Acerinox Sa · BME:ACX
Acerinox Sa — Q2 2020 Earnings Presentation
51 slides from Acerinox Sa's earnings presentation, Jul 29, 2020
Slide 1: Acerinox Q2 2020 Results Presentation
ACERINOX Q2 2020 RESULTS PRESENTATION 29 JULY 2020 ACERINOX Q2 2020 RESULTS PRESENTATION
Slide 2: Disclaimer
Disclaimer This document may contain forward-looking information and statements about ACERINOX, S.A., its subsidiaries and/or its management. These forward-looking statements include financial projections and estimates and their underlying assumptions, and statements regarding the intent, belief or
Slide 3: How Acerinox faced COVID-19?
How acerinox faced COVID-19? • Crisis Committee (end February 2020) • Action Protocol - First steel company certified by AENOR for its protocols against COVID-19 • Safety and prevention measures • Secured liquidity • Refinancing to anticipate future renewals and extend maturities • Secured the suppl
Slide 4: H1 Main Financial Figures
H1 Main Financial Figures Million EUR Variation H1 H1 2019 H1 2020 2020/H1 2019 VDM integration Net Sales 2,442 2,331 -5% Adjusted EBITDA (1) 186 179 -4% Cost reduction on a like for like basis (Stainless Division) EBITDA 186 165 -12% Adjusted EBIT (2) 100 90 -9% • Personnel: -9% • Operating: -18% E
Slide 5: Robust quarter against the difficult backdrop
Robust quarter against the difficult backdrop Q2 MARKET HIGHLIGHTS Q2 ACERINOX HIGHLIGHTS • Q2 severely impacted by COVID-19 • Robust Q2 adjusted EBITDA, 94 million EUR • Raw material prices recovered through quarter +11% QoQ Europe -2% YoY • Imports market share steady at 22% (flat products) • Cost
Slide 6: Q2 Main Financial Figures
Q2 Main Financial Figures Million EUR Variation Q2 Q1 2020 Q2 2020 2020/Q1 2020 (1) Net Sales 1,159 1,172 1% Adjusted EBITDA (2) 85 94 11% Lower activity due to COVID-19 EBITDA 85 80 -6% Low level of prices Adjusted EBIT (3) 44 46 3% Cost control EBIT 44 -11 --- Strong cash generation Results before
Slide 7: Figures by division
Figures by division Million EUR Stainless Group High Performance Alloys % Var Million euros Q1 2020 Q2 2020 Q2 2020 (1) Q2/Q1 Melting production (thousand Mt) 599 417 -30% 25 Net sales 1.159 894 -23% 279 Adjusted EBITDA (2) 85 71 -16% 23 Adjusted EBITDA margin 7% 8% 8% EBITDA 85 57 -33% 23 EBITDA ma
Slide 8: Very robust performance as demand collapsed
Very robust performance as demand collapsed MELTING PRODUCTION (*) ADJUSTED EBITDA (*) NET FINANCIAL DEBT 854 872 94 85 VDM debt 23 313 VDM 442 313 acquisition Thousand tons Million EUR 25 112 Million EUR 570 599 97 103 542 491 85 71 642 582 495 541 417 475 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1
Slide 9: Another strong quarter of FCF generation
Another strong quarter of FCF generation Million EUR (*) EBITDA stripping out 14 million EUR for the expenses of the purchase of VDM in the second quarter 9 ACERINOX Q2 2020 RESULTS PRESENTATION
Slide 10: Update on VDM integration process
Update on VDM integration process On March 17 Acerinox closed the purchase of VDM Metals Transition process to ensure business continuity and prioritize the long-term vision The current work plan is divided into 20 areas and includes a specific integration team The 3 year synergy target has risen fr
Slide 11: Managing through the challenges of COVID-19
Managing through the challenges of COVID-19 What did we do in Q2? Focus beyond Q2 Our long term strategy remains intact 11 ACERINOX Q2 2020 RESULTS PRESENTATION
Slide 12: What did we do in Q2? FCF focus remains a priority
What did we do in Q2? FCF focus remains a priority COST CONTROL CAPEX REDUCTION WORKING CAPITAL MANAGEMENT Personnel cost Inventories reduction: 95 million EUR 147 +44% 5 Trade debtors reduction: 93 million EUR Million EUR 56 35 34 Million EUR 29 23 22 -11% Trade creditors reduction: 139 million EUR
Slide 13: What did we do in Q2? Strength of liquidity remains key
What did we do in Q2? Strength of liquidity remains key Million EUR 1,734 Liquidity fully covers all maturities Available Liquidity enhance by 277 million EUR QoQ lines 625 93% of gross debt, 1,981 million EUR, is free of covenants on results Weighted average cost of term debt is 1.5% Cash on hands
Slide 14: Focus beyond Q2 - operational performance and FCF
Focus beyond Q2 - operational performance and FCF Million EUR 1. Labour agreements to maintain cost flexibility 2. Ongoing focus on cost control 3. Focus on adding value through high performance alloys 4. Efficient working capital management Focus will be on operational 5. CAPEX control performance
Slide 15: Our long term strategy remains intact
Our long term strategy remains intact • Intense balance sheet focus that allow us an efficient capital allocation • Constantly improving due to digitalization and 360º planning, cost reduction programs and optimizing the commercial network • Added value enhanced by VDM metals and constant Excellence
Slide 16: Our long term strategy remains intact - Excellence 360º
Our long term strategy remains intact - Excellence 360º 17 MILLION EUR (29%) ACHIEVED IN H1 2020 125 MM€ Production: Quality, melting shop yields and efficiency in production 100% materials 112 MM€ Supply chain: Delivery on time 89% 86 MM€ 59 MM€ 69% 25 MM€ 47% 19% Excel Plan VI 360º 2019 2020 2021
Slide 17: Outlook and conclusions
Outlook and conclusions • The remainder of 2020 will continue to be very challenging • We have probably past the worst but the speed and the strength of the recovery remains impossible to predict • Signs of recovery emerging in the European stainless steel market • Faster recovery in the North Ameri
Slide 18: Value creation for all stakeholders
VALUE CREATION FOR ALL STAKEHOLDERS ACERINOX Q2 2020 RESULTS PRESENTATION
Slide 19: Appendix
APPENDIX ACERINOX Q2 2020 RESULTS PRESENTATION
Slide 20: A new global leader in stainless and high performance alloys
APPENDIX A new global leader in stainless and high performance alloys Acerinox is a global leader in stainless steel VDM Metals is a global leader in high performance alloys Acerinox + VDM Metals add growth opportunities 20 ACERINOX Q2 2020 RESULTS PRESENTATION
Slide 21: A new global leader in stainless and high performance alloys
APPENDIX A new global leader in stainless and high performance alloys Acerinox is a global leader in stainless steel VDM Metals is a global leader in high performance alloys Acerinox + VDM Metals add growth opportunities 21 ACERINOX Q2 2020 RESULTS PRESENTATION
Slide 22: 2019 Acerinox
APPENDIX 2019 Acerinox Acerinox is the most global stainless steel manufacturing in the world Presence on five continents, factories on four of them, supplying to customers in 81 countries The marketing and sale of the products is carried out through a network consisting of service centres, wa
Slide 23: 2019 Acerinox: Global Presence
APPENDIX 2019 Acerinox: Global Presence ACX PRESENCE IN 56 COUNTRIES IN THE 5 CONTINENTS Workforce 6,709 EUROPE 3,207 AMERICA 1,541 AFRICA 1,298 Warehouses (25) ASIA/OC 663 Sales offices (35) Service centres (18) Sales agents (15 in 27 countries) Plants (6) AFRICA AMERICA ASIA EUROPE THE MIDDLE EAST
Slide 24: Acerinox: History
APPENDIX Acerinox: History 1970, incorporation of ACERINOX, S.A.(Spain) 1990, incorporation of NORTH AMERICAN STAINLESS (USA) Acerinox S.A. 100% Acerinox, S.A. 76% 2002, incorporation of COLUMBUS STAINLESS (South Africa) I.D.C. 24% Acerinox, S.A. 98% 2009, incorporation of BAHRU STAINLESS (Malaysia)
Slide 25: Acerinox Principles And Values
APPENDIX Acerinox Principles And Values 25 ACERINOX Q2 2020 RESULTS PRESENTATION
Slide 26: Our Main Product: Stainless Steel
APPENDIX Our Main Product: Stainless Steel Is an alloy of iron + chrome (≥ 10.5%) + carbon (≤ 1.2%) chrome allows the formation of a thin and invisible film on the steel surface, that prevents corrosion to the material Benefits of Stainless Steel Excellent corrosion Long term value Easy cleaning Dur
Slide 27: Stainless Steel Production Process
APPENDIX Stainless Steel Production Process LONG (1) MELTING SHOP PRODUCT (2) HOT ROLLING SHOP Expeditions Plate Shop Billet Slab Raw Electric Arc A.O.D. Continuous Slab Grinding Preheating Roughing Steckel Hot Rolled Materials Furnace Converter Casting Machine Furnace Mill Mill Coil (3) COLD ROLLIN
Slide 28: Acerinox Products
APPENDIX Acerinox Products FLAT PRODUCT LONG PRODUCT Algeciras 1970 | Spain 1957 | Spain Melting Shop Hot Rolling Hot Rolling Shop Cold Rolling Shop Ponferrada Finished Product 1990 | USA 1990 | Spain Kentucky Melting Shop Hot Rolling Shop Igualada Finished product Cold Rolling Shop 2003 | USA Midde
Slide 29: Stainless Steel World Production
APPENDIX Stainless Steel World Production Thousand Mt Compound annual growth rate 1950–2019: + 5.9% 55,000 50,000 45,000 World production 40,000 35,000 of Stainless Steel 30,000 in 2019: 25,000 52.2 million mt 20,000 15,000 10,000 5,000 0 1950 1960 1970 1980 1990 2000 2010 2019 Source: ISSF and Acer
Slide 30: Stainless Steel World Production
APPENDIX Stainless Steel World Production Million Mt China accounts for 58% of world production in 2019 60 50 Others 40 Japan India 30 China USA 20 Europe 10 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Others: Brazil, Russia, S. Africa, S. Korea,
Slide 31: Stainless Steel Use Per Sector, 2019
APPENDIX Stainless Steel Use Per Sector, 2019 Diversified product Other transport Electrical 5% Machinery 8% Motor vehicles 8% Metal products 38% Construction 12% Mechanical engineering 29% 31 ACERINOX Q2 2020 RESULTS PRESENTATION
Slide 32: Market Performance: Prices
APPENDIX Market Performance: Prices Raw materials Average quarterly Price US¢ / Lb. Cr Source: LME NICKEL FERROCHROME Source: Metal Bulletin Average price: cash/three months USD/mt 20,000 165 154 139 142 138 15,000 124 120 118 112 114 110 104 102 101 10,000 5,000 J F M AM J J A S O N D J F M A M J J
Slide 33: Acerinox Stainless Steel Production
APPENDIX Acerinox Stainless Steel Production Thousand Mt Acerinox has three full integrated plants 2,475 2,519 MELTING SHOP 2,440 2,320 2,231 2015 2016 2017 2018 2019 HOT ROLLING 2,209 2,231 2,120 2,039 1,951 2015 2016 2017 2018 2019 COLD ROLLING 1,716 1,738 1,752 1,609 1,607 2015 2016 2017 2018 201
Slide 34: Stainless Steel Division: sales geographical mix
APPENDIX Acerinox Stainless Steel Division: sales geographical mix Presence in 5 continents Year 2019 Europe 35.4% Oceania 0.5% Africa 4.3% Asia 12.0% America 47.8% 34 ACERINOX Q2 2020 RESULTS PRESENTATION
Slide 35: Acerinox stainless steel main figures: Net sales
APPENDIX Acerinox stainless steel main figures Net sales Million EUR 7,000 6,000 5,000 4,000 3,000 4,627 5,011 4,754 2,000 4,221 3,968 1,000 0 2015 2016 2017 2018 2019 35 ACERINOX Q2 2020 RESULTS PRESENTATION
Slide 36: Acerinox stainless steel main figures: EBITDA
APPENDIX Acerinox stainless steel main figures EBITDA Million EUR 600 500 400 300 489 480 200 329 364 286 100 0 2015 2016 2017 2018 2019 36 ACERINOX Q2 2020 RESULTS PRESENTATION
Slide 37: Acerinox stainless steel main figures: CAPEX
APPENDIX Acerinox stainless steel main figures CAPEX 2015-2019 Million EUR 173 173 152 144 94 2015 2016 2017 2018 2019 37 ACERINOX Q2 2020 RESULTS PRESENTATION
Slide 38: Acerinox stainless steel main figures: Net profit
APPENDIX Acerinox stainless steel main figures Net profit Million EUR 300 250 200 150 234 237 100 176 50 80 43 0 2015 2016 2017 2018 2019 -50 -60 -100 Before adjustments After adjustments 38 ACERINOX Q2 2020 RESULTS PRESENTATION
Slide 39: Return to Shareholders
APPENDIX Acerinox stainless steel main figures Return to Shareholders (*) Scrip dividend 0.50 0.45 0.44 0.45 0.45 176 € / share 2015 (*) 2016 (*) 2017 2018 2019 39 ACERINOX Q2 2020 RESULTS PRESENTATION
Slide 40: A new global leader in stainless and high performance alloys
APPENDIX A new global leader in stainless and high performance alloys Acerinox is a global leader in stainless steel VDM Metals is a global leader in high performance alloys Acerinox + VDM Metals add growth opportunities 40 ACERINOX Q2 2020 RESULTS PRESENTATION
Slide 41: About VDM Metals
APPENDIX About VDM Metals Technology Leader in High Performance Alloys 7 Production Facilities for Mission-Critical Applications in Germany and the US 62 Alloy Patent 12 Subsidiaries, 6 Sales Offices, 4 Service Centres, 18 Agents Applications Global leader in High Performance Serving International C
Slide 42: Added value enhanced by VDM Metals
APPENDIX 2020 Added value enhanced by VDM metals Why does VDM Metals add value? ▪ Globally #1 in high performance alloys market Market leader with ▪ Reputation of excellence and strong brand name growth Potential ▪ Significant growth potential in specialty alloys Technology innovation ▪ Innovation l
Slide 43: High Performance Alloys: indispensable now and for a sustainable future
APPENDIX High Performance Alloys: not always visible but always indispensable now and for a sustainable future Sophisticated niche products with high growth potential 43 ACERINOX Q2 2020 RESULTS PRESENTATION
Slide 44: Demand for high performance alloys
APPENDIX Demand for high performance alloys High performance alloys is a strong growth market Specialty Alloys’ Market (excl. Seamless Tube) CAGR 2010-2018: 4% 254 258 249 265 265 256 277 313 227 2010 2011 2012 2013 2014 2015 2016 2017 2018 Market (000’ tonnes) Market Breakdown by End-User (2018) Ma
Slide 45: VDM Metals global market position
45 in 000’ tons VDM1 Categoría Competitor 1 Source: SMR Q3 2018 Competitor 2 Competitor 3 Competitor 4 Competitor 5 Competitor 6 VDM Metals global market position Competitor 7 Competitor 8 APPENDIX Competitor 9 Competitor 10 Competitor 11 Competitor 12 Competitor 13 Competitor 14 Unique opportunity
Slide 46: VDM Metals: solid revenue and earnings growth
APPENDIX VDM Metals global market position Solid revenue and earnings growth in recent years Volumes Production Sales1 Million EUR 000’ tons Adjusted EBITDA2 Net Debt Million EUR Million EUR Note: FY ending in September, 30; 1 Production Sales relate to the sale of metal alloy products and services
Slide 47: A new global leader in stainless and high performance alloys
APPENDIX A new global leader in stainless and high performance alloys Acerinox is a global leader in stainless steel VDM Metals is a global leader in high performance alloys Acerinox + VDM Metals add growth opportunities 47 ACERINOX Q2 2020 RESULTS PRESENTATION
Slide 48: Acerinox Products
APPENDIX Acerinox Products FLAT PRODUCT LONG PRODUCT Algeciras 1970 | Spain 1957 | Spain Melting Shop Hot Rolling Hot Rolling Shop Cold Rolling Shop Ponferrada Finished Product 1990 | USA 1990 | Spain Kentucky Melting Shop Hot Rolling Shop Igualada Finished product Cold Rolling Shop 2003 | USA Midde
Slide 49: Combined global footprint and sales by region
APPENDIX Combined global footprint and sales by region Strong regional complementarity Acerinox (2018) Others Unna 5% Altena Duisburg Werdohl Europe Americ Siegen 35% a 47% Asia 13% VDM Metals Reno Spain (2018) Florham Park United States Other Ameri s ca 0% 16% Asia Malaysia 11% Europe 73% Combined
Slide 50: A new global leader in stainless and high performance alloys
APPENDIX A new global leader in stainless and high performance alloys Creating value through: VDM: - Enhancement of product mix Acerinox: - Projects and tailor-made solutions world’s largest - Exceptional R&D capabilities global leader in producer in high - Diversification of geographical earnings s
Slide 51: Value creation for all stakeholders
VALUE CREATION FOR ALL STAKEHOLDERS ACERINOX Q2 2020 RESULTS PRESENTATION