Slide 1: Financial Results Full year ended 30 June 2016
For personal use only Financial Results Full year ended 30 June 2016 25 August 2016
Slide 2: Agenda
Agenda For personal use only Results Overview Galdino Claro, Group CEO Financial Results Fred Knechtel, Group CFO Strategic Progress & Outlook Galdino Claro, Group CEO Loading heavy melt scrap into a bulk carrier for deep-sea export in Providence, Rhode Island 2
Slide 3: Strengthening the business and improving returns
Strengthening the business and improving returns For personal use only 1. Successful rollout of business resetting actions $137 million in controllable costs savings in FY161 Sold or idled 29 underperforming facilities, lowered headcount by 12%, and reduced volume break-even point by a further 17% t
Slide 4: Resetting objectives
Resetting objectives For personal use only Actions accomplished during FY16 Volume break-even point was reduced by a further 17% to 7.8 million tonnes Sold or idled 29 underperforming facilities North American Metals - Central Region restructure near complete E-Recycling US operational resetting com
Slide 5: Full year highlights
Full year highlights For personal use only Sales Revenue Sales Volumes $4,652 million 8.55 million tonnes 1H $2,412 million | 2H $2,240 million 1H 4.30 million | 2H 4.25 million Underlying1 EBITDA Net Cash $184 million $242 million 1H $61 million | 2H $123 million As at 30 June 2016 Underlying1 EBIT
Slide 6: Earnings by quarter
Earnings by quarter For personal use only Underlying EBIT by Quarter 1Q FY16 70 2.8 The market weakened substantially in July, stabilised, and then fell again 60 2.6 materially in mid-September 2.4 2Q FY16 50 2.2 Resetting plan initiated to respond to million tonnes 40 A$ million 2.0 lower volume en
Slide 7: Financial Results
For personal use only Financial Results Fred Knechtel, Group CFO 7
Slide 8: Group financial performance
Group financial performance For personal use only A$ million FY15 FY16 Chg % Underlying EBIT of $58 million in FY16 Sales Revenue 6,310.9 4,651.7 (26.3) 1H impacted by steep drop in prices and volumes Underlying EBITDA1 262.5 184.4 (29.8) 2H recovery due to cost reductions and Depreciation & amortis
Slide 9: Business segment financial performance
Business segment financial performance For personal use only Underlying EBIT (A$m) 1H 2H FY16 Improved 2H FY16 underlying EBIT across all business segments North America Metals (23.1) 25.4 2.3 NA Metals improved $49 million 2H over 1H ANZ Metals 14.0 25.7 39.7 Europe Metals 2H the strongest since FY
Slide 10: Substantially reduced controllable costs
Substantially reduced controllable costs For personal use only Controllable Costs Reductions1 $234 million in controllable cost reductions (exchange rate adjusted) since the start of the strategic plan in FY14, in constant currency terms Headcount reduced by 26% since FY13 $234 million in Sustainabl
Slide 11: Cash Flow Walk
Cash Flow Walk For personal use only 600 Cash Flow Walk FY15 to FY16 500 -18 -109 400 184 15 -47 A$ million 300 -60 -8 Additional $50 -20 200 million expected in -9 137 1H FY17 339 314 242 100 0 Net Cash EBITDA Working Capital Proceeds Dividends Shares Net Interest Tax paid Other Net Cash 30 June ca
Slide 12: Strong net cash supports reinvestment and capital returns
Strong net cash supports reinvestment into business, while continuing to return capital to shareholders For personal use only Capital Expenditure Cash • Preservation of cash for future Management working capital requirements 200 FY17F capex 180 $120-150 million • Ongoing maintenance, safety and 160
Slide 13: Strategic Progress & Outlook
For personal use only Strategic Progress & Outlook Galdino Claro, Group CEO 13
Slide 14: Committed to deliver ≥ 10% return on capital by FY18
Committed to deliver ≥ 10% return on capital by FY18 For personal use only Grow Optimise Market share growth through organic investment and patient selective acquisitions Streamline Strengthen supplier relationships Leverage emerging technologies in e-recycling across metals Exploit local & global l
Slide 15: Lowering costs and volume break-even
Lowering costs and volume break-even, providing for higher earnings and improved return on capital For personal use only 14 Break-even volume 12 further reduced Lowering break-even point further to drive Sales volumes (million tonnes) higher returns, at 10 current volumes 8 6 4 >10% 2 2.2% 4.6% 5.5%
Slide 16: Substantial pipeline of internal initiatives over FY17-FY18
Substantial pipeline of internal initiatives over FY17-FY18 For personal use only FY17 FY18 Streamline Initiatives - Sale of assets in Mississippi and Tennessee (complete) - Sale of FE Mottram (complete) - Closure of Chicago Stainless (complete) - E-Recycling US restructure (in progress) EBIT impact
Slide 17: Conclusion & Outlook
Conclusion & Outlook For personal use only 1. Substantial reductions in costs and break-even volume point during FY16 $137 million in controllable cost reductions (on a constant currency basis) Volume break-even point lowered to 7.8 million tonnes 2. Earnings leverage to higher volumes proven in 4Q
Slide 18: Appendix
For personal use only Appendix 18
Slide 19: Easing competition from Chinese steel exports to Turkey
Easing competition from Chinese steel exports to Turkey For personal use only Turkey Steel Imports From China China’s exports of steel to Turkey have receded to 2014 levels 600 0 Lower imports of semi-finished steel are 50 supporting increased demand and prices 500 for ferrous scrap 100 China announ
Slide 20: Metal recycling industry beginning to rationalise
Metal recycling industry beginning to rationalise For personal use only US Industry-wide Metals Recycling Closures Over 160 reported closures of metals 35 30 recycling facilities since the start of 2015 # of facilities 25 Consolidation taking place through 20 bankruptcies, indefinite idling, 15 cons
Slide 21: North America Metals
North America Metals For personal use only A$m FY15 FY16 Chg % Sales Revenue 3,416.5 2,352.6 (31.1) Statutory EBITDA 86.7 53.5 (38.3) Underlying EBITDA 80.7 75.7 (6.2) Depreciation 55.9 61.7 10.4 Amortisation 13.0 11.7 (10.0) Statutory EBIT 17.8 (145.8) - Underlying EBIT 11.8 2.3 (80.5) Assets 1,335
Slide 22: Australia & New Zealand Metals
Australia & New Zealand Metals For personal use only A$m FY15 FY16 Chg % Sales Revenue 1,053.3 743.6 (29.4) Statutory EBITDA 85.0 58.0 (31.7) Underlying EBITDA 86.9 66.6 (23.4) Depreciation 26.6 26.0 (2.3) Amortisation 1.1 0.9 (18.2) Statutory EBIT 57.3 31.1 (45.7) Underlying EBIT 59.2 39.7 (32.9) A
Slide 23: Europe Metals
Europe Metals For personal use only A$m FY15 FY16 Chg % Sales Revenue 1,036.6 759.1 (26.8) Statutory EBITDA 38.0 (15.7) - Underlying EBITDA 37.1 32.4 (12.7) Depreciation 12.5 13.8 10.4 Amortisation - - - Statutory EBIT 25.5 (29.7) - Underlying EBIT 24.6 18.6 (24.4) Assets 258.3 245.2 (5.1) Intake Vo
Slide 24: Global E-Recycling
Global E-Recycling For personal use only A$m FY15 FY16 Chg % Sales Revenue 795.0 792.7 (0.3) Statutory EBITDA 53.0 (2.6) - Underlying EBITDA 55.2 19.2 (65.2) Depreciation 10.6 11.2 5.7 Amortisation 0.6 0.4 (33.3) Statutory EBIT 41.8 (60.2) - Underlying EBIT 44.0 7.6 (82.7) Assets 473.3 447.9 (5.4) E
Slide 25: FY16 income tax expense considerations
FY16 income tax expense considerations For personal use only A$m Loss Before Tax Income Tax Benefit Effective Tax % Statutory Result (225.2) (8.7) 3.9% Reconciling items: Deferred tax assets not recognised (17.2) Non-deductible impairment charge (41.5) Underlying Results (225.2) (67.4) 29.9% 25
Slide 26: Significant items by region – FY16
Significant items by region – FY16 For personal use only NA ANZ Europe Global Pre-Tax After-Tax FY16 (A$m) Unallocated Metals Metals Metals E-Recycling Total Total Goodwill impairment - - 0.2 43.1 - 43.3 34.2 Other intangible asset 6.8 - - 2.9 - 9.7 8.6 impairment Impairment of investment in 119.1 -
Slide 27: Significant items by region – FY15
Significant items by region – FY15 For personal use only NA ANZ Europe Global Pre-Tax After-Tax FY15 (A$m) Unallocated Metals Metals Metals E-Recycling Total Total Reversal of an impairment of (0.6) - - - (0.6) (0.6) loan receivable - Net impact from investments in - - - - (2.8) (2.8) (2.8) associat
Slide 28: Financial Summary - Group
Financial Summary - Group For personal use only A$m FY10 FY11 FY12 FY13 FY14 FY15 FY16 Group Results Sales Revenue 7,453 8,847 9,036 7,193 7,129 6,311 4,652 Underlying EBITDA 379 414 253 190 242 263 184 Underlying EBIT 235 283 123 67 119 142 58 Underlying NPAT 127 182 74 17 69 102 38 Underlying EPS
Slide 29: Financial Summary – Segment
Financial Summary – Segment For personal use only A$m FY10 FY11 FY12 FY13 FY14 FY15 FY16 Sales Revenue North America Metals 4,834 5,782 5,773 4,256 3,996 3,417 2,353 ANZ Metals 1,126 1,300 1,190 1,047 1,188 1,053 744 Europe Metals 783 954 1,056 935 1,063 1,037 759 Global E-Recycling 622 750 982 937
Slide 30: Financial Summary – Segment (cont.)
Financial Summary – Segment (cont.) For personal use only A$m FY10 FY11 FY12 FY13 FY14 FY15 FY16 Sales tonnes (‘000) North America Metals 9,906 10,964 11,080 9,377 8,152 7,018 5,772 ANZ Metals 1,578 1,764 1,765 1,764 2,054 1,874 1,418 Europe Metals 1,394 1,466 1,651 1,645 1,609 1,589 1,361 Total 12,
Slide 31: Financial Summary – Segment (cont.)
Financial Summary – Segment (cont.) For personal use only A$m FY10 FY11 FY12 FY13 FY14 FY15 FY16 Sales tonnes (‘000) Ferrous Trading 9,068 10,115 10,320 9,396 9,331 8,325 6,768 Ferrous Brokerage 3,264 3,518 3,597 2,840 1,918 1,617 1,307 Non Ferrous 565 571 586 550 566 539 476 Total 12,897 14,204 14,
Slide 32: Metals Recycling Global Footprint
Metals Recycling Global Footprint For personal use only Europe Metals North America Metals Australia & New Zealand Metals Australia New Zealand Metal Shredder / Key Metals Recycling facility Metal Shredder (50% JV owned) 32
Slide 33: Electronics Recycling Global Footprint
Electronics Recycling Global Footprint For personal use only Europe, Africa, and Middle East UAE Europe North America South Africa United States Asia Pacific India Singapore Australia New Zealand Electronics Recycling facility 33
Slide 34: Disclaimer
Disclaimer For personal use only The material contained in this document is a presentation of information about the Group’s activities current at the date of the presentation, 25 August 2016. It is provided in summary form and does not purport to be complete. It should be read in conjunction with th