Slide 1: First Quarter 2014 Earnings Presentation
BEFESA BEFESA First Quarter 2014 Earnings Presentation 20th May 2014
Slide 2: Forward-looking Statement
BEFESA Forward-looking Statement This presentation contains forward-looking statements and information relating to Befesa and its affiliates that are based on the beliefs of its management as well as assumptions made and information currently available to Befesa and its affiliates. Such statements r
Slide 3: Introduction
BEFESA Business Zinc Business Zinc Non-Zinc Business Consolidated Business Introduction Q&A Appendix Highlights Performance Financials Performance Financials Outlook Rafael Pérez Head of Strategy & Investor Relations 3
Slide 4: Highlights
BEFESA Business Zinc Business Zinc Non-Zinc Business Consolidated Business Introduction Q&A Appendix Highlights Performance Financials Performance Financials Outlook Javier Molina Chief Executive Officer 4
Slide 5: Befesa 1Q 2014 Highlights
BEFESA Befesa 1Q 2014 Highlights Good start of the year in all Befesa segments with total consolidated 1Q revenues of €157 million Strong consolidated 1Q EBITDA of €29 million and EBITDA margins in line with previous years at 18% Difficult global economic context with challenging steel and aluminum
Slide 6: Zinc Business Performance
BEFESA Business Zinc Business Zinc Non-Zinc Business Consolidated Business Introduction Q&A Appendix Highlights Performance Financials Performance Financials Outlook Asier Zarraonandia Managing Director of Zinc Business 6
Slide 7: Crude Steel Performance
BEFESA Crude Steel Performance We continue to deliver high margins in a challenging zinc commodity price environment. Total sales of €60m and EBITDA of €19m Operational Performance Throughput Highlights - 157.574 tons of crude steel dust treated in 1Q Steel dust deliveries in line with expectati
Slide 8: Crude Steel Market Overview
BEFESA Crude Steel Market Overview The European steel market has started to show positive signs after several consecutive challenging periods Crude Steel Production EU-28 Crude Steel Production Turkey Crude Steel Production South Korea Crude Steel Production (million tons) 41,1 43,8 42,1 43,8 -0,5%
Slide 9: Zinc Prices & Hedging
BEFESA Zinc Prices & Hedging Zinc prices during the first quarter of 2014 kept the peak level reached along the end of 2013, although still 4% behind 1Q 2013 2.000 2012: 2013: 1.703 €/t 1.700 €/t 1.800 Zinc Prices 1Q 2014: 2Q 2014: During the first quarter of 2014 zinc prices fluctuated on 1.550 €
Slide 10: Stainless Steel Performance
BEFESA Stainless Steel Performance Stainless steel business negatively affected by weak market dynamics in Europe and low nickel prices recovering at a slow path Operational Performance Throughput: 16.628 tons of stainless steel dust treated in 1Q 2014 (-40% vs 1Q 2013 and -31% vs 4Q 2013) Load
Slide 11: 2014 Growth Strategy
BEFESA 2014 Growth Strategy Steel growth strategy focused on South Korea and Turkey projects will drive significant near-term growth Korea Plant commissioning started last March 2013 Full speed operations started in September Throughput in line with expectations. Oversupply of crude steel dust
Slide 12: Zinc Business Financials
BEFESA Business Zinc Business Zinc Non-Zinc Business Consolidated Business Introduction Q&A Appendix Highlights Performance Financials Performance Financials Outlook Marta Deprit Financial Controller of Zinc Business 12
Slide 13: Crude Steel Key Financials
BEFESA Crude Steel Key Financials Crude steel segment 1Q EBITDA only 1% behind 1Q 2013 despite 4% decline in zinc LME prices Crude Steel Revenues (€m) Y-o-Y Highlights 2013 2014 Crude steel dust segment revenues increased by 2% and the EBITDA decrease by 6% due to the following effects: 45,2 46,0
Slide 14: Stainless Steel Key Financials
BEFESA Stainless Steel Key Financials Stainless steel heavily affected by depressed stainless market dynamics and weak commodity prices Stainless Revenues (€m) Y-o-Y Highlights 2013 2014 Stainless steel dust segment revenues decreased by 35,6% and the EBITDA went to almost zero due to the decrease
Slide 15: Zinc Cash Flow & Liquidity
BEFESA Zinc Cash Flow & Liquidity Cash flow generation influenced by the results of the operations Operating activities: During the first quarter of 2014 the net cash flows used in operating activities increased in €15,5 million and in €6,5 million compared to the same period in 2013 mainly due to
Slide 16: Non-Zinc Business Performance
BEFESA Business Zinc Business Zinc Non-Zinc Business Consolidated Business Introduction Q&A Appendix Highlights Performance Financials Performance Financials Outlook Javier Molina Chief Executive Officer 16
Slide 17: Aluminium Performance
BEFESA Aluminium Performance Secondary Aluminium performance in line with expectations and weaker salt slag performance driven by low volumes Operational Performance Salt Slag/SPLs Recycled Highlights - 102.418 tons of salt slag/SPL recycled in 1Q 2014 Aluminum produced volumes in line with (-13
Slide 18: Aluminium Market Overview
BEFESA Aluminium Market Overview European car industry has shown strong performance in 1Q European Car Production European Car Production The European demand for new passenger cars boosted during the first quarter of 2014 compared to same period of 2013. This increased output reflects the recovering
Slide 19: Aluminium Financial Highlights
BEFESA Aluminium Financial Highlights Despite weaker salt slag volumes and prices, key financial metrics similar to 1Q 2013 thanks to savings from cost measures in place Aluminium Revenues (€m) Y-o-Y Highlights 2013 2014 Revenues and EBITDA of the aluminium waste business pretty in line with those
Slide 20: Industrial Waste Performance
BEFESA Industrial Waste Performance 1Q in line with expectations across the different divisions of Industrial Waste Management and cost savings delivering expected results for the business unit Operational Performance Industrial Waste Managed In Spain: 133.503 tons in 1Q 2014 (-21,9% vs 1Q 2013 an
Slide 21: Industrial Waste Financial Highlights
BEFESA Industrial Waste Financial Highlights Strong Ebitda growth and margin improvement driven by better margin in Spain and stronger volumes in Latin America and Sulphur Industrial Waste Revenues (€m) Y-o-Y Highlights 2013 2014 The 14% increase in EBITDA was principally due 0,0% to a 18% increas
Slide 22: 2014 Growth Strategy
BEFESA 2014 Growth Strategy Bernburg plant moving forward as planned in line with budget and schedule. Important step in the Persian Gulf project achieved. Bernburg Construction of the plant fully on time and on budget with expected start date for September Commercial status: ~65% of plant produ
Slide 23: Consolidated Financials
BEFESA Business Zinc Business Zinc Non-Zinc Business Consolidated Business Introduction Q&A Appendix Highlights Performance Financials Performance Financials Outlook Rafael Pérez Head of Strategy & Investor Relations 23
Slide 24: Revenue and EBITDA
BEFESA Revenue and EBITDA First quarter of 2014 slightly below 1Q 2013 both in terms of revenues and EBITDA, keeping the profitability at high historical levels Revenues (€m) Highlights Steel Aluminium Ind. Waste 1Q 2014 consolidated revenues amounted 164,7 M€ 156,6 M€ to €157 million, slightly be
Slide 25: Consolidated P&L
BEFESA Consolidated P&L Good operating result during the first quarter of the year but slightly below 1Q 2013 Consolidated P&L (‘000 euros) BEFESA Profit & Loss Statement ('000 euros) 1Q 2014 1Q 2013 Change Net revenue 156.569 164.663 (8.094) EBITDA 28.680 30.778 (2.098) Depreciations, amortizations
Slide 26: Consolidated Cash Flow Statement
BEFESA Consolidated Cash Flow Statement Operating activities: During the first quarter of 2014 the net cash flows used in operating activities increased in €10,6 million and in €32,0 million compared to the same period in 2013 mainly due to better performance of the working capital Investing act
Slide 27: Debt Structure & Net Debt Position: March 2014
BEFESA Debt Structure & Net Debt Position: March 2014 Solid and stable financing position at 3 levels (Zinc, Non-Zinc and Corporate) with total leverage at x4,9 Net Debt / LTM Vendor Note 48 M€ Total Net March 2014 EBITDA PIK Note 156 M€ Debt(1) 587 M€ x4,9(2) Befesa Medio Ambiente Ring fence struct
Slide 28: Outlook
BEFESA Business Zinc Business Zinc Non-Zinc Business Consolidated Business Introduction Q&A Appendix Highlights Performance Financials Performance Financials Outlook Javier Molina Chief Executive Officer 28
Slide 29: 2014 Business focus
BEFESA 2014 Business focus The main priorities for Befesa for 2014 keeps the same • Focus on operational excellence in order to achieve the cost savings target for 2014 in a sustainable manner • Good execution of the Bernburg project: time and budget • Consolidation of Befesa Zinc in South Korea • G
Slide 30: Strategy
BEFESA Strategy The growth strategy of Befesa is being defined within the frame: Recycling - Waste – Metals Recycling has to be the main activity that is present in all Befesa’s business lines and that is supported by global macro trends in favor of recycling Recycling Metals are an important source
Slide 31: Outlook
BEFESA Outlook Most recent forward looking steel and aluminium market indicators suggest a positive trend for 2014 in Befesa’s markets European Steel Market “The latest signals from key steel-using sectors such as automotive are “The outlook for 2014 is moderately positive, with continued growth ove
Slide 32: Questions
BEFESA Business Zinc Business Zinc Non-Zinc Business Consolidated Business Introduction Q&A Appendix Highlights Performance Financials Performance Financials Outlook Questions 32
Slide 33: Appendix
BEFESA Business Zinc Business Zinc Non-Zinc Business Consolidated Business Introduction Q&A Appendix Highlights Performance Financials Performance Financials Outlook 33
Slide 34: Consolidated P&L
BEFESA Consolidated P&L BEFESA Profit & Loss Statement ('000 euros) 1Q 2014 1Q 2013 Change From continuing operations: Revenue 156.569 164.663 (8.094) +/- Changes in inventories of finished goods and work in progress 309 5.849 (5.540) Cost of sales (73.690) (83.986) 10.296 Other income 2.221 3.913 (
Slide 35: Consolidated Balance Sheet
BEFESA Consolidated Balance Sheet BEFESA Consolidated Balance Sheet (‘000 euros) Assets 31.03.2014 31.12.13 Equity and liabilities 31.03.2014 31.12.13 Equity: Non-current assets Attibutable to owners of the parent - Intangible assets Share capital 150.003 150.003 Goodwill 373.860 373.860 Reserve for
Slide 36: Consolidated Cash Flow Statement
BEFESA Consolidated Cash Flow Statement BEFESA Cash Flow Statement ('000 euros) 1Q 2014 1Q 2013 Change Cash flows from operating activities: Profit (loss) for the year before tax 6.757 19.367 (12.610) Adjustments for- Depreciation and amortisation charge 8.884 7.510 1.374 Depreciation and amortisati
Slide 37: Zinc Detailed Balance Sheet
BEFESA Zinc Detailed Balance Sheet BEFESA ZINC Balance Sheet ('000 euros) Assets 31.03.2014 31.12.2013 Equity and Liabilities 31.03.2014 31.12.2013 Non-current assets: Equity: Intangible assets: Of the Parent: Goodwill 286.287 286.287 Share capital 25.010 25.010 Other intangible assets 8.592 8.818 U
Slide 38: Zinc Detailed P&L
BEFESA Zinc Detailed P&L BEFESA ZINC Profit & Loss Statement ('000 euros) 1Q 2013 1Q 2014 Change 4Q 2013 1Q 2014 Change Revenue 64.651 59.758 (4.893) 67.080 59.758 (7.322) Cost of sales (39.079) (37.039) 2.040 (40.644) (37.039) 3.605 Other operating income 2.299 1.382 (917) 957 1.382 425 Gross Profi
Slide 39: Zinc Detailed Cash Flow
BEFESA Zinc Detailed Cash Flow BEFESA ZINC Cash Flow Statement ('000 euros) 1Q 2013 1Q 2014 Change 4Q 2013 1Q 2014 Change Cash Flows From Operating Activities Profit for the period before tax 11.265 6.402 (4.863) (11.767) 6.402 18.169 Adjustments due to: Amortization/ Depreciation 4.209 4.053 (156)
Slide 40: Zinc Detailed Operational Data
BEFESA Zinc Detailed Operational Data Three-month period ended March 31, 4Q 1Q 2014 vs 4Q Change Change 2013 2014 2013 (tons) (%) (tons) (%) Crude steel waste recycling Installed capacity1 (tons ) 560.300 670.300 110.000 19,6% 670.300 0 0,0% Crude steel waste processed (tons ) 127.423 157.574 30.151
Slide 41: Aluminium Detailed Operational Data
BEFESA Aluminium Detailed Operational Data Three-month period ended March 31, 4Q 1Q 2014 vs 4Q Change Change 2013 2014 2013 (tons) (%) (tons) (%) Salt slags and SPLs recycling Installed capacity6 (tons ) 630.000 630.000 0 0,0% 630.000 0 0,0% Salt slags recycled (tons) 112.895 96.573 (16.322) -14,5%
Slide 42: Industrial Waste Detailed Operational Data
BEFESA Industrial Waste Detailed Operational Data Three-month period ended March 31, 4Q 1Q 2014 vs 4Q Change Change 2013 2014 2013 (tons) (%) (tons) (%) Industrial waste management (Spain) Industrial waste treated (tons): 170.961 133.503 (37.458) -21,9% 150.088 (16.585) -11,1% Industrial waste manag
Slide 43: Consolidated Key Financials
BEFESA Consolidated Key Financials Three-month period ended March 31, 4Q 1Q 2014 vs 4Q Change Change 2013 2014 2013 (€m) (%) (€m) (%) Revenue (€ million) Steel waste recycling 67,5 59,8 (7,8) -11,5% 67,1 (7,3) -10,9% Crude steel 45,2 46,0 0,9 1,9% 50,2 (4,2) -8,4% Stainless steel 16,2 10,4 (5,8) -35
Slide 44: Net Debt Position: March 2014
BEFESA Net Debt Position : March 2014 Total Net Debt Position (Excl. Vendor Note & Factoring/Confirming) : March YTD 2014 (€m) x4,9(2) 71 156 11 7 9 140 158 20 14 658 587 300 334 BZ Bond Hankook Other Zinc Zinc Gross Non-Zinc Bernburg Other Non- Non-Zinc Public Entity PIK Note Total Gross Total Cash