Eregli Demir Ve Celik Fabrikalari T.a.s. · BIST:EREGL

Eregli Demir Ve Celik Fabrikalari T.a.s — Ereğli Demir ve Çelik Fabrikaları T.A.Ş. (Erdemir) — 9M 2016 Earnings Presentation

37 slides from Eregli Demir Ve Celik Fabrikalari T.a.s's earnings presentation, Oct 20, 2016

  1. Slide 1: Erdemir Group

    © ErdemirGroup

  2. Slide 2: 2016 9 Months Consolidated Results

    2016 9 Months Consolidated Results 20 October 2016 2 20.10.2016

  3. Slide 3: Disclaimer

    DISCLAMIER Ereğli Demir Çelik Fabrikaları T.A.Ş. (Erdemir) may, when necessary, make written or verbal announcements about forward-looking information, expectations, estimates, targets, assessments and opinions. Erdemir has made the necessary arrangements about the amounts and results of such inform

  4. Slide 4: 2016 Market Overview, 9M Results, Guidance

    ˃ 2016 Market Overview ˃ 2016 9M Results ˃ 2016 Guidance 4 20.10.2016

  5. Slide 5: Crude steel production and HRC prices

    5 -12% -10% -10% 10% 15% -8% -6% -4% -2% -5% 0% 2% 4% 6% 0% 5% Sep-13 Sep-13 Nov-13 Nov-13 Jan-14 Jan-14 Mar-14 Mar-14 20.10.2016 May-14 May-14 Jul-14 Jul-14 Sep-14 Sep-14 Nov-14 Nov-14 October 2016 Jan-15 Jan-15 Mar-15 Mar-15 May-15 May-15 Source : * Worldsteel ** Bloomberg Jul-15 Jul-15 Sep-15 Sep

  6. Slide 6: Coking coal price increased to 233 USD/ton as of October 2016

    Coking coal price increased to 233 USD/ton as of October 2016 COKING COAL PRICES IRON ORE PRICES USD/TON (HCC PEAK DOWNS REGION FOB AUSTRALIA) (IODEX 62% FE CFR NORTH CHINA MID) USD/TON 240 90 220 80 200 180 70 160 60 140 120 50 100 40 80 60 30 10.2014 12.2014 02.2015 04.2015 06.2015 08.2015 10.2015

  7. Slide 7: HRC prices are stabilizing

    HRC prices are stabilizing HRC PRICES ( USD/Ton ) 700 600 500 400 300 200 Feb-14 Feb-15 Feb-16 Jun-14 Jun-15 Jun-16 Oct-13 Oct-14 Aug-15 Oct-15 Oct-16 Aug-14 Aug-16 Dec-13 Dec-14 Dec-15 Apr-14 Apr-15 Apr-16 CIS EXPORT HRC BLACKSEA/BALTIC EU HRC CHINA EXPORT HRC USA IMPORT HR As of October 2016, EU H

  8. Slide 8: Billet sales prices are stabilized

    Billet sales prices are stabilized BILLET PRICES ( USD/Ton ) 600 500 400 300 200 Jun-15 Feb-14 Feb-15 Feb-16 Jun-14 Jun-16 Oct-13 Oct-14 Oct-15 Oct-16 Aug-14 Aug-15 Aug-16 Dec-13 Dec-14 Dec-15 Apr-14 Apr-15 Apr-16 BILLET CHINA EXPORT BILLET LATIN AMERICAN EXPORT BILLET IMPORT TURKEY As of October 20

  9. Slide 9: Turkish steel consumption increased by 4% in 2016 8M YoY

    Turkish steel consumption increased by 4% in 2016 8M YoY PRODUCTION ( 000 TONS ) 36,8 36,1 36,4 34,3 31,9 10,4 10,4 9,9 9,0 9,1 25,0 24,5 7,1 7,1 26,4 25,7 26,5 25,3 22,8 17,9 17,4 2015 2014 2013 2012 2011 2016 8M 2015 8M Long Flat Total CONSUMPTION ( 000 TONS ) 34,3 30,8 31,3 28,5 26,9 16,5 23,6 22

  10. Slide 10: Turkish iron and steel product exports increased by 2% in 2016 8M YoY

    Turkish iron and steel product exports increased by 2% in 2016 8M YoY IRON AND STEEL PRODUCT EXPORTS ( 000 TONS ) 16,5 15,2 0,02 15,2 13,1 14,1 0,06 0,00 1,8 0,04 0,00 2,3 2,3 8,9 8,7 2,5 3,0 2,6 0,6 1,6 2,4 0,00 0,00 0,3 1,7 1,6 0,2 0,2 10,2 11,0 11,3 11,7 10,5 7,0 6,9 2015 2014 2013 2012 2011 2016

  11. Slide 11: Deceleration in the automotive sector's growth rate is expected

    Deceleration in the automotive sector’s growth rate is expected CHANGES IN SECTOR DEVELOPMENT INDEX (% YoY) 30% 25% 22,1% 20% 16,0% 16,0% 15% 11,3% 10% 11,2% 7,4% 5,5% 7,1% 5,5% 7,0% 6,0% 2,7% 3,9% 5% 5,0% 6,8% 1,0% 3,0% 0% 2,8% 3,0% 1,4% 1,0% 0,6% 1,0% -5% -5,5% -10% 2011 2012 2013 2014 2015 2016 (

  12. Slide 12: 2016 Market Overview, 9M Results, Guidance

    ˃ 2016 Market Overview ˃ 2016 9M Results ˃ 2016 Guidance 12 20.10.2016

  13. Slide 13: Erdemir Group Key Figures

    ERDEMİR GROUP KEY FIGURES 2016 9M 2015 9M 2015 2014 Liquid Steel Production (000 Tons) 6.932 6.811 9.122 8.693 (1) Slab Production (000 Tons) 5.652 5.581 7.349 7.363 (2) Flat Steel Production (000 Tons) 5.359 5.558 7.400 6.954 Long Steel Production (000 Tons) 1.131 1.046 1.563 1.153 Flat Steel Shipm

  14. Slide 14: Liquid steel production increased by 2% in 2016 9M YoY

    Liquid steel production increased by 2% in 2016 9M YoY LIQUID STEEL PRODUCTION ( 000 TONS ) 9.122 8.693 8.447 6.932 6.811 2.362 2.092 2.242 2.370 2.328 2.349 2016 2015 2016 2015 2016 2015 2016 2015 2015 2014 2013 1. Quarter 2. Quarter 3. Quarter 9 Months 14 20.10.2016

  15. Slide 15: Crude steel capacity utilization ratio higher than world average

    Crude steel capacity utilization ratio of ERDEMİR Group is higher than world average CRUDE STEEL CAPACITY UTILIZATION RATIO 105% 100% 100% 96% 96% 95% 93% 90% 88% 84% 85% 80% 80% 78% 78% 76% 75% 70% 69% 70% 65% 2011 2012 2013 2014 2015 2016 9M Erdemir Group World 15 20.10.2016 Source: Worldsteel

  16. Slide 16: Production was 6,5 million tons in 2016 9M

    Production was 6,5 million tons in 2016 9M PRODUCTION VOLUMES ( 000 TONS ) 8.963 8.107 1.563 7.783 1.153 6.604 1.356 6.490 1.820 1.131 1.046 1.746 1.844 1.388 1.373 2.217 2.065 2.112 2.352 2.161 2.187 5.580 5.208 241 395 4.583 396 393 342 410 3.971 4.185 458 447 461 468 469 458 1.363 1.377 1.258 1.4

  17. Slide 17: Sales volumes was 6,3 million tons in 2016 9M

    Sales volumes was 6,3 million tons in 2016 9M SALES VOLUMES ( 000 TONS ) 8.781 8.096 1.552 7.684 1.163 6.345 1.346 6.311 1.845 1.788 1.128 1.014 1.830 1.376 1.344 2.289 1.990 2.163 2.298 5.384 5.145 242 1.894 2.203 4.508 398 384 406 3.841 3.953 502 467 346 366 457 494 380 420 1.389 1.291 1.285 1.425

  18. Slide 18: Net sales revenue was 2,7 billion USD in 2016 9M

    Net sales revenue was 2,7 billion USD in 2016 9M NET SALES REVENUE ( MILLION USD ) 5.252 5.142 627 580 4.382 435 3.356 303 2.709 326 4.625 4.562 3.947 1.179 3.053 875 81 922 1.190 118 912 987 2.383 93 124 115 98 1.098 1.066 889 782 804 797 2016 2015 2016 2015 2016 2015 2016 2015 2015 2014 2013 1. Qu

  19. Slide 19: Sales to pipe&profile, automotive and white goods sectors increased

    Sales to pipe&profile, automotive and white goods sectors increased in 2016 9M YoY 2016 9M FLAT STEEL DOMESTIC SALES BREAKDOWN (%) 2015 9M FLAT STEEL DOMESTIC SALES BREAKDOWN (%) 427Kt; 9% 450Kt; 9% 278Kt; 6% 242Kt; 5% 2.168Kt; 2.166Kt; 47% 44% 520Kt; 11% 510Kt; 11% 4.656Kton; 4.875Kton; 89% 191Kt;

  20. Slide 20: Flat steel sales to EU countries was 57% of flat export

    Flat steel sales to EU countries was 57% of our flat export in 2016 9M 2016 9M FLAT STEEL EXPORTS BREAKDOWN (%) 2015 9M FLAT STEEL EXPORTS BREAKDOWN (%) 22Kt; 4% 29Kt; 7% 6Kt; 1% 67Kt; 12% 11Kt; 3% 10Kt; 2% 49Kt; 12% 561Kton; 422Kton; 85Kt; 15% 11% 8% 317Kt; 57% 64Kt; 15% 263Kt; 62% 58Kt; 10% 2016 9

  21. Slide 21: Erdemir Group sales prices and cost of sales

    21 Sep-14 Sep-14 USD/TON USD/TON Oct-14 Oct-14 20.10.2016 Nov-14 Nov-14 Dec-14 Dec-14 Jan-15 Jan-15 Feb-15 Feb-15 Mar-15 Mar-15 Apr-15 Apr-15 May-15 May-15 Jun-15 Jun-15 Jul-15 Jul-15 Aug-15 Aug-15 Sep-15 Erdemir Group Flat Sales Price Sep-15 Erdemir Group Long Sales Price Oct-15 Oct-15 Nov-15 Nov-1

  22. Slide 22: EBITDA decreased by 17% in 2016 9M YoY

    EBITDA decreased by 17% in 2016 9M YoY EBITDA ( MILLION USD ) 1.200 40,0% 1.000 1.136 32,0% 30,5% 987 800 21,2% 21,9% 24,0% 21,1% 20,6% 21,9% 770 21,6% 600 20,5% 712 19,2% 593 17,6% 16,0% 400 14,2% 200 8,0% 249 261 279 124 190 202 0 0,0% 2016 2015 2016 2015 2016 2015 2016 2015 2015 2014 2013 1. Quar

  23. Slide 23: EBITDA was 593 million USD in 2016 9M

    EBITDA was 593 million USD in 2016 9M Consolidated EBITDA => Consolidated Net Profit (Million USD) 23 20.10.2016

  24. Slide 24: High dividend payment didn't have a negative effect on liquidity

    Due to the cash, which is provided from working capital, high dividend payment didn’t have a negative effect on liquidity Consolidated EBITDA => Consolidated Net Cash (Million USD) 24 20.10.2016

  25. Slide 25: EBITDA per ton for flat product was 143 USD/ton in 2016 3Q

    EBITDA per ton for flat product was 143 USD/ton in 2016 3Q EBITDA PER TON (USD/TON) * 153 150 148 141 143 144 135 143 130 142 124 113 135 108 100 126 125 100 97 118 111 113 88 107 101 92 94 89 74 61 59 64 67 45 54 49 43 24 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2012 2013 2014 2015

  26. Slide 26: Net assets were 4,3 billion USD at end of September 2016

    Net assets were 4,3 billion USD at the end of September 2016 CONSOLIDATED NET ASSETS (MILLION USD) WORKING CAPITAL (MILLION USD) 26 20.10.2016

  27. Slide 27: Despite the high dividend payments, there is no net debt

    Despite the high dividend payments, there is no net debt BORROWINGS (MILLION USD) 2.529 2.479 787 1.945 1.135 1.640 1.472 1.452 693 1.283 1.111 1.023 891 1.742 368 595 1.344 947 529 581 655 516 14 -53 2011 2012 2013 2014 2015 2016 9M Long-Term Debt Short-Term Debt Net Debt 27 20.10.2016

  28. Slide 28: Net debt was positive at the end of 2016 3Q

    Net debt was positive at the end of 2016 3Q NET DEBT (MILLION USD) 28 20.10.2016

  29. Slide 29: 1.164 million USD cash and cash equivalents at end of September 2016

    Erdemir Group has 1.164 million USD cash and cash equivalents at the end of September 2016 BORROWINGS MATURITY PROFILE (MILLION USD) 556 1.164 19 198 181 12 144 97 339 7 98 7 3 169 137 90 95 Sept.16 2016 Oct.-Dec. 2017 2018 2019 2020 Cash 2016 Principal Revolving Trade Financing Loans Interest 29 20

  30. Slide 30: Raw materials made up 64% of the cost of sales

    Raw materials made up 64% of the cost of sales COST OF SALES BREAKDOWN* - % 6% 5% 5% 4% 0,1% 0,3% 1% 5% 1% 7% 5% 5% 7% 7% 7% 9% 12% 12% 11% 14% 70% 71% 73% 64% 2016 9M 2015 2014 2013 Raw Materials Personnel Expenses Purchased Energy Expenses Depreciation and Amortization Exp. Non-operating Expenses

  31. Slide 31: Conversion cost per ton excluding depreciation was 122 USD/ton

    Conversion cost per ton excluding depreciation was realised as 122 USD/ton in 2016 3Q MAIN PRODUCT CONVERSION COSTS ( USD/TON ) 200 2800 180 2.352 2.358 2.141 2.187 2.217 2.161 2.067 2.131 2.065 2.065 2.112 2300 160 2.045 1.991 1.910 140 1.540 1800 120 100 1300 80 66 69 65 68 61 62 60 59 55 54 55 80

  32. Slide 32: Capital expenditures of 461 million USD planned for 2016

    Capital expenditures of 461 million USD is planned for 2016* ( M USD ) 1.017 718 634 961 445 461 675 576 264 242 345 377 200 201 158 162 162 171 159 120 143 113 107 82 91 140 93 83 80 88 29 116 68 43 56 59 57 55 17 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2016 (B) 9M Fixed Assets

  33. Slide 33: Number of employees was 12.340 as of September 2016

    Number of employees was 12.340 as of September 2016 NUMBER OF EMPLOYEES 13.433 13.045 12.872 12.801 12.659 12.340 2011 2012 2013 2014 2015 2016 September 33 20.10.2016

  34. Slide 34: 2016 Market Overview, 9M Results, Guidance

    ˃ 2016 Market Overview ˃ 2016 9M Results ˃ 2016 Guidance 34 20.10.2016

  35. Slide 35: 2016 Guidance

    2016 Guidance Production (Million Tons) Sales (Million Tons) 9,0 8,8 8,8 8,8 7,4 7,2 7,2 7,2 1,6 1,6 1,6 1,6 2015 Actual 2016 Budget 2015 Actual 2016 Budget Long Flat Long Flat 35 20.10.2016

  36. Slide 36: 2016 Guidance: EBITDA and Net Profit Margins

    2016 Guidance EBITDA and Net Profit Margins ˃ In 2015; EBITDA and Net Profit Margins were 17.6% and 9.4% respectively. ˃ In 2016; EBITDA and Net Profit Margins are expected to be 19-21% and 10-12% respectively. 36 20.10.2016

  37. Slide 37: Erdemir Group

    O ErdemirGroup 37 20.10.2016

Ereğli Demir ve Çelik Fabrikaları T.A.Ş. (Erdemir) — 9M 2016 Earnings Presentation on 6ix