Tata Steel Limited · NSE:TATASTEEL
Tata Steel — Q3 FY2016 Earnings Presentation
31 slides from Tata Steel's earnings presentation, Feb 4, 2016
Slide 1: Results Presentation
Results Presentation Third quarter and nine-months ended 31st December 2015 4th February 2016 Aerospace Automotive Consumer products Energy & Power Lifting & Excavation Packaging Rail Shipbuilding Construction General Industry - Strips General Industry - Longs
Slide 2: Disclaimer
2 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 fac
Slide 3: Commitment towards excellence in Health & Safety
Tata Steel Group – Commitment towards excellence in Health & Safety 0.95 Key focus areas Competence development programmes in 0.78 H&S leadership 0.68 0.60 0.56 Prioritised strategic activity in contractor management, construction and onsite traffic 0.44 0.38 KPO start-up being undertaken under syst
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 „Thousand school project „aimed at ~8,000 farmers 9M FY’16 Spend ` Crs Primary health care improving adopt the system services delivery to Education 16 standards of of Rice ~430,000 people education in intensific
Slide 5: Agenda
Agenda SN Particulars 1 Financial performance 2 India & SE Asia performance 3 Europe performance 4 Appendix
Slide 6: Global steel industry continues to grapple with excess supply and weak demand
Global steel industry continues to grapple with excess supply and weak demand GDP growth estimates Global excess capacity (MnT) & capacity utilisation (%) (0.1) % Revision in estimates (0.1) (0.2 ) (0.3) Revised GDP Estimates(%) (0.2 ) (0.4) 7.9 (0.1) 7.8 7.3 6.9 6.7 (0.4 ) (0.2) (2.0) 6.5 (0.4 ) (1
Slide 7: Concerns over China and depressed raw material prices have dampened HRC prices
Concerns over China and depressed raw material prices have dampened HRC prices China Investment production and China HRC export and cost price China steel exports (MnT) sales (%) (US$/t) 20% 112.6 18% 93.8 26% 41% 3% 30.8 29.3 25.8 26.7 2014 2015 Q1 CY15 Q2 CY15 Q3 CY15 Q4 CY15 Average quarterly raw
Slide 8: Key highlights – Quarter ended 31st December 2015
Key highlights – Quarter ended 31st December 2015 Robust deliveries in India despite weak domestic steel market Restructuring of the UK operations underway in the backdrop of severe macro headwinds and policy costs Downstream operations curtailed across multiple locations LOI signed with Greybul
Slide 9: Financial performance – Quarter ended 31st December'15
Financial performance – Quarter ended 31st December’15 Q3 FY16 Q2 FY16 Q3 FY15 Figures in ` Crore unless specified India Europe SE Asia Others Group Group Group & Elimn Deliveries (Mn T) 2.35 3.35 0.65 0.02 6.37 6.29 6.29 Turnover 9,064 16,344 1,785 846 28,039 29,305 33,633 Raw Mat consumed 2,341 5,
Slide 10: Financial performance – Nine months ended 31st December'15
Financial performance – Nine months ended 31st December’15 9M FY16 9MFY15 Figures in ` Crore unless specified India Europe SE Asia Others & Group Group Elimn Deliveries (Mn T) 6.82 10.06 2.03 0.07 18.98 19.25 Turnover 27,689 51,147 6,048 2,760 87,644 1,05,838 Raw Mat consumed 7,541 16,753 224 612 25
Slide 11: Group EBITDA bridge Q3 FY2016 vs. Q2 FY2016
Group EBITDA bridge Q3 FY2016 vs. Q2 FY2016 ` Crores 4,596 683 98 (294) 3,197 (218) (1,388) (280) 163 906 404 391 (357) 305 (2,806) Q2 FY'16 Revenue -Price Cost -Change Production Regulatory Actuarial Others Adjusted Profit on sale Underlying Revenue - Cost -Volume & Manufacturing Central & Q3 FY'16
Slide 12: Debt and pension movement
Debt and pension movement ` Crores 85,168 80,903 160 80,701 (4,424) 75,118 74,893 2,984 (3,186) 73,614 10,050 7,289 225 Gross Debt Loans Movt Forex impact Gross Debt Cash & Cash Net Debt Sep Loans Movt Forex impact Gross Debt Cash & Cash Net Debt Dec Derivatives Underlying Net Mar 15 Sep 15 Eq 15 De
Slide 13: Committed to long term goals in this challenging business environment
Committed to long term goals in this challenging business environment Aligning the footprint in Europe to prevailing market conditions Ongoing restructuring of the group portfolio to create sustainable long term value Kalinganagar project to broaden product basket and customer universe Focus on cost
Slide 14: Agenda
Agenda SN Particulars 1 Financial performance 2 India & SE Asia performance 3 Europe performance 4 Appendix
Slide 15: Indian operations weighed down by sluggish demand and elevated steel imports
Indian operations weighed down by sluggish uptick in demand and elevated steel imports PMIs (manufacturing) - India and SEA countries India – Steel consuming sectors growth (%) 65 28% 60 YoY % Growth 14% Expansion 14% 12% 13% 12% 15% 9% 55 4% 5% 5% 8% 5% 1% 5% 1% 1% 50 -4% 3% 6% 3% 2% -4% -4% 45 -6%
Slide 16: Higher deliveries with stable mix of value added products
Higher deliveries with stable mix of value added products across key business segments Steel sales (in kt) FAMD sales (in kt) 61 6,824 57 6,342 1,035 49 1,011 2% 10% 2,374 1% 35 2,258 5% 33 26 2,128 2,331 2,350 2,239 15% 2,582 342 366 333 742 779 827 12 11 8 11 774 907 919 7 834 833 270 279 271 - 9M
Slide 17: India EBITDA bridge Q3 FY2016 vs. Q2 FY2016
India EBITDA bridge Q3 FY2016 vs. Q2 FY2016 ` Crores 4,771 414 -2,806 33 2 -527 -218 1,525 -144 Q2 FY16 Revenue Other operational Vol/Mix Bought out Regulatory Sale of Quoted Others Q3 FY16 cost Metaliks Impact other Inv. Lower realisation impacted the selling results Favorable cost movement led
Slide 18: Kalinganagar plant
Kalinganagar plant Blast Furnace Coke Oven Battery Sinter Plant Twin Wagon Tippler ` 23,000 crores invested in the project as of December 31, 2015 18
Slide 19: Kalinganagar plant ...contd
Kalinganagar plant ...contd Hot Strip Mill Steel Melting Shop 19
Slide 20: SE Asia – Business update
SE Asia – Business update NatSteel Holdings Deliveries declined due to subdued demand in Singapore and mothballing of China operations Stable profitability on the back of renewed focus on cost management Continue to focus on export to selected niche markets and higher sales volumes of downstre
Slide 21: Business Outlook
Business Outlook Steel demand in key underlying sectors like construction, automobiles and infrastructure set to improve in the traditionally strong Q4 Supply-side pressure to continue due to elevated imports and capacity ramp up by domestic steel players Regulatory initiatives should facilitate the
Slide 22: Agenda
Agenda SN Particulars 1 Financial performance 2 India & SE Asia performance 3 Europe performance 4 Appendix
Slide 23: European steel mills not benefiting from domestic economic growth
European steel mills not benefiting from domestic economic growth GDP-Eurozone and UK(YoY%) Exchange Rates 4% Euro per GBP US$ per GBP 2% 2008 2009 2010 2011 2012 2013 2014 2015 2016 0% Eurozone -2% UK -4% -6% 2008 2009 2010 2011 2012 2013 2014 2015 2016 EU Sector output1 (YoY%change,3mma2) EU marke
Slide 24: Production maintained at lower levels to focus on higher-value markets
Production maintained at lower levels to focus on higher-value markets Liquid steel production (In MnT) Deliveries (In MnT) 3.74 3.58 3.56 3.31 3.35 3.27 Q3 FY15 Q2 FY16 Q3 FY16 Q3 FY15 Q2 FY16 Q3 FY16 Maintained lower steel production to enable focus on higher value markets Deliveries at simila
Slide 25: EBITDA bridge Q3 FY2016 vs. Q2 FY2016
EBITDA bridge Q3 FY2016 vs. Q2 FY2016 £ million 3 months to 3 months to Sep 2015 Dec 2015 0 Selling £(25)m (20) Result (40) £(99)m Central £(68)m (60) & Other Cost Production Manufacturing Changes Volume (80) £5m (100) £46m £(45)m £50m (120) (140) Selling Result impacted by continued downward pres
Slide 26: A sustainable business in Europe: market and business improvements
A sustainable business in Europe: market and business improvements Actions to improve competitiveness – Restructuring including mothballing of some UK assets, exiting of plates market and loss of 3,000 jobs – Ongoing cost-improvement programme at Strip Products UK business – Progress on compensation
Slide 27: Business Outlook
Business Outlook The eurozone and UK economies continue to grow, however manufacturing in UK industrial activity continues to lag the service sectors Steel demand in the EU is expected to grow by +1.1% in 2016 in line with steel-using sector activity. A significant part of the increase is expected t
Slide 28: Agenda
Agenda SN Particulars 1 Financial performance 2 India & SE Asia performance 3 Europe performance 4 Appendix
Slide 29: Standalone Results – QoQ Variations
Standalone Results – QoQ Variations All figures in ` Crore Particulars Q3 FY16 Q2 FY16 Key Reasons Higher steel and FAMD volumes partly offset by lower steel and FAMD Net sales 8,991 9,446 realisations Other operating income 73 85 Last quarter included higher operating income Changes in inventories
Slide 30: Consolidated Results – QoQ Variations
Consolidated Results – QoQ Variations All figures in ` Crore Particulars Q3 FY16 Q2 FY16 Key Reasons Lower steel realisations across geographies partly offset by higher Net sales 27,819 29,069 deliveries at India and Europe Other operating income 220 236 At par with previous quarter Changes in inven
Slide 31: Contact Information
Contact Information For Investor For Media Enquiries: Enquiries: Kulvin Suri Devang Shah Tel: +91 657 664 5512 / Tel: +91 22 6665 0530 +91 92310 52397 Email: devang.shah@tatasteel.com Email: kulvinsuri@tatasteel.com Enda Joyce Ramvikas Nag Tel: +44 203 817 6693 Tel: +91 22 6665 0557 +44 7980 916 827