Q2 and H1 2011 IFRS Results Conference Call 17 August 2011 17 - PowerPoint PPT Presentation

Q2 and H1 2011 IFRS Results Conference Call 17 August 2011 17 August 2011

Disclaimer This presentation has been prepared by OJSC MHK EuroChem (“EuroChem” or the “Company”) for informational purposes, and may include forward- looking statements or projections. These forward-looking statements or projections include matters that are not historical facts or statements and reflect the Company’s intentions, beliefs or current expectations concerning, among other things, the Company’s results of operations, financial condition, liquidity, performance, prospects, growth, strategies, and the industry in which the Company operates. By their nature, forward-looking statements and projections involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions you that forward-looking statements and projections are not guarantees of future performance and that the actual results of operations, financial condition and liquidity of the Company and the development of the industry in which the Company operates may differ materially from those made in or suggested by the forward-looking statements or projections contained in this presentation. Factors that could cause the actual results to differ materially from those contained in forward-looking statements or projections in this presentation may include, among other things, general economic conditions in the markets in which the Company operates, the competitive environment in, and risks associated with operating in, such markets, market change in the fertilizer and related industries, as well as many other risks affecting the Company and its operations. In addition, even if the Company’s results of operations, financial condition and liquidity and the development of the industry in which the Company operates are consistent with the forward-looking statements or projections contained in this presentation, those results or developments may not be indicative of results or developments in future periods. The Company does not undertake any obligation to review or confirm expectations or estimates or to update any forward-looking statements or projections to reflect events that occur or circumstances that arise after the date of this presentation. This document does not constitute or form part of any advertisement of securities, any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of the Company in any jurisdiction, nor shall it or any part of it nor the fact of its presentation, communication or distribution form the basis of, or be relied on in connection with, any contract or investment decision. No reliance may be placed for any purpose whatsoever on the information contained in this document or on assumptions made as to its completeness. No representation or warranty, express or implied, is given by the Company, its subsidiaries or any of their respective advisers, officers, employees or agents, as to the accuracy of the information or opinions or for any loss howsoever arising, directly or indirectly, from any use of this presentation or its contents. By participating in this meeting, you agree to be bound by the foregoing. 2

Industry Update H1 Performance Nitrogen Segment Phosphate Segment Potash Segment Outlook

Industry Context in H1 2011 Urea, DAP, MOP  Stronger agricultural commodity prices (H1 2011 avg. 1400 v. H1 2010 avg.) 1200 • Corn: +94% (1 July to date: +2%) US$ per tonne 1000 800 • Wheat: +61% (1 July to date: +5%) 600 • Rice: + 13% (1 July to date: +23% 400 • Soybeans: +43% (1 July to date: -2%) 200 0 01/08 03/08 05/08 07/08 09/08 11/08 01/09 03/09 05/09 07/09 09/09 11/09 01/10 03/10 05/10 07/10 09/10 11/10 01/11 03/11 05/11  Demand for fertilizer supported by attractive farmer economics Prilled urea (FOB Yuzhniy) DAP (FOB Baltics) MOP (FOB Baltics, Spot)  Supply is tight across all nutrients on low stocks and high demand Iron ore, CFR China 250  China: new sliding export duties restrict exports of 200 DAP and urea. Plans to build new urea capacity over US$ per tonne 150 the next five years halved to 5 MT 100 50  Consolidation continued (Uralkali-Silvinit, Ukraine) 0 01/08 03/08 05/08 07/08 09/08 11/08 01/09 03/09 05/09 07/09 09/09 11/09 01/10 03/10 05/10 07/10 09/10 11/10 01/11 03/11 05/11  Demand from China supports iron-ore prices. New supply takes longer than expected to shape up IronOre (CFR China) • Iron ore: H1 11 avg. price + 22% over H1 2010 avg. (1 July to date: +5%) 4

Performance Overview Sales H1 2011 by segment Key Figures H1 2011 vs. H1 2010 (in brackets – change in percentage points relative to H1 2010) Change to H1 H1 2011 Phosphates 2010 47% (+1) Distribution Revenue 62,085 +37% RUBm 12% (+2) EBITDA 23,426 +80% RUBm Other Net profit RUBm 20,883 +200% 2% (+1) Gross margin 51% +5 p.p. % Nitrogen EBITDA margin 38% +9 p.p. % 39% (-4) Sales volumes Sales H1 2011 by region Nitrogen* KT 2,928 +1% (in brackets – change in percentage points relative to H1 2010) Phosphate (excl. iron KT 1,254 +3% Europe Latin ore and baddeleyite) 16% (-) America 16% (+2) North Phosphate (iron ore America 2,755 -8% KT and baddeleyite) 8% (+2) Asia and Australasia Africa 16% (-6) 3% (-) *Nitrogen includes organic synthesis products. Russia and CIS 41% (+2) 5

H1 2011 Revenue +37% (+45% net of transport costs) 70,000 60,000 7,109 435 784 4,553 45 907 Transport (244) (151) 5,630 (2,519) 50,000 7,610 7,462 40,000 Transport RUB m 54,977 Net 37,927 revenue 30,000 Net revenue 20,000 10,000 0 H1 2010 Realised Realised Realised Volume Volume Volume Transport FX Effect 3rd Party Other H1 2011 Gross Price Effect Price Effect Price Effect and Mix and Mix and Mix Price and Product Gross Revenue (N) (P) (Iron Ore + Effect (N) Effect (P) Effect (Iron Mix Effect Sales Revenue Badd.) Ore + Badd.) 6

H1 2011 Cash Flow 25,000 20,000 (3,278) 15,000 (4,287) (331) RUB m 23,426 1,579 10,000 2,706 15,530 5,000 9,962 (9,853) 0 H1 2011 Taxation Working Other Items Operating CAPEX Equity Other H1 2011 Free EBITDA Capital Cash Flow Investments Cash Flow Details on page 12 Effective tax rate = 17.5% Increase in trade receivables and Sale of K+S AG shares 7 inventories due to rising prices

H1 2011 Net Profit Reconciliation of EBITDA to Net Profit H1 2011 H1 2010 EBITDA RUBm 23,426 13,009 Sale of shares of - Depreciation and amortisation RUBm (2,150) (1,618) K+S Group - Idle property, plant and equipment write-off RUBm (18) (84) + Gains on available-for-sale investments RUBm 914 91 - Financial fx loss - net RUBm 2,588 (1,135) - Interest expense RUBm (1,174) (889) - Other financial income/(loss) - net RUBm 1,730 (410) +/- Non-controlling interest RUBm (2) 43 RUB/USD - Income tax expense RUBm (4,432) (2,049) volatility Net profit RUBm 20,883 6,958 Mainly realized on US$/RUB non-deliverable forward contract and changes in the fair value of cross currency interest rate swap 8

Business Segments: Others Revenue and EBITDA, other segments H1 11 / H1 10 H1 2011 Change Revenue RUBm 15,401 +23% Fertilizer sales volumes through own - Distribution RUBm 7,622 +77% distributors increased to 669 KT in H1 - Others RUBm 7,779 -5% 2011, 39% higher than H1 2010 862 +3,492% EBITDA RUBm EuroChem distribution and sales outlets registered a 92% increase in sales in Q2’11 v Q2’10. Sales reached RUB 3.5bn or 11% of EuroChem’s overall sales for Q2 2011 Including logistic and other services rendered to other segments and third parties, third party product sales, etc 9

Costs Cost Structure, RUBm H1 11 / H1 10 H1 2011 H1 2010 Change Annual nat gas increase: for 6M11, average gas prices at NAKAzot and 6,995 5,997 +17% Gas (raw materials) NEVAzot facilities were RUB 3,178 and 3,342 per 1,000m3 respectively compared to RUB 2,748 and 2, 909/1,000m3 in 6M10 Sulphur 1,231 655 +88% Strong demand and tight supply drove price increases Other materials and 10,402 6,778 +53% Increases in raw material prices components Primarily brought on by the liberalization of the wholesale electricity 3,464 2,706 +28% Energy market from January 2011 and increases in energy tariffs Due to higher prices for diesel fuel (45%) and oil (10%), as well as the Utilities and fuel 1,875 1,549 +21% expansion of heavy vehicle fleet vehicles and acquisition of excavators at Kovdorskiy GOK Transportation 6,705 7,393 -9% Due to salary indexation and increased social insurance contributions 5,700 5,419 +5% Labour Change in WIP and (765) 43 NM FG Other 5,157 4,248 -21% Total* 40,764 34,788 +17% 10 *Includes cost of sales, distribution and G&A expenses