Cap S.a. · BCS:CAP
Cap — Celfin Capital Andean Investor Day 2011
41 slides from Cap's conference presentation, June 2011
Slide 1: Celfin Capital Andean Investor Day
Celfin Capital Andean Investor Day London – New York June 2011
Slide 2: Forward-looking statements disclaimer
This information material may include certain forward‐looking statements and projections provided by CAP S.A. (the “Company“) with respect to the financial condition, results of operations, cash flows, plans, objectives, future performance, and business of the Company. Any such statements and projec
Slide 3: Agenda
Agenda g Company overview Global environment Business plan Financial highlights Investment considerations 3
Slide 4: Vertically integrated ferrous metal company
Vertically integrated ferrous metal company o Exports iron ore products, mainly to Asia o Produces steel for the domestic market o Processes value‐added l dd d steell solutions l in Chile, h l Peru and d Argentina o The above allows for a balanced and profitable business portfolio o 2010 Consolidate
Slide 5: Corporate structure
Corporate structure Mitsubishi Pension Invercap Other Corporation Funds 19,3% 9,4% 31,3% 40,0% 47,32% , 52,68% 75,0% 99,9% 25,0% Compañía Minera Compañía Siderúrgica Novacero del Pacífico Huachipato 50,93% 50,93% 11,03% 11,03% Cintac Intasa Iron Ore Mining Steel Production Steel Processing 5 Source:
Slide 6: Iron ore mining
Iron ore mining Los Colorados mine
Slide 7: Iron ore mining operations
Iron ore mining operations Punta Totoralillo Port Cerro Negro Norte There are currently three different and Copiapó i d independent d t areas off operation ti iin the th Magnetite Plant north of Chile, located around the cities of La Serena, Vallenar and Copiapó: Cities Guacolda II Port Los Colorado
Slide 8: Shipments and markets
Shipments and markets Shipments Markets 2010 12.030 12.000 1 8% 1,8% 0 3% 0,3% 10.145 10.213 7,6% 1,5% 1 5% 10.000 2,8% 8.377 14,8% 61,6% 7.674 8.000 7.251 h. MT 6.000 Th 9,6% 4.000 2.000 2.289 1Q 11 0 China Chile Japan Malaysia USA Indonesia Korea Perú 2006 2007 2008 2009 2010 2011E Share of Seabor
Slide 9: Resources and reserves of magnetite ore
Resources and reserves of magnetite ore Mine / Deposit Total Mineral Resources (1) Reserves (2) MTM Grade (% Fe) MTM Grade (% Fe) Existing operations Los Colorados (under expansion) + District 437 45,0% , 256 43,6% , El Romeral 282 33,9% 86 39,7% El Algarrobo 143 41,3% 47 47,8% Hierro Atacama I ‐ Ca
Slide 10: Steel production
Steel production Blast Furnace at CSH
Slide 11: Steel production
Steel production Market Share o The leader in Chile’s steel market 70% 65% Earthquake 58% 66% 60% 62% o 1.45 . 5 million o to tonss o of aannual ua liquid qu d stee steel 50% 50% 55% production capacity 40% 47% 55% 37% 30% 30% 20% o Strong long term commercial relations 10% with ith customers t i Ch
Slide 12: Steel production
Steel production o The earthquake of February 27, 2010, severely damaged our steel mill, causing a 3 months detention o Greater damage in primary production area: pier, coke plant, blast furnaces and steel shop o Production restarted within June , 2010 o In 2011 plant operating at full capacity (aro
Slide 13: Steel processing
Steel processing
Slide 14: Steel processing
Steel processing o Creates value‐added solutions for the construction, industry and infrastructure sectors in Chile, Chile Peru and Argentina o Chile is Latinamerica’s most advanced user of steel in construction o Seeks to promote steel consumption Shipments and Prices 1.300,0 1.400 1.245,4 1.250,0
Slide 15: EBITDA by business unit
EBITDA (1) by business unit 100% 97% CMP CSH SPG 92% 80% 77% 60% 54% 52% 47% 50% 42% 38% 40% 36% 40% 18% 20% 13% 12% 8% 8% 5% 6% 7% ‐3% 1% 0% 2005 2006 2007 2008 2009 2010 1Q 2011 ‐20% US$ million 2005 2006 2007 2008 2009 2010 1Q 2011 EBITDA 255 247 336 534 128 740 223 (1) EBITDA: Gross Margin – S&A
Slide 16: Agenda
Agenda g Company overview Global environment Business plan Financial highlights Investment considerations 16
Slide 17: Seaborne iron ore supply and demand balance
Seaborne iron ore supply and demand balance Seaborne supply and demand balance New projects MMT 100 50 0 2009 2010 2011f 2012f 2013f 2014f 2015f 2016f ‐50 ‐100 ‐150 ‐200 ‐250 ‐300 ‐350 Deficit Source: Macquarie Research, Research May 2011 Source: Macquarie Research, 2010 o Target implementation date
Slide 18: Seaborne iron ore supply and demand balance
Seaborne iron ore supply and demand balance Increase in production capacity New projects 506 MTM 304 234 169 125 26 MTM 2008 2009 2010 o New projects generally require high infrastructure cost and extended construction periods o Environmental permits ever more demanding o Average project Capex has q
Slide 19: Strong increase in Capex observed for new projects
Strong increase in Capex observed for new projects Source: JP Morgan Research , May 2011 o It is getting more expensive to add new capacity, even for the big 3 19
Slide 20: Iron ore price evolution
Iron ore price evolution Iron ore grades of Chinese producers v/s Iron ore spot prices Source: JP Morgan Research, May 2011 20
Slide 21: Iron ore price projection
Iron ore price projection Iron Ore Spot Price Estimates (Pellet Feed US$/Ton) Source: Macquarie Commodities Research, May 2011 o According to the market projections, iron ore prices will remain strong 21
Slide 22: Evolution of raw materials prices
Evolution of raw materials prices Metallurgical Coal Iron Ore 350 225 211,49 Pellet (65% Fe) 300 200 175 250 150 151 24 151,24 US$/Ton 200 138,83 US$/DMT 125 150 100 100 72,83 75 50 71,78 50 28,03 0 25 37,81 Jun‐11 May‐11 Apr‐11 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1Q10 2Q10 3
Slide 23: Steel production
Steel production World Steel Production (MTM) v/s World Steel Plants Capacity Utilization o Current world steel production using approximately 80% of total installed capacity o Plant utilization outside China considerably lower Source: Bloomberg and Santander Estimates, 2011 23
Slide 24: Evolution of steel price
Evolution of steel price 8 241 4 8 155 4 index value (April 946100) 112 1 n n nl fo n g Europe t t t t t t t Jan 07 Jul07 Jan0& Aug 08 Mar09 Sep 09 Mar 10 Oct 10 May 11 Source: www.crugroup.com 270 + z index value (April 94100) 118 ff i a 4 4 i Jan 07 Jul07 Jan08 Aug 08 Mar09 Sep 09 Mar10 Oct 10 May
Slide 25: Urbanization in progress
Urbanization in progress Source: Arcelor Mittal, Metal Bulletin o Growing urban population levels in developing countries will have an impact on levels off iron i ore imported i t d as wellll as steel t l production d ti andd consumption ti 25
Slide 26: Crude steel consumption
Crude steel consumption (million tons) Source: Arcelor Mittal, Metal Bulletin o Within the developing world, steel consumption is forecast to grow strongly b beyondd 2014 26
Slide 27: Agenda
Agenda g Company overview Global environment Business plan Financial highlights Investment considerations 27
Slide 28: Development program underway
Development program underway Cerro Negro Norte (greenfield project) • Production: 4.0 million tonnes / Pellet feed • Capex: US$574.5 million • Production start‐up: 1Q 2013 Los Colorados (brownfield expansion) • Current production: 5.2 million tonnes / Pellets and pellet feed • Projected increase: 2.
Slide 29: Iron ore
Iron ore Capex (US$ Million) Production (Million tons) 546 18 16,2 188 13 8 13,8 12,0 12,0 4,0 300 4,0 2,5 2,1 3,0 2,3 2,2 2,6 128 358 32 6,2 6,5 8,2 7,2 7,9 172 9 3,5 3,5 23 1,9 1,7 2,0 2011 2012 2013 2011 2012 2013 2014 2015 Cerro Negro Norte Los Colorados El Romeral Los Colorados MHA I Cerro Negr
Slide 30: Steel
Steel o After overcoming damages produced by the earthquake, CAP has recovered its historic level of market share o CAP’s long term development plan currently under consideration. Principal goal is to ensure supply of a growing Chilean market with tonnages of CAP’s own steel and/or alternatively imp
Slide 31: Steel processing
Steel processing o Steel processing operated at full capacity in Chile during 2010 – 2011 period, helping the country country’ss recovery efforts following the earthquake o Growth focus in Chile, Peru, Argentina and Brazil 31
Slide 32: Agenda
Agenda g Company overview Global environment Business plan Financial highlights Investment considerations 32
Slide 33: Financial highlights
Financial highlights Sales (US$ Million) EBITDA 1 (US$ Million) 2.200 1.000 1.972 1.994 898 2.000 900 1.800 800 740 1.583 1 600 1.600 1.375 700 1.400 600 534 1.200 997 500 1.000 400 336 800 595 247 600 300 400 200 128 200 100 0 0 2006 2007 2008 2009 2010 1Q2011 2006 2007 2008 2009 2010 1Q2011 Gross
Slide 34: Financial evolution
Financial evolution (US$ million) 2006 2007 2008 2009 2010 1Q 11 Cash 242 184 379 393 981 1.062 Short Term Debt 97 81 111 84 219 338 Long Term Debt 539 543 769 823 781 632 Total Financial Debt 636 623 880 907 1.001 970 Net Financial Debt 394 439 501 514 20 ‐‐ Net Financial Debt / EBITDA 1,60x 1,31x
Slide 35: Debt profile
Debt profile Latest transactions April • Refinancing of existing Syndicated Loan, US$ 200 million (5 yr) • Prepayment Series D Bond, US$ 170 million • Unwind Cross Currency Swaps, + US$ 33 million May • Prepayment Series E Bond, US$ 90 million • Unwind Cross Currency Swaps, + US$ 3 million Debt amor
Slide 36: Agenda
Agenda g Company overview Global environment Business plan Financial highlights Investment considerations 36
Slide 37: Leading Chilean stocks
Leading Chilean stocks o CAP represents 5.9% of the IPSA(1) volume and its shares are one of the most traded in the Chilean market 2010 Average Daily Traded Volume (US$ million) ADTV (*) ADTV (*) Companies 2010 2011 IPSA (US$ million) (US$ million) 3.994 143 LAN 15.8 19.0 7.5% 527 243 38 15 Cencosud
Slide 38: Strong fundamentals
Strong fundamentals o Substantial growth in iron ore o Further expansion to 30 – 40 million tons possible through development projects currently under d consideration id ti o Steel strategy to further consolidate already predominant position in Chile o Challenges in steel production partly compensat
Slide 39: Evolution of CAP's comparables
Evolution of CAP’s comparables 300 Rio Tinto Vale Arcelor Posco Nippon CSN Gerdau Fortescue Usiminas CAP Ternium BHP IPSA Steel Index S&P One Steel 250 200 150 100 50 (Base 100) 0 Ene‐08 May‐08 Sep‐08 Ene‐09 May‐09 Sep‐09 Ene‐10 May‐10 Sep‐10 Ene‐11 May‐11 o CAP has always traded internationally at
Slide 40: CAP compared with Chilean stocks
CAP compared with Chilean stocks 5.000 4.500 4.000 3.500 Aprril 2001 = 100 3.000 2.500 2.000 1.500 1.000 500 0 ENDESA ANTARCHILE COLBÚN BCI FALABELLA ORO BLANCO LAN SOQUIMICH CALICHERA CAP CMPC VAPORES CCU CEMENTOS IPSA o CAP’s performance also at a premium versus other leading companies in Chile 40
Slide 41: www.cap.cl
‘ OWWW.cap.cl “CHa 7