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) — Q1 2009 Earnings Presentation

32 slides from Eregli Demir Ve Celik Fabrikalari T.a.s's earnings presentation, May 18, 2009

  1. Slide 1: Erdemir Group First Quarter 2009 Consolidated Financial Results

    Erdemir Group First Quarter 2009 Consolidated Financial Results 18 May 2009

  2. Slide 2: Disclaimer

    DISCLAIMER 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

  3. Slide 3: Agenda

    AGENDA: ¾2009 Market Overview ¾2009 First Quarter Financial Highlights ¾Policies and Measures 3 / 32

  4. Slide 4: EU steel prices continue to decline; crude steel production up

    In European Union, prices continue to decline. Crude steel production increased by 13,5% in March 2009 compared to December 2008. EU27 CRUDE STEEL PRODUCTION ( YoY % ) * 50% 30% 10% -10% -30% -50% -70% N D N D N D F F F F O O O S S S J J J J J J J J J J A A A A A A M M M M M M M 2006 2007 2008 2009

  5. Slide 5: North America destocking continues, pushing prices down

    In North America; destocking continues, pushing prices down. Crude steel production increased by 3,7% in March 2009 compared to December 2008. US CRUDE STEEL PRODUCTION ( YoY % ) * 50% 30% 10% -10% -30% -50% -70% N D N D N D F F F F O O O S S S J J J J J J J J J J A A A A A A M M M M M M M 2006 2007

  6. Slide 6: CIS sharp price declines level off

    In CIS, sharp price declines level off. Crude steel production increased by 31% in March 2009 compared to December 2008. CIS CRUDE STEEL PRODUCTION ( YoY % ) * 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% -50% N D N D N D F F F F O O O S S S J J J J J J J J J J A A A A A A M M M M M M M 2006 2007 2008

  7. Slide 7: Decreasing raw material prices improve cost structure

    Decreasing raw material prices improve the cost structure of efficient steel makers. CHINA 2ND QUALITY COKING COAL SPOT CHINA PORT FINE ORE PRICE CFR EXPORT PRICE ( USD/TON ) USD/TON ( USD/TON ) USD/TON USD/TON 800 250 700 200 600 500 150 400 300 100 200 50 100 0 0 N D N D N D N D N D N D F F F F F

  8. Slide 8: Turkish steel demand recovery in Q1 2009

    The demand showed recovery in Q1 2009, while the apparent consumption has continued to fall. (Millon Tons) 6,0 TURKISH FLAT STEEL (Millon Tons) TURKISH LONG STEEL Production Consum ption 6,0 Production Consum ption 5,6 5,1 5,0 5,0 4,6 4,0 3,7 4,0 3,0 3,0 3,0 2,5 2,3 1,8 2,0 1,5 2,0 1,4 1,3 0,8 1,0 1

  9. Slide 9: Steel product imports and exports

    Imports of steel products were the same in Q1 2009 YoY while exports increased. IRON AND STEEL PRODUCT EXPORTS ( 000 TONS ) 16.803 183 13.792 1.337 190 12.666 2.355 148 1.217 1.561 1.368 1.582 3.000 4.347 3.858 20 12.833 57 10.789 9.567 30 353 462 551 277 315 315 3.484 2.934 2.340 28 40 94 35 2008/4

  10. Slide 10: Automotive production declined 54% in first four months

    Automotive production declined 54% in the first four months of 2009 YoY. AUTOMOTIVE PRODUCTION (000 UNITS) AUTOMOTIVE EXPORTS (000 UNITS) - %54 - %55 472 368 218 167 2008 ( 2008 JANUARY- APRIL) (JAN.- APR.) 2009 ( JANUARY 2009 (JAN.-–APR.) APRIL ) 2008 ( JANUARY 2008 (JAN.-– APR.) APRIL ) 2009 ( JAN

  11. Slide 11: Agenda

    AGENDA: ¾2009 Market Overview ¾2009 First Quarter Financial Highlights ¾Policies and Measures 11 / 32

  12. Slide 12: Erdemir Group Key Figures

    ERDEMİR GROUP KEY FIGURES 2009/1.Q. 2008/1.Q. 2008 2007 Liquid Steel Production (000 Tons) 1.590 1.540 6.121 5.486 Slab Production 905 (1) (000 Tons) 999 3.995 3.680 Flat Steel Production 1.174 (2) (000 Tons) 1.126 4.182 4.206 Long Steel Production (000 Tons) 554 530 2.033 1.917 Flat Steel Shipments

  13. Slide 13: Liquid steel production increased in Q1 2009

    Liquid steel production in Q1 2009 increased by 3% and 23% compared to Q1 and Q4 2008 respectively. LIQUID STEEL PRODUCTION ( 000 TONS ) 6.121 5.486 3 %2 1.590 1.540 1.293 2008 2009 2008 2008 2007 4.Q. 1.Q. 13 / 32

  14. Slide 14: Finished goods output increased

    Finished 2008 yılı goods output increased satış hacmimiz bygöre geçen yıla 54%%4 anddüştü. 3% respectively in Q1 2009 compared to Q4 and Q1 2008. PRODUCTION VOLUMES ( 000 TONS ) 6.214 6.123 Long Long 2.033 1.917 CRC CRC 1.486 1.632 4 1.728 1.656 1.121 %5 HRC HRC 554 530 2.696 2.574 417 299 425 160 5

  15. Slide 15: Sales volume increased in Q1 2009

    Sales volume 2008 yılı satışincreased hacmimiz in the 1Q geçen yıla2009 görecompared %4 düştü.to Q4 and Q1 2008 by 53% and 8% respectively. SALES VOLUME ( 000 TONS ) 5.972 6.215 Long Long 1.920 2.040 CRC CRC 1.688 1.471 3 %5 1.733 1.609 HRC HRC 1.131 566 502 2.607 2.461 482 326 448 210 840 438 658 2

  16. Slide 16: Net sales revenue in Q1 2009 increased by 6%

    Net sales revenue in Q1 2009 increased by 6% compared Q4 2008. NET SALES REVENUE ( MILLION TL ) 6.809 1.563 5.357 4.902 763 1.082 5.246 4.594 3.820 %6 1.418 1.006 1.064 234 515 422 1.184 491 642 2008 4.Q. 2009/1.Q. 2008 1.Q. 2008 2007 2006 Domestic Export Total Q1 2009 FIGURES ARE UNAUDITED. 16 / 32

  17. Slide 17: Sales breakdown by customer and export destination

    Sales to pipe and profile, and debar producers increased in 1Q 2009.* FLAT STEEL DOMESTIC SALES BREAKDOWN ( %) FLAT STEEL EXPORT SALES BREAKDOWN ( %) 9% 7% 12 % 4% 2% 3% 6% 2% 4% 6% 4% 51 % 15 % 69% 7% PIPE and PROFILE INDUSTRY STEEL SERVICES CENTERS USA EU CHINA ISRAEL INDIA BRAZIL OTHER TRADERS AU

  18. Slide 18: Net profit and EBITDA significant recovery

    Net profit and EBITDA had a significant recovery in the 1Q 2009. EBITDA ( MILLION TL ) 1.104 1.111 897 324 136 2008/4.Q. 2009/1.Q. 2008/1.Q. 2008 2007 2006 -1.351 712 NET PROFIT ( MILLION TL ) 704 227 228 2008/4.Q. * 2009/1.Q. 2008/1.Q. 2008 2007 2006 -146 -1.231 * Q4 2008 figures include 1.084 mill

  19. Slide 19: Medium term liquidity position enhanced through refinancing

    Medium term liquidity position significantly enhanced through refinancing of all of the 1.1 billion USD principal repayments due in the rest of 2009. BORROWINGS ( MILLION USD ) BORROWINGS MATURITY PROFILE* 2.998 ST Portion of LT Debt Short-Term Debt ( MILLION USD ) Long-Term Debt 1.268 600 Liquid Fu

  20. Slide 20: Agenda

    AGENDA: ¾2009 Market Overview ¾2009 First Quarter Financial Highlights ¾Policies and Measures 20 / 32

  21. Slide 21: Capacity utilization ratio increased in both plants

    Capacity utilization ratio increased in both plants through first four months. CAPACITY UTILISATION RATIOS * EREĞLİ İSKENDERUN PLANTS CUR - % PLANTS CUR - % Coke Plant 94,2 Coke Plant 71,0 Sinter Plant 86,7 Sinter Plant 72,0 Blast Furnaces 95,6 Blast Furnaces 64,0 BOF 106,2 BOF 73,0 Continuous Slab

  22. Slide 22: Depreciation method changed for some fixed assets

    The depreciation method has been changed for some fixed assets to better reflect the expected pattern of consumption of future economic benefits of such assets. IMPACT OF THE CHANGE IN THE DEPRECIATION METHOD (*) STRAIGHT LINE UNITS OF PRODUCTION EREĞLİ - İSKENDERUN METHOD – MILLION TL METHOD – MILL

  23. Slide 23: Specific energy consumption is coming down

    Despite the reduced capacity utilization, specific energy consumption is coming down. ENERGY CONSUMPTION (MCAL / TON CRUDE STEEL) EREĞLİ 5.199 -10% 4.875 4.791 4.734 4.661 2005 2006 2007 2008 2009/1.Q. İSKENDERUN 6.166 - 10% 6.008 5.805 5.826 5.529 2005 2006 2007 2008 2009/1.Q. 23 / 32

  24. Slide 24: Electricity sourcing dynamically managed

    Electricity sourcing is dynamically managed during the day to achieve minimum costs. ELECTRICITY PRODUCTION AND PURCHASING ( BILLION KWH) EREĞLİ Inhouse Production Purchasing Total 1,39 1,43 1,39 0,93 0,82 0,75 0,36 0,68 0,33 0,57 0,48 0,19 0,14 0,20 0,17 2006 2007 2008 2009/1.Q. 2008/1.Q. İSKENDERU

  25. Slide 25: CO2 emissions decrease despite reduced utilization

    CO2 emission of Ereğli and İskenderun mills decrease by in spite of reduced capacity utilizations. CO2 EMISSIONS (KG/TCS) EREĞLİ 2,04 -8% 1,92 1,88 1,88 1,84 2005 2006 2007 2008 2009/1.Q. İSKENDERUN 2,47 2,28 -14% 2,26 2,17 2,12 2005 2006 2007 2008 2009/1.Q. 25 / 32

  26. Slide 26: Labor productivity increased significantly

    Labor productivity in Q1 2009 increased significantly compared to Q4 2008 through higher capacity utilization rates and management gains. LABOR PRODUCTIVITY (MAN-HOUR/TON) EREĞLİ 4,36 4,00 3,83 3,82 3,62 2005 2006 2007 2008 2009/1.Q. İSKENDERUN 6,05 5,96 5,26 4,51 4,34 2005 2006 2007 2008 2009/1.Q.

  27. Slide 27: Number of employees decreased by about 10%

    Number of employees decreased by about 10% since 2007, primarily through voluntary redundancies and retirements. NUMBER OF EMPLOYEES 15.015 15.063 14.598 14.637 14.056 13.713 13.417 2004 2005 2006 2007 2008 2009/1.Q. 2009/MAY* In March 2008, about 800 persons left the Group through voluntary redunda

  28. Slide 28: Quarterly fixed costs decreased in last two quarters

    Quarterly fixed costs, excluding raw material charges decreased in the last two quarters and were on average 196 Million USD, while variable costs were 96 Million USD. 143 107 112 109 98 88 93 80 98 265 276 236 244 217 227 194 205 188 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2007 2008 2009 Fixed Cost Variable Cos

  29. Slide 29: Fixed and variable operating costs decreased

    Fixed and variable operating costs, excluding raw material charges decreased in the Q1 2009 primarily due to management gains. FLAT PRODUCTS ( USD/TON ) 207 156 154 151 136 138 135 131 114 88 99 70 63 66 72 61 66 59 1.Q. 2.Q. 3.Q. 4.Q. 1.Q. 2.Q. 3.Q. 4.Q. 1.Q. 2007 2008 2009 Fixed Cost per Ton Varia

  30. Slide 30: Erdemir completed a large portion of investment program

    Erdemir Group completed a large portion of its current investment program. ( M USD ) 940 116 694 673 588 577 130 37 27 362 824 509 543 524 149 167 132 332 4 1 60 7 144 76 100 56 68 2002 - 2005 2006 2007 2008 2009 2010 2011 2012 - After İskenderun Investments Erdemir Mining Investments Ereğli Investm

  31. Slide 31: Shortening working capital turnover days helped decrease net debt

    Shortening of working capital turnover days helped decrease net debt. 250 250 200 46 200 142 175 141 53 150 59 139 63 134 43 110 150 56 107 54 103 55 102 36 100 100 176 140 50 98 98 115 117 122 108 50 94 0 -24 0 -44 -51 -48 -35 -46 -51 -47 -34 -50 -50 -100 -100 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun

  32. Slide 32: Net debt expected to remain stable

    Net debt is expected to remain stable. NET DEBT ( MILLION USD ) 2.355 2.236 2.200 31.12.2008 31.03.2009 31.12.2009(E) DEBT COMPOSITION JPY JPY JPY 5% TL 3% 5% EURO EURO TL EURO TL 18% 9% 17% 15% 15% 21% USD USD USD 68% 63% 61% 32 / 32

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