CORPORATE PRESENTATION 1
COMPANY PRILE OMK is a high technology integrated manufacturer of steel, rolled products, pipes, pipeline valves and fittings, railway wheels and automotive springs. 30 COUNTRIES WORLDWIDE We make products that allow our customers to transport energy, cargo and people safely and efficiently. OMK s strategic partners are the leading Russian and international oil and gas, transportation and engineering companies. OMK s products are shipped to 30 countries worldwide. Russia is our key market. 2
OMK IS A LEADING PRODUCER STEEL AND OMK S SHARE THE RUSSIAN MARKET IN 1ST PLACE 2 LARGE DIAMETER ND PLACE IN GENERAL SIGNIFICANT MARKET SHARE PIPELINE VALVES OMK CONTRIBUTES TO THE DEVELOPMENT THE RUSSIAN ECONOMY We are the largest supplier of pipes for the major gas pipelines and we produce more than half of the railway wheels and almost two-thirds of the automotive springs on the Russian market. We are ranked first in Europe by volume in large diameter pipes, railway wheels and automotive springs produced. 32% 17% 12% RAILWAY WHEELS CASING OIL AND GAS AND SPECIAL CLIENTS 54% 23% 15% AUTOMOTIVE SPRINGS PIPELINE FITTINGS 68% 20% 3
OMK GEOGRAPHY OUR PLANTS ARE EXAMPLES DYNAMIC DEVELOPMENT VYKSA STEEL WORKS (Nizhny Novgorod Region, an OMK company since 1999) CASTING AND ROLLING COMPLEX (Nizhny Novgorod Region, built by OMK in 2008) BLAGOVESHCHENSK VALVES PLANT (Republic of Bashkortostan, an OMK company since ) TRUBODETAL PLANT (Chelyabinsk, an OMK company since 2005) RUSSIA Moscow Vyksa Vyksa Steel Works Casting and Rolling Complex Almetyevsk Almetyevsk Pipe Plant Chusovoy Chusovoy Steel Plant Blagoveshchensk Blagoveshchensk Valves Plant Chelyabinsk Trubodetal ALMETYEVSK PIPE PLANT (Republic of Tatarstan, an OMK company since 2002) CHUSOVOY STEEL PLANT (Permsky Kray, an OMK company since 2003) OMK TUBE (Houston, USA, built by OMK in ) NUMBER OUR EMPLOYEES >27 000 USA Houston OMK Tube 4
TRUSTED SUPPLIER FOR PIPELINE PROJECTS OMK ARE USED IN ALL MAJOR PIPELINES Nord Stream 460 000 TONS Vyborg Greifswald Central Asia China TONS 385000 Gedaim Horgos Sakhalin Khabarovsk Vladivostok TONS 355000 Sakhalin Khabarovsk Vladivostok OUR PRODUCT SHARE IN MANY PROJECTS EXCEEDS A THIRD THE OVERALL VOLUME Bovanenkovo Ukhta TONS 300000 Bovanenkovo Ukhta Dzhubga Lazarevskoye Sochi TONS 22000 Eastern Siberia Pacific Ocean TONS 230000 Tayshet Kozmino Power of Siberia * TONS 30000 Baltic Pipeline System 85 000 TONS Turkish stream ** Kirishi Primorsk 600KMS Dzhubga-1 AGDS Adler AGDS Kovykta and Chayanda fields Khabarovsk Anapa Turkey * Production and supplies still underway. ** Under development 5
OPERATIONAL RESULTS LARGE DIAMETER (THOUSAND TONS) RAILWAY WHEELS (THOUSAND PIECES) OIL AND GAS AND TUBES * (THOUSAND TONS) CRC PRODUCTS (COILS AND SHEETS) (THOUSAND TONS) 800 1058 450 661 873 797 920 1029 * Production facilities of the OGP Division, including D508 mm and 530 mm pipes, VSW Pipe Shop 3. 6
OPERATIONAL RESULTS PIPELINE FITTINGS (THOUSAND TONS) PIPELINE VALVES (THOUSAND TONS) AUTOMOTIVE SPRINGS (THOUSAND TONS) 13 19 6,4 7 55 59 7
FINANCIAL RESULTS TOTAL REVENUE REVENUE EBITDA NET PRIT/LOSS PERCENTAGE SHARE BILLION RUBLES BILLION RUBLES BILLION RUBLES 129 40 3 4 5 105 20,5 25-13 3 6 12 LARGE DIAMETER DIVISION OIL AND GAS DIVISION APP DIVISION CHUSOVOY DIVISION 28 PIPELINE FITTINGS AND VALVES DIVISION RAILWAY WHEELS DIVISION NORTH AMERICA DIVISION OTHER 8
OMK DIVISIONAL STRUCTURE WE SEEK TO BECOME THE MOST EFFICIENT COMPANY IN THE RUSSIAN STEEL INDUSTRY DIVISIONS PLANTS PRODUCTION LARGE DIAMETER DIVISION OIL AND GAS DIVISION VYKSA STEEL WORKS VYKSA STEEL WORKS, CASTING AND ROLLING COMPLEX Large diameter pipes Hot rolled wide sheets Oil and gas pipes Water supply pipes. Casing pipes Shaped pipes Hot rolled sheets APP DIVISION ALMETYEVSK PIPE PLANT Oil and gas pipes Water supply pipes Shaped pipes TRUBODETAL, BLAGOVESHCHENSK VALVES PLANT * Pipeline fittings Pipeline valves RAILWAY WHEELS DIVISION VYKSA STEEL WORKS Railway wheels CHUSOVOY DIVISION CHUSOVOY STEEL PLANT Springs Iron sections OMK s current production structure NORTH AMERICA DIVISION OMK TUBE OCTG Plain end pipes * Directors of Trubodetal and Blagoveshchensk Valves Plant report directly to the OMK President. 9
STRATEGY OMK S GOAL IS TO BECOME A SUPPLIER INTEGRATED SOLUTIONS FOR THE OIL AND GAS INDUSTRY EFFICIENT IN-HOUSE PRODUCTION + PACKAGED PROPOSAL = EFFICIENT BUSINESS MODEL STRATEGIC AREAS INCREASING OPERATING EFFICIENCY RETAINING POSITION AND INCOME IN TRADITIONAL MARKET SECTORS EXPANDING PRODUCT RANGE TO NEW PRODUCT SECTORS 10
INVESTMENTS TOTAL INVESTMENTS IN 2002-180BILLION RUBLES MAJOR INVESTMENT PROJECTS ULTRAMODERN LDP FABRICATION LINES (2005) INTEGRATED CASTING AND ROLLING COMPLEX (2005-2008) THICK PLATE MILL-5000 (2008-2011) MODERNISATION THE MDP PRODUCTION FACILITIES RECONSTRUCTION THE VSW RAILWAY WHEEL FACILITY MODERNISATION THE FITTINGS PRODUCTION FACILITIES DEVELOPMENT THE PIPELINE VALVES PRODUCTION FACILITIES CONSTRUCTION RUSSIA S FIRST HIGH-SPEED RAILWAY WHEEL FABRICATION LINE INVESTMENTS BILLION RUBLES R&D COSTS MILLION RUBLES 119* 128,8 11,5 16,1 * In, R&D costs declined due to the scheduled increase in the share of research and development carried out by OMK s in-house engineering and technical centres. This was facilitated by the creation of the Centre of Research Laboratories at the Vyksa production site, which has the most advanced equipment. 11
PROCUREMENT Operational procurement of goods, work and services are the responsibility of our plants procurement departments. OMK s procurement department performs methodology functions, control and development. OUR PROCUREMENT PRINCIPLES ARE AS FOLLOW: WE FER OUR SUPPLIERS THE FOLLOWING MODERN PROCUREMENT TOOLS Supplier s self sign-up in the corporate SRM system: anyone can become our supplier! E-procurements in the SRM system. Every supplier who signs up (and is approved) is automatically invited to take part in procurement procedures. We make the most expensive procurements via tender. TRANSPARENCY COOPERATION COMPETENCE COMPETITIVENESS RESPONSIBILITY IN PARTNERSHIP WITH OUR SUPPLIERS, WE ADHERE TO THE FOLLOWING PRINCIPLES: OPENNESS FAIRNESS DEVELOPMENT KEY NUMBERS >90 >6000 >50 000 SUPPLIERS OVERALL PROCUREMENT COST BILLION RUBLES PER YEAR ITEMS PROCURED 12
FULL IMPORT SUBSTITUTION LARGE DIAMETER OMK contributed significantly to the substitution of imports of large diameter pipes. In 2005, the company built the country s first Russian Size LDP facility. SYSTEMATIC IMPLEMENTATION LDP IMPORT SUBSTITUTION IN RUSSIA 2005 2011 2015 OMK has built the country s first Russian size LDP production line. Production of straight line seam welded pipes with diameters up to 1420 mm has begun in Russia. WE CREATED THE WORLD S FINEST INTEGRATED LARGE DIAMETER PIPE PRODUCTION We created our own production of pipe sheets. Launch of the Heavy Plate Mill-5000 at VSW to provide LDP lines with raw materials. Long-term contract for the supply of Russianmade slabs was signed in order to provide stable quality and production supply. We began to apply our own, in-house developed corrosion-resistant coatings to pipes. FROM ORE INTO PIPE DOMESTIC PRODUCTION ALL RUSSIAN LARGE DIAMETER, PARTICULARLY FOR THE POWER SIBERIA PROJECT, ARE MADE TOTALLY FROM RUSSIAN MATERIALS Share of imported LDPs in Russian pipeline projects TODAY S RUSSIAN OIL AND GAS COMPANIES USE ALMOST NO IMPORTED LDP S 37% 31% 16% 14% 4% 4% 11% 15% 1% 2% 0% 04 05 06 07 08 09 10 11 12 13 c 13
CORPORATE CITIZENSHIP AND CHARITY SOCIAL INVESTMENTS IN 2011-2BILLION RUBLES OUR CHARITY DIRECTIONS: WE SUPPORT DISADVANTAGED GROUPS, CHILDREN IN DIFFICULT LIFE SITUATIONS, YOUTH AND THE ELDERLY IN THE REGIONS WHERE THE COMPANY MAINTAINS A PRESENCE IN, WE SPENT 1 MILLION RUBLES ON SOCIAL PROJECTS FOR EVERY 5 THOUSAND TONS OUR PRODUCTION WE SUPPORT EDUCATIONAL PROGRAMMES AND INSTITUTIONS WE SPONSOR BLOOD DONATION INITIATIVES WE SUPPORT PROJECTS INTENDED TO REVIVE CULTURAL HERITAGE SITES AND PROMOTE CURRENT TRENDS IN CONTEMPORARY CULTURE AND ART 14
CHARITY FUND THE OMK-UCHASTIE CHARITY FUND WAS LAUNCHED BY SHAREHOLDERS AND EMPLOYEES THE COMPANY AND IS FUNDED BY THEM AS WELL PROTECTING CHILDHOOD AND FAMILY DIRECTIONS: TARGETED AID TO SERIOUSLY AND TERMINALLY ILL CHILDREN In 2009-, our employees assisted over 1,000 needy families through an expenditure of 31 million rubles through the OMK-Uchastie charity fund >31 >1000 MILLION RUBLES FAMILIES DEVELOPMENT EDUCATION AND MEDICAL PRACTICES: Creation of a website on child oncology with educational modules for doctors and nurses Regular charity events at SRI of Child Oncology and Haematology (N.N. Blokhin ROSC). Annual congress of child oncologists, etc. COLLABORATION WITH INSTITUTIONS: CHILDREN FROM SOCIALLY DISADVANTAGED FAMILIES OR THOSE WHO ARE LEFT WITHOUT PARENTS CARE ARE EDUCATED OR CURED: Orphanages, correctional schools in regions where OMK operates ART OVRAG NEW URBAN CULTURE FESTIVAL IN VYKSA (NIZHNY NOVGOROD REGION) 15
ОМК 28/2, Ozerkovskaya embankment Moscow, Russia, 115184 +7 (495) 231-77-71 +7 (495) 231-77-72 press@omk.ru www.omk.ru 16