumes
increased because of higher revenues from
discontinued operations. Revenues and
at Russian mills.
sales of flat-rolled, construction and railway
Improving auxiliary materials and service costs
71
EBITDA from continuing operations are
products.
Procurement efficiency
34
US$13,486 million (2020: US$9,452 million)
In 2021, revenues from the Steel, North
Other
6
and US$3,692million (2020: US$1,830 million)
America segment rose by 30.6% YoY
The Coal segment’s EBITDA rose YoY, due
TOTAL
335
respectively.
to US$2,324 million, driven by a 33.6%
to higher average realised prices.
36
37
1. For the definition of EBITDA, please refer to page 290
Meet EVRAZ
EVRAZ in figures
STRATEGIC REPORT
Corporate governance
Financial statements
Additional information
ANNUAL REPORT & ACCOUNTS 2021
Foreign exchange gains amounted
Net interest expense decreased
the full amount of the 6.75% notes due 2022
Revenues, cost of sales and gross profit by segment, US$ million
to US$34 million. They were mainly
to US$227 million in 2021, compared
(US$500 million principal) was repurchased
related to intragroup loans denominated
with US$322 million in 2020. This was mainly
early.
2021
2020
CHANGE
CHANGE, %
in rubles and payable by Evraz Group
due to repayment of expensive debt
Steel segment
S.A., whose functional currency is the US
and a lower indebtedness level during 2021.
In the reporting period, the Group had
dollar, to the Russian subsidiaries, which
In the first quarter of 2021, the Group settled
an income tax expense of US$1,077 million,
Revenues
10,188
6,969
3,219
46.2
have the ruble as their functional currency.
the 8.25% notes due 2021 (US$735 million
compared with US$437 million in 2020.
Cost of sales
(6,070)
(4,596)
(1,474)
32.1
The depreciation of the Russian ruble against
principal) and 12.6% ruble-denominated
The change mostly reflects the significant
Gross profit
4,118
2,373
1,745
73.5
the US dollar in 2021 led to foreign exchange
bonds due 2021 (US$203 million principal
improvement in operating results.
Steel, North America segment
gains being recognised on the income
at 31 December 2020). Later during 2021,
statements of non-Russian subsidiaries.
Revenues
2,324
1,779
545
30.6
Cost of sales
(1,835)
(1,604)
(231)
(14.4)
Gross profit
489
175
314
n/a
Coal segment
Cash fow, US$ million
Revenues
2,321
1,490
831
55.8
Cost of sales
(919)
(1,027)
108
(10.5)
2021
2020
CHANGE
CHANGE, %
Gross profit
1,402
463
939
n/a
Cash flows from operating activities before changes
4,000
1,593
2,407
151.1
in working capital
Other operations - gross profit
206
115
91
79.1
Changes in working capital
(576)
335
(911)
n/a
Unallocated - gross profit
(12)
(8)
(4)
50.0
Net cash fows from operating activities
3,424
1,928
1,496
77.6
Eliminations - gross profit
(183)
(76)
(107)
n/a
Short-term deposits at banks, including interest
4
4
0
0.0
TOTAL
6,020
3,042
2,978
97.9
Purchases of property, plant and equipment and intangible
(910)
(647)
(263)
40.6
assets
Proceeds from sale of disposal groups classified as held
2
11
(9)
(81.8)
Total segment gross profit, expenses and results, US$ million
for sale, net of transaction costs
2021
2020
CHANGE
CHANGE, %
Other investing activities
(1)
8
(9)
n/a
Net cash fows used in investing activities
(905)
(624)
(281)
45.0
Gross profit
6,020
3,042
2,978
97.9
Net cash fows used in financing activities
(2,707)
(1,107)
(1600)
n/a
Selling and distribution costs
(907)
(840)
(67)
8.0
General and administrative expenses
(617)
(552)
(65)
11.8
including dividends paid
(1,549)
(872)
(677)
77.6
Effect of foreign exchange rate changes on cash and cash
(12)
7
(19)
n/a
Impairment of non-financial assets
(30)
(310)
280
(90.3)
equivalents
Foreign-exchange gains/(losses), net
34
408
(374)
(91.7)
Net increase/(decrease) in cash and cash equivalents
(200)
204
(404)
n/a
Social and social infrastructure maintenance expenses
(35)
(31)
(4)
12.9
Gains/(losses) on disposal of property, plant and equipment, net
(8)
(3)
(5)
n/a
Other operating income and expenses, net
(44)
(43)
(1)
2.3
Profit from operations
4,413
1,671
2,742
n/a
Calculation of free cash fow1, US$ million
Interest expense, net
(227)
(322)
95
(29.5)
Share of profit/(losses) of joint ventures and associates
14
2
12
n/a
2021
2020
CHANGE
CHANGE, %
Gain/(loss) on financial assets and liabilities, net
(21)
(71)
50
(70.4)
EBITDA
5,015
2,212
2,803
n/a
Gain/(loss) on disposal groups classified as held for sale, net
2
1
1
100.0
EBITDA excluding non-cash items2
5,042
2,203
2,839
n/a
Other non-operating gains/(losses), net
3
14
(11)
(78.6)
Changes in working capital
(576)
335
(911)
n/a
Profit before tax
4,184
1,295
2,889
n/a
Income tax accrued
(1,007)
(579)
(428)
73.9
Income tax expense
(1,077)
(437)
(640)
n/a
Social and social infrastructure maintenance expenses
(35)
(31)
(4)
12.9
NET PROFIT
3,107
858
2,249
n/a
Net cash fows from operating activities
3,424
1,928
1,496
77.6
Interest and similar payments
(248)
(269)
21
(7.8)
In 2021, selling and distribution expenses rose
at increasing productivity (EVRAZ Business
In 2021, EVRAZ recognised a US$30 million
Capital expenditures, including recorded in financing
(920)
(657)
(263)
40.0
activities and non-cash transactions
by 8.0% amid increased freight transportation
System transformation, legal and IT)
impairment loss mainly in relation to certain
costs related to higher shipment volumes
and consulting services for these projects.
functionally obsolete items of property, plant
Proceeds from sale of disposal groups classified as held
2
11
(9)
(81.8)
for sale, net of transaction costs
and freight rates. General and administrative
This was partly offset by the effect that
and equipment.
expenses climbed by 11.8%, mostly because
depreciation of the average ruble exchange
Other cash flows from investing activities
(1)
7
(8)
n/a
of the implementation of projects aimed
rate had on costs.
FREE CASH FLOW
2,257
1,020
1,237
n/a
1. For the definition of free cash flow, please refer to page 253.
2. See Note 3 on pages 202 of the consolidated financial statement for additional information and reconciliation with IFRS financial statements.for additional
38
information and reconciliation with IFRS financial statements.
39
содержание .. 1 2 3 ..