Arcelormittal South Africa Limited · JSE:ACL
Arcelormittal South Africa — H1 2013 Earnings Presentation
27 slides from Arcelormittal South Africa's earnings presentation, Jul 31, 2013
Slide 1: Financial results for the six months ended June 2013
Financial results for the six months ended June 2013
Slide 2: Overview
Overview Nonkululeko Nyembezi-Heita
Slide 3: Safety - journey to zero
Safety - journey to zero OVERVIEW 3.0 • Zero fatalities 2.73 • LTIFR* 0.66 vs 0.60 2.5 2.37 2.20 – Increased shop floor audits and upskilling site champions 2.0 – Awareness campaigns and collaboration with 1.64 other AMSA sites 1.5 1.24 • Safety focus remains paramount 1.0 0.61 0.66 0.5 0.0 2007 200
Slide 4: Overview
Overview OVERVIEW Rm movement of EBITDA (H1’2013 versus H1’2012) H1 headline loss of R123m versus 2012 profit of R106m R 20 Strong recovery in Q2 Total Steel C&C Other R0 17 4 EBITDA of R977m versus R1 041m in 2012 -R 20 Margin unchanged at 6% -R 40 -R 60 -64 Cash cost of steel sales per ton increas
Slide 5: Key result drivers
Key result drivers OVERVIEW H1’13 vs H2’12 H1’13 vs H1’12 Flat steel product prices in rand 9% 8% Long steel product prices in rand 6% 2% Liquid steel production 5% -9% Total sales volume 2% -16% Export sales volume -29% -40% Domestic sales volume 14% -7% HRC rand cash cost per ton -4% 1% Billet ran
Slide 6: Key result drivers
Key result drivers OVERVIEW Q2’13 vs Q2’12 Q2’13 vs Q1’13 Flat steel product prices in rand 13% 9% Long steel product prices in rand 8% 7% Liquid steel production 8% 41% Total sales volume -17% -4% Export sales volume -50% -4% Domestic sales volume -1% -4% HRC rand cash cost per ton 4% 8% Billet ran
Slide 7: Steel market overview
www.arcelormittalsa.com Steel market overview CEO
Slide 8: Global macro-economic environment
Global macro-economic environment STEEL MARKET OVERVIEW • China’s GDP growth rate at 7.5% 2013 apparent steel consumption forecast* • Europe continues to show sluggish demand conditions China 4.5% • Current US demand robust on back of strong automotive and improvement in housing market / constructio
Slide 9: Domestic macro-economic environment
Domestic macro-economic environment STEEL MARKET OVERVIEW • South African economy expected to slow to Kagiso PMI Private fixed investment (YoY) below 2% GDP growth in 2013 (2012 = 2.4%) 65 20 • Absence of infrastructure activity continues to hamper domestic steel demand 60 15 Private fixed investmen
Slide 10: Domestic market – quarterly steel consumption and inventory levels
Domestic market – quarterly steel consumption and inventory levels STEEL MARKET OVERVIEW Total domestic market – quarterly consumption • Total steel consumption increased 1 600 Flat Long 1 400 – Surge in imports to an estimated total of 650 000t 1 200 Total shipments (000t) 1 000 – Demand mainly dri
Slide 11: Domestic market – quarterly steel imports
Domestic market – quarterly steel imports STEEL MARKET OVERVIEW Total domestic market - quarterly imports • Imports increased from 10% to 16% over last five years 400 Imports of primary steel Imports of finished steel products 30% Primary steel as % of consumption • Factors influencing steel imports
Slide 12: Operating results
www.arcelormittalsa.com Operating results CEO
Slide 13: Production and shipment volumes
Production and shipment volumes OPERATING RESULTS • Steel production disrupted by fire with a Production (000t) 3 000 2 727 resultant loss of 361 000t mitigated by: 2 363 2 481 852 – Imports of 51 000t 2 000 684 946 – Operating the EAF’s added 80 000t 1 000 1 875 1 679 1 535 Long – Additional 75 000
Slide 14: Coke and Chemicals
Coke and Chemicals OPERATING RESULTS • South African ferrochrome production still Stainless steel production compared to FeCr output limited by electricity shortage World stainless steel output World fecr output Stainless steel production (000t) 20 000 5 000 SA fecr output Fecr production (000t) • S
Slide 15: Capital expenditure (Rm)
Capital expenditure (Rm) OPERATING RESULTS H1’12 H2’12 H1’13 Growth 31 35 28 Environment 7 121 184 Maintenance 189 492 390 Total expenditure 227 648 602 • Main ongoing projects during H1’2013 – Environment • Newcastle: ZED Project - R142m • Vanderbijlpark: Coal water treatment plant - R17m • Vanderb
Slide 16: Finance
www.arcelormittalsa.com Finance CFO
Slide 17: Headline earnings (Rm)
Headline earnings (Rm) FINANCE H1’12 H2’12 H1’13 Revenue 17 792 14 499 15 890 EBITDA 1 041 80 977 Profit / (loss) from operations 260 -731 233 Finance and investment income 7 53 16 (Losses) / gains on forex and financial instruments -25 16 -75 Finance costs -176 -149 -137 Tax -15 199 -29 Equity earn
Slide 18: Main steel cost drivers (R/t crude steel)
Main steel cost drivers (R/t crude steel) FINANCE % change % change H1’12 H2’12 H1’13 H1’12 H2’12 Iron ore and pellets 1 121 1 167 1 419 27% 22% Scrap / DRI / HBI 169 233 240 42% 3% Coking coal and other fuels 1 595 1 628 1 424 -11% -13% Electricity 375 483 437 17% -10% Other energy & utilities 198
Slide 19: EBITDA from segments (Rm)
EBITDA from segments (Rm) FINANCE H1’12 H2’12 H1’13 Flat steel products 30 -296 -25 Long steel products 724 46 694 Coke and Chemicals 250 253 267 Corporate and other 37 77 41 Total EBITDA 1 041 80 977 EBITDA margin 6% 1% 6% Click to edit Master text 19
Slide 20: Cash flow (Rm)
Cash flow (Rm) FINANCE H1’12 H2’12 H1’13 Cash generated from operations 1 142 133 966 Working capital -410 1 123 269 Capex -227 -648 -602 Net finance cost -84 -73 -57 Investments -207 -162 -38 Tax -20 -32 -148 Dividend received 87 Proceeds on scrapping of assets 3 26 1 Increase / (repayment) of borr
Slide 21: Working capital movement (Rm)
Working capital movement (Rm) FINANCE H1’12 H2’12 H1’13 Inventories 1 153 -43 -789 Finished products 244 -315 -318 Work-in-progress 630 -90 -476 Raw materials 313 358 23 Plant spares and stores -34 4 -18 Receivables -948 1 662 -1 641 Payables -523 -358 2 731 Utilisation of provisions -92 -138 -32 Wo
Slide 22: Sound balance sheet with focus on working capital management
Sound balance sheet with focus on working capital management FINANCE • Low financial leverage OWCR and rotation days * 12 000 180 • Intra-month borrowing (peak-demands) with Working capital (Rm) Rotation days* 160 sufficient/unutilised short term lines 10 000 • Improved payment terms provide flexibi
Slide 23: EBITDA history (Rm)
EBITDA history (Rm) FINANCE 1800 1 588 1600 1 449 1400 1200 987 1000 817 808 800 706 648 600 400 224 238 169 200 82 3 0 2010 2011 2012 2013 -200 -158 -221 -400 Click to edit Master text 23
Slide 24: Other key issues
www.arcelormittalsa.com Other key issues CEO
Slide 25: Other key issues
Other key issues OTHER KEY ISSUES AND OUTLOOK CO2 emissions (tCO2 /ton liquid steel) Sishen arbitration 3.5 2.90 2.98 3.0 2.87 Anti-trust matters 2.80 2.74 2.81 0.76 2.5 0.77 0.69 0.78 0.82 0.85 Carbon tax 2.0 1.5 2.13 2.12 2.09 2.22 1.0 1.92 1.96 0.5 0.0 2007 2008 2009 2010 2011 2012 Scope 1 (all c
Slide 26: Outlook for Q3'13
Outlook for Q3’13 OTHER KEY ISSUES AND OUTLOOK • Safety is our first priority • Q2 has demonstrated that operations are stable and operating well with excellent efficiencies and cost containment being achieved • Outlook for the next quarter – Domestic sales expected to remain flat – Improving enviro
Slide 27: Financial results Questions
Financial results for the six months ended June 2013 Questions
ArcelorMittal South Africa — H1 2013 Earnings Presentation on 6ix