Tata Steel Limited · NSE:TATASTEEL
Tata Steel — Q4 FY2016 Earnings Presentation
35 slides from Tata Steel's earnings presentation, May 25, 2016
Slide 1: Results Presentation
Results Presentation Financial Quarter and year ended 31st March 2016 25th May 2016 1
Slide 2: Disclaimer
Disclaimer: Statements in this presentation describing the Company’s performance may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results may differ materially from those directly or indirectly expressed, inferred or implied. Important fact
Slide 3: Tata Steel Group is committed towards excellence in Health and Safety
Tata Steel Group is committed towards excellence in Health and Safety LTIFR* data for Tata steel group Ambition: 1 0.95 Committed to ensuring all Tata steel sites are sustainably fatality 0.9 free. 0.78 Being the Benchmark in H&S in our industry 0.8 Achievements: 0.68 0.7 59% Year on year redu
Slide 4: Tata Steel is focused on engaging with communities and improving quality of life
Tata Steel is focused on engaging with communities and improving quality of life India CSR Spend Trend-India (`Crs) Primary health care services for Promoted safe sexual health 5,70,000 people & Ante-Natal and behaviour among adolescents Post-Natal Check-ups for 7,800 (RISHTA project) for 23,700 212
Slide 5: Agenda
Agenda I Group Financial Performance II India & SE Asia performance III Europe performance IV Appendix 5
Slide 6: Global steel industry continues to be impacted by surplus capacity and demand contraction
Global steel industry continues to be impacted by surplus capacity and demand contraction Global overcapacity 800 100% Global steel environment faced headwinds from sluggish 600 90% global trade, China slowdown, weak investment sentiment from lower oil and other commodity prices 400 80% and volati
Slide 7: Structural rebalancing in China impacting demand supply equation globally
Structural rebalancing in China impacting demand supply equation globally China Investment, Production and Sales(YoY Change%) Slowdown in major steel consuming sectors resulted into 35% 30% Chinese mills focusing on exports. 25% 20% Geopolitical issues and volatile currencies added to 15% 10% pr
Slide 8: Key highlights of the quarter and year
Key highlights of the quarter and year Best ever hot metal production of 10.65 MT Sustained increase in deliveries despite weak business environment India Increasing share of value added products with best ever branded retail sales Start of commercial production at Kalinganagar Steel Plant
Slide 9: Quarterly Financial Performance
Quarterly Financial Performance ` Crs Group India Q4 FY16 Q3 FY16 Q4 FY15 Q4 FY16 Q3 FY16 Q4 FY15 Deliveries(MT) 6.94 6.36 7.06 2.72 2.35 2.41 Turnover 29,508 28,039 33,666 10,522 9,064 10,635 Raw material Cost 7,057 7,625 8,782 2,159 2,341 2,684 EBITDA 2,270 841 1,580 2,188 1,525 1,661 Underlying E
Slide 10: Annual Financial Performance
Annual Financial Performance ` Crs Group India FY16 FY15 FY16 FY15 Deliveries(MT) 25.92 26.31 9.54 8.75 Turnover 117,152 139,504 38,210 41,785 Raw material Cost 32,188 40,741 9,700 11,679 EBITDA 11,301 12,745 10,896 10,102 Underlying EBITDA# 7,892 13,027 7,388 10,102 PBT (1,674) (1,388) 6,127 8,509
Slide 11: Group EBITDA FY16 Vs FY15 - Affected by falling realisations
Group EBITDA FY16 Vs FY15-Affected by falling realisations `Crores Non-Controllable - (` 9,526 crores) Controllable - `2,552 crores 13,887 3,508 10,420 2,885 38 6,913 9,314 476 4,361 475 (128) (1,726) (847) (17,463) FY'15 Revenue - Cost -Change Production Actuarial Others Adjusted Revenue - Cost - C
Slide 12: Debt movement FY16
Debt movement FY16 ` Crores 85,168 86,204 11,578 80,701 177 859 1,440 3,027 74,626 Gross Debt Mar Loans Movt Forex impact Gross Debt Dec Loans Movt Forex impact Gross Debt Mar Cash & Cash Eq Net Debt Mar 16 15 15 16 Gross debt increased by ` 5,502 crores despite incurring a capex of ` 11,486 crore
Slide 13: Cash Flow Bridge for FY16
Cash Flow Bridge for FY16 ` Crores 5,433 1,645 8,175 1,550 4,001 817 11,578 10,250 4,567 11,486 949 Opening Operating Change in Direct taxes Capex Monetisation Net Debts Interest paid Dividend Others Closing Cash, Cash, Bank & Cash flow Working paid of assets Bank & Current Inv. before WC capital (N
Slide 14: Restructuring of UK operations to create sustainable shareholder value
Restructuring of UK operations to create sustainable shareholder value Restructuring of Strip Products UK, Speciality Steels and Long Products Europe leading to around 3,000 job losses and tactical decision to focus on higher-value sales. Agreement to sell Long Products Europe to Greybull which
Slide 15: Agenda
Agenda I Group Financial Performance II India & SE Asia performance III Europe performance IV Appendix 15
Slide 16: Business environment – Awaiting revival
Business environment – Awaiting revival Indian steel consuming sectors growth % 28% Growth in key steel consuming sectors remained tepid during the year. 15% 14% Continued cheap imports and the uncompetitive export 14% 9% realisations led to net imports increase by over 200%. 6% 11% 8% 4% 5% 1%
Slide 17: Sustained outperformance despite market headwinds
Sustained outperformance despite market headwinds Sustained Outperformance Surge in sales across verticals(‘000 tonnes) 20.0% 19.0 12.8% 13.8% 13% 15.0% Production curtailed due to RM Crisis 9.1% 10.0% 4.0% 9,543 14.0 4.5% 5.0% 8,749 2,719 1,430 2,408 2,351 2.7% 0.0% 1,363 5% 396 3.0% 1.0% 351 333 1
Slide 18: Ferro Alloys and Minerals Division - Production ramp up in a challenging environment
Ferro Alloys and Minerals Division - Production ramp up in a challenging environment Kt `/Tonne 100 70655 75000 69878 85 68815 80 72 70000 61 60 60 49 6224957 65000 59059 40 35 60000 27 21 20 11 12 10 13 9 10 7 11 12 14 11 55000 7 0 50000 Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Ferro Chrome Sales (K
Slide 19: Building a portfolio of strong brands
Building a portfolio of strong brands First branded Thermo Ready to use footings Downstream service presently offers the Flagship brand in the field of Best-in-class Hot Rolled Sheets & Mechanically Treated (TMT) Rebar Cut & Bend service that aims at Galvanized Corrugated Sheets Coils in the country
Slide 20: EBITDA Bridge Q4FY16 to Q3FY16
EBITDA Bridge Q4FY16 to Q3FY16 `Crores 222 2,188 236 120 137 1,525 68 78 (103) (95) Q3 FY16 Revenue Bought out Imp Coal Captive Iron Ore Other DMF Charge Vol/Mix Others Q4 FY16 Metaliks & Coal operational cost EBITDA improved due to higher deliveries, favourable raw material cost and better profit c
Slide 21: Start of commercial production at Kalinganagar Steel Plant
Start of commercial production at Kalinganagar Steel Plant October’15: March’16 May’15: Rolling of 1st Coil Starting of Hot Metal Battery Heating from Hot strip mill production Commercial Production starts Stabilization underway September’15 January’16 March’16 1st Coke Pushing Starting of Sinter St
Slide 22: Kalinganagar Steel Plant Highlights
Kalinganagar Steel Plant Highlights Adoption of Adoption of best best technology technology and and Largest operating LD converter in Large operating Blast India with 310 Tonnes Benefits Furnaces(4330 m3) Reduction in Coke rate & Blast Furnace slag rate Higher operational efficiency Pulveriz
Slide 23: Kalinganagar Steel Plant
Kalinganagar Steel Plant Steel Melting Shop Sinter Plant Blast Furnace Coke Ovens 23
Slide 24: Kalinganagar Steel Plant
Kalinganagar Steel Plant Gas Pipelines DM Plant PAN view of Blast furnace with Railway siding 24
Slide 25: South East Asia Business Update
South East Asia Business Update Nat Steel Holdings Deliveries declined for FY 16 on the back of mothballing of China operations Focus on cost improvement initiatives and downstream products & solutions business. Continued with exports driven strategy to overcome dominance of cheap Chinese bar
Slide 26: Business Outlook
Business Outlook I Indian steel industry prospects improving due to low oil prices, the reform momentum and policies to increase infrastructure and manufacturing output II Normal monsoons & increased thrust on rural spend expected to revive rural demand III Supply side pressure likely to cap raise i
Slide 27: Agenda
Agenda I Group Financial Performance II India & SE Asia performance III Europe performance IV Appendix 27
Slide 28: EU steel mills are not benefitting from local economic growth
EU steel mills are not benefitting from local economic growth GDP-Eurozone and UK(YoY%) EU Market supply(Mn Tonnes and Import share %) 20 Import (LHS) 20% 4% 18 EU deliveries (LHS) 16 15% 2% Import share (RHS) 14 0% 12 10% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 10 -2% Eurozone 8 5% -4% 6
Slide 29: Efficiency and product mix improvements
Efficiency and product mix improvements Operational reliability and productivity gains Strong operational performance throughout the past year Productivity improvements at both IJmuiden and Port Talbot, including record annual outputs at IJmuiden and Port Talbot hot strip mills while maintaining
Slide 30: EBITDA Bridge–Q4FY16 vs Q3FY16
EBITDA Bridge–Q4FY16 vs Q3FY16 £ million 3 months to 3 months to Dec 2015 Mar 2016 0 (20) £(37)m £(68)m £12m £4m (40) (60) £47m £0m (80) Central £(32)m & Other (100) Selling Production (120) Cost Manufacturing Result Volume Changes EBITDA higher than the prior quarter Selling result impacted by
Slide 31: Business Outlook
Business Outlook I The Eurozone and UK economies continue to grow, however industrial activity continues to lag the services sector II EU steel demand expected to remain stable in 2016 due to muted growth of steel-using sectors III European steel mills expected to continue to be under pressure from
Slide 32: Agenda
Agenda I Group Financial Performance II India & SE Asia performance III Europe performance IV Appendix 32
Slide 33: Standalone-QoQ Variations
Standalone-QoQ Variations ` Crores Q4 FY16 Q3 FY16 Key Reasons Net sales 10,372 8,991 Higher volumes Other operating income 150 73 Credits relating to insurance claims Changes in inventories 646 (173) Reduction due to higher sales Purchases of finished, semis & other 224 333 Higher purchases of HR c
Slide 34: Consolidated Results -QoQ Variations
Consolidated Results -QoQ Variations ` Crores Q4 FY16 Q3 FY16 Key Reasons Net sales 29,164 27,819 Increased primarily at India Other operating income 343 220 Increase mainly in India and other miscellaneous income Changes in inventories 1,903 957 Reduction mainly due to higher sales Purchases of fin
Slide 35: Contact
Contact Investor enquiries : Samita Shah Tel: +91 22 6665 7307 Email: samita.shah@tatasteel.com Devang Shah Tel: +91 22 6665 0530 Email: devang.shah@tatasteel.com Media enquiries: Kulvin Suri Tel: +91 657 664 5512 / +91 92310 52397 Email: kulvinsuri@tatasteel.com Rob Simpson Tel: +44 207 717 4404/ +