Arcelormittal South Africa Limited · JSE:ACL
Arcelormittal South Africa — Q3 2015 Earnings Presentation
14 slides from Arcelormittal South Africa's earnings presentation, Nov 6, 2015
Slide 1: Investor and Media interaction following announcements
Investor and Media interaction following announcements 6 November 2015 0
Slide 2: Agenda
Agenda • Global steel supply and China pricing • Operational results • Update on BU sustainability • Update on initiatives • Update on Kumba • Trading update • Rights offer • Proposed BEE tansaction • Outlook for Q4 2015 1
Slide 3: Global steel supply
Global steel supply 800 000 Chinese carbon steel exports to Africa & South 90 000 • Global steel output has reduced from 700 000 Africa (12 month moving average data) 80 000 135.6mtpm in 2014 to the current level of 600 000 Africa total South Africa 70 000 134.5mtpm, while China has curtailed its 50
Slide 4: China pricing and its impact
China pricing and its impact Chinese steel prices compared to RMB 600 Rebar (fob China) • Global steel prices lost some 50% of its value 525 519 HRC (fob China) RMB 500 507 509 508 over the past 20 months with the real damage 479 469 443 494 467 Rebar spread 423 421 HRC spread been done since Decemb
Slide 5: Operational results
Operational results • Steel production 16% higher at 1.2mt compared to Q3 2014 (1.0mt) only due to the reline of the blast furnace in 2014 • Capacity utilisation up from 62% in Q3 2014 to 72% due to reline in 2014 but lower than planned levels of 95% because of depressed trading conditions • Steel s
Slide 6: Update on BU sustainability
Update on BU sustainability • Vereeniging – Vaal Meltshop and Forge plant • Meltshop only will be placed under care and maintenance • Meltshop to cease output by end December 2015 (380ktpa) • Some 283 employees affected for whom we are seeking solutions • Vanderbijlpark – footprint study • Only mode
Slide 7: Update on initiatives
Update on initiatives • Trade protection • Import tariffs • Safe guard duties • Anti-dumping duties • Competition Commission • Fair pricing model • Designation of steel • Current plans assume that all the initiatives undertaken with Government will be in place in Q1 2016 6
Slide 8: Update on Kumba
Update on Kumba • Kumba agreed to amend the pricing mechanism from cost-based EPP • EPP to use Platts 62% Fe CFR China Fines Index • At certain price levels a discounted price will be applicable • At a price US$60/t - US$70/t (EPP -5%) • At a price US$70/t - US$80/t (EPP - 6.25%) • Above US$80/t (EP
Slide 9: Trading update
Trading update • Loss per share and headline loss per share for the year ended 31 December 2015 is expected to be higher by more than 600 cents or 11 times (1100 %) when compared to the year ended 31 December 2014 • Depressed trading conditions in the local steel industry which has adversely affecte
Slide 10: Rights offer
Rights offer • Reasonable certainty that “holistic” solution will be in place by 31 March 2016 • Balance sheet and future funding needs for additional capital programme of R4.6bn to be dealt with • Step 1: Rights Offer • Step 2: BBBEE ownership transaction • Step 3: Potential bond/ commercial paper
Slide 11: Rights offer (cont)
Rights offer (cont) • Size: R4.0 bn to R 4.5 bn; fully underwritten by AM Group • Application of funds • Reduce AM Group debt of R3.2 bn • Assist to fund the capital expenditure programme • General meeting is convened for 11 December 2015 to allow the passing of a special resolution for AMSA to issu
Slide 12: Proposed BEE transaction
Proposed BEE transaction • AMSA transforming the company to maximise its B-BBEE score • Ownership transaction of approximately 23% being considered • Engaging with shortlisted potential BEE investors • Preference is for prospective B-BBEE investors to provide own funds • Also consider opportunity to
Slide 13: Outlook for Q4
Outlook for Q4 • Market conditions are expected to remain tough and all our units are expected to maintain their current below capacity production levels however; we expect that sales will decrease due to the seasonal impact 12
Slide 14: Thank you
a“ ArcelorMittal Thank you
ArcelorMittal South Africa — Q3 2015 Earnings Presentation on 6ix