Tata Steel Limited · NSE:TATASTEEL
Tata Steel — Q4 FY2015 Earnings Presentation
42 slides from Tata Steel's earnings presentation, May 20, 2015
Slide 1: Results Presentation
Results Presentation Financial quarter and year ended 31st March 2015 20th May 2015
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 facto
Slide 3: Tata Steel Group – Health and Safety (H&S)
Tata Steel Group – Health and Safety (H&S) Ambition • Committed to ensuring all Tata Steel sites are sustainably fatality free • Being the benchmark in H&S in our industry 2.5 2.35 • “Committed to Zero” programme launched in 2.10 India 2 Key focus areas 1.5 1.31 0.95 • Competence development in H&S
Slide 4: Continued focus on engaging with communities and improving quality of life
Tata Steel’s continued focus on engaging with communities and improving quality of life CSR Spend in India (Rs. Crs) FY15 Spend Rs Crs 250 Health 23 212 200 Education 29 171 171 150 Livelihoods 10 100 Ethnicity 14 50 Infrastructure 79 Others (Sports, Environment, etc.) 16 0 FY13 FY14 FY15 Total 171
Slide 5: Agenda
Agenda SN Particulars 1 Overview 2 India & SE Asia performance 3 Europe performance 4 Financial highlights 5 Key developments
Slide 6: Global oversupply driven by excess capacity in China
Global oversupply driven by excess capacity in China China - steel demand growth Significant overcapacity in China China’s steel exports (app. y/y%) (Mt) (In MnT) Q1 Q2 Q3 Q4 120 101 100 26 80 66 58 60 18 28 14 40 15 15 24 20 14 16 15 16 23 - FY13 FY14 FY15 Global steel demand has been mixed in 20
Slide 7: Highlights of the quarter and the year
Highlights of the quarter and the year 1 Steady deliveries across the Group despite depressed steel markets Continued enrichment of product basket : higher % of branded products in India 2 and differentiated products in Europe Sharp drop in realisations coupled with regulatory issues affects profita
Slide 8: Agenda
Agenda SN Particulars 1 Overview 2 India & SE Asia performance 3 Europe performance 4 Financial highlights 5 Key developments
Slide 9: India and SE Asia – Steel demand stagnant due to macro headwinds
India and SE Asia – Steel demand stagnant due to macro headwinds India GDP growth PMIs (manufacturing) India 65 Old Series (at FY'05 prices) • GDP (YoY) signals a positive India momentum 60 Singapore New Series (at FY'12 prices) • PMI slowed down in Q4 - 52.1 55 Expansion 6.90% 7.40% in Mar’15 from
Slide 10: Imports and currency movements adversely affecting the demand-supply balance in India
Imports and currency movements adversely affecting the demand- supply balance in India India finished steel import /export1 Imports surge across segments Relatively stable INR Performance 10,000 FY14 FY15 JPY CPY RUB INR Imports Exports 5.9 150.00 8,000 6,000 130.00 3.3 4,000 110.00 2,000 1.2 0.3 0
Slide 11: Performance of Tata Steel India Financial Year Ended 31st March'15
Performance of Tata Steel India Financial Year Ended 31st March’15 Production • Hot metal production Mn T crossed 10mtpa • Deliveries increased over the last year despite the weak steel demand and mining disruptions Deliveries Turnover Rs. Crore • Full ramp up of LD3, Mn T TSCR, Pellet plant and Cok
Slide 12: Record sales across segments
Record sales across segments Annual sales Quarterly sales In kt In kt 8,515 8,749 2,407 2,408 7,485 1,183 1,363 2,128 353 351 1,029 342 2,865 3,143 2,573 820 886 742 2,821 3,341 3,145 936 774 907 1,062 1,126 1,098 298 270 264 FY13 FY14 FY15 Q4 FY14 Q3 FY15 Q4 FY15 Automotive and Special Products Bra
Slide 13: Ferro operations remained under pressure
Ferro operations remained under pressure Annual Sales Quarterly Sales 600 In kt 200 In kt 515 500 155 150 400 355 300 100 223 200 152 152 115 42 46 50 73 100 50 51 48 45 61 13 12 8 9 11 12 10 - - - - FY 13 FY 14 FY 15 Q4 FY 14 Q3 FY 15 Q4 FY 15 Ferro Chrome Ferro Manganese Ferro Chrome Ferro Mangane
Slide 14: KPO Phase–1: Largest greenfield project in India currently
KPO Phase–1: Largest greenfield project in India currently Land under possession for Phase I and II Wider product portfolio: Share of Automotive, Branded & Retail and value add steel to increase Social investments being made for sustainable development of the project Proximity to rail, road
Slide 15: Performance of Tata Steel South East Asia Financial Year Ended 31st March'15
Performance of Tata Steel South East Asia Financial Year Ended 31st March’15 • Slowdown in China, weak Production regional demand and Mn T surge in imports affected steel prices in South East Asia • Profitability affected by sticky scrap prices which led to lower spreads Deliveries Turnover Mn T Rs.
Slide 16: Business Outlook
Business Outlook Mixed signals from auto space: Revival or false start? “Normal” monsoon critical for revival of rural markets Credit and liquidity issues among customers a cause of concern Big ticket infrastructure and construction projects expected to spur growth in second-half of current fiscal S
Slide 17: Agenda
Agenda SN Particulars 1 Overview 2 India & SE Asia performance 3 Europe performance 4 Financial highlights 5 Key developments
Slide 18: Business environment
Business environment GDP – Eurozone and UK (y/y%) HRC Market Spread1 • With the stabilising Eurozone 4% economy, the demand is 550 500 2% expected to strengthen further 450 400 350 0% 2008 2009 2010 2011 2012 2013 2014 2015 • UK economy continues to 300 -2% outperform much of Europe 250 Q1 2015: €21
Slide 19: Depreciation of the euro expected to lead to increased economic activity in Europe
The depreciation of the euro is expected to lead to increased economic activity in Europe Currency movement (indexed) Chinese trade balance (Mt) USDEUR USDGBP 135 120 105 90 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Worldsteel: Apparent finished steel use – European Union 19 Source: ISSB, Eurofer, Worldste
Slide 20: Performance of Tata Steel Europe – Financial Year Ended 31st March'15
Performance of Tata Steel Europe – Financial Year Ended 31st March’15 Liquid Steel Production • Relatively stable levels of Mn T production and deliveries in FY15 • Opportunities for improved sales with higher precision and quality Deliveries Turnover • Lower raw material prices led to lower steel p
Slide 21: Financial and product mix improvements drive performance
Financial and product mix improvements drive performance Journey to sustainable performance continues Stable operations, though opportunities exist for improved sales with higher precision Year-on-year EBITDA and EBIT improvement due to improved spreads and enhanced product mix Continued focus
Slide 22: EBITDA bridge Q4 FY2015 vs. Q4 FY2014
EBITDA bridge Q4 FY2015 vs. Q4 FY2014 £ million Cost Production 200 Changes Volume Central Manufacturing & Other £(23)m £14m 3 months to 150 £267m £(54)m Mar 2015 3 months to Selling Mar 2014 Result 100 £112m £81m £(173)m 50 0 (50) (100) EBITDA improved by almost 40% from prior year Q4 Selling R
Slide 23: EBITDA bridge FY2015 vs. FY2014
EBITDA bridge FY2015 vs. FY2014 £ million Central Cost Production Manufacturing 12 months & Other 500 Changes Volume to Mar 2015 £69m £(45)m £(34)m 400 12 months to £618m £435m Selling Mar 2014 Result 300 £314m £(487)m 200 100 0 (100) (200) EBITDA improved by £121m (39%) from previous year Selli
Slide 24: Business Outlook
Business Outlook Outlook for the mainland European economy has improved as the depreciated euro is expected to boost competitiveness; though UK manufacturers facing currency headwinds EU steel demand is expected to grow by +1.8% in 2015 as market conditions improve Declining steel demand and increas
Slide 25: Agenda
Agenda SN Particulars 1 Overview 2 India & SE Asia performance 3 Europe performance 4 Financial highlights 5 Key developments
Slide 26: Financial Performance – Quarter Ended 31st March'15
Financial Performance – Quarter Ended 31st March’15 Figures in Rs. Crore unless specified Q4 FY15 Q3 FY15 Q4 FY14 Figures in Rs. Crore unless specified India Europe SE Asia Others Group Group Group & Elimn Deliveries (Mn T) 2.41 3.81 0.76 0.08 7.06 6.30 7.62 Turnover 10,635 19,537 2,461 1,033 33,666
Slide 27: Financial Performance – Year Ended 31st March'15
Financial Performance – Year Ended 31st March’15 Figures in Rs. Crore unless specified FY15 FY14 Figures in Rs. Crore unless specified India Europe SE Asia Others & Group Group Elimn Deliveries (Mn T) 8.75 13.67 3.59 0.31 26.32 26.56 Turnover 41,785 79,878 13,048 4,793 139,504 148,614 Raw Mat consum
Slide 28: Successfully derisking the Balance sheet
Successfully derisking the Balance sheet 1 Maximising use of internal accruals to fund growth capex 2 Diversifying sources of capital – Debut US$ bond issuance of US$1.5 billion 3 Lengthening the debt maturity profile by over 5 years 4 Convenant light financing 5 Monetisation of non-core assets – Rs
Slide 29: Debt and Pension movements over FY15
Debt and Pension movements over FY15 Rs. Crores 2,967 84,299 81,609 -277 -405 80,701 -3,192 70,452 69,735 -10,250 -717 Gross Debt Loans Movt Forex impact Gross Debt Loans Movt Forex impact Gross Debt Cash & Cash Net Debt Mar Derivatives Underlying Mar 14 Dec 14 Mar 15 Eq 15 Net Debt Mar 15 Capex i
Slide 30: Group EBITDA Bridge
Group EBITDA Bridge Rs. Crores 30
Slide 31: Cash flow management over FY15
Cash flow management over FY15 13,955 351 ₹Crores Rs. Crores -2,427 4,305 1,704 2,726 563 840 -5,694 -1,152 -13,492 Operating Change in Direct taxes Capex Monetisation Sale of Net Debts Interest paid Dividend Others Net cash flow Cash flow Working paid of assets Current before WC capital Investment
Slide 32: Non-cash impairment undertaken in FY'15
Non-cash impairment undertaken in FY’15 Acquisition Cost Before Impairment After Impairment = Goodwill = Book Value = Impairment PP&E* Goodwill Total Period Assets Impairment Impairment Impairment Trigger for impairment (Rs. Crs) (Rs. Crs) (Rs. Crs) Q1 FY15 Benga project, Mozambique 1,126 451 1,577
Slide 33: Agenda
Agenda SN Particulars 1 Overview 2 India & SE Asia performance 3 Europe performance 4 Financial highlights 5 Key developments
Slide 34: Mining Regulatory update
Mining Regulatory update All our iron ore and chromite mines are currently operational MMDR Ammendment Act notified on March 27, 2015 addresses regulatory concerns Odisha mines: Supplementary Lease Deed executed for mines in Joda East, Khondbond, Joda West, Manmora, Bamebari, Gomardih and Tiri
Slide 35: Direct Shipping Ore Project, Canada
Direct Shipping Ore Project, Canada In FY15, 275 Ktons was dispatched. Shipments to recommence from Q1 FY16. Several cost reduction initiatives undertaken in logistics and operations in current price regime Wet Processing plant to be commissioned in mid-2015 which will facilitate year-long ope
Slide 36: Consulting with UK employees to create sustainable pension arrangements
Tata Steel is consulting with UK employees to create sustainable pension arrangements Long term challenges faced by the BSPS, UK scheme are : High number of pensioners as compared to active employees Low bond yields especially in comparison to the relatively high inflation rates The Company
Slide 37: Update on potential sale of Long Products and distribution activities
Update on potential sale of Long Products and distribution activities Tata Steel focusing on developing sustainable European strip products business to maximise production and technological synergies Due diligence began in October 2014 with Klesch Group into potential sale of Scunthorpe-based Lo
Slide 38: Structural improvements set to start yielding results
Structural improvements set to start yielding results Mining regulatory issues in India close to resolution KPO Phase I to begin phased commissioning shortly Scheduled term debt repayments of ~US$1 billion in the next 12 months Working capital release as raw materials inventory in India normalises F
Slide 39: Appendix
qp TATA Appendix
Slide 40: Standalone Results – QoQ Variations
Standalone Results – QoQ Variations All figures in Rs. Crore Particulars Q4 FY15 Q3 FY15 Key Reasons Net sales 10,522 9,824 Higher volumes partly offset by lower realizations Other operating income 112 72 One-off incentive received at Haldia Met Coke Changes in inventories 564 (662) Decrease in high
Slide 41: Consolidated Results – QoQ Variations
Consolidated Results – QoQ Variations All figures in Rs. Crore Particulars Q4 FY15 Q3 FY15 Key Reasons Higher deliveries in India and Europe partly offset by lower realisation Net sales 33,337 33,328 across geographies Other operating income 329 306 Increased primarily in India Changes in inventorie
Slide 42: Contact Information
Contact Information For investor enquiries contact: For media enquiries contact: Samita Shah Kulvin Suri Tel: +91 22 6665 7307 Tel: +91 657 664 5512 / Email: samita.shah@tatasteel.com +91 92310 52397 Email:kulvinsuri@tatasteel.com Ramvikas Nag Bob Jones Tel: +91 22 6665 0557 Tel: +44 207 717 4532 Em