Tata Steel Limited · NSE:TATASTEEL
Tata Steel — FY2011 Earnings Presentation
40 slides from Tata Steel's earnings presentation, May 25, 2011
Slide 1: Analyst Meet Presentation
May 25, 2011 Consolidated Financial Results Financial Year Ended 31st March 2011 Analyst Meet Presentation
Slide 2: Agenda
Agenda Introduction and Consolidated Highlights Global Business Environment Performance of Indian and South East Asian Operations Performance of European Operations Group Financial Performance Corporate Developments 2
Slide 3: Introduction and Consolidated Highlights
Introduction and Consolidated Highlights Port Talbot 3
Slide 4: Tata Steel Group – Safety Performance
Tata Steel Group – Safety Performance Lost Time Injury Frequency (LTIF) 10 tragic fatalities to employees/contractors in FY11 3.06 2.35 Company wide focus to ensure casualty- 2.10 free operations 1.31 Lost time injury frequency rate of 0.78, an 0.95 0.78 18% improvement over FY10 On track to achieve
Slide 5: Group Financial Highlights, Financial Year Ended 31st March'11
Group Financial Highlights Financial Year Ended 31st March’11 Deliveries (MnT) 23.61 23.54 Turnover (US$ Mn) 26,635 22,966 6.30 6.54 7,586 6,169 6.02 5.68 6,524 5,877 6.06 5.88 6,426 5,696 5.23 5.44 5,224 6,099 FY10 FY11 FY10 FY11 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 PAT* (US$ Mn) 2,015 EBITDA (US$ Mn) 3,836 937
Slide 6: Global Business Environment
Global Business Environment Building Solutions 6
Slide 7: Global Market Environment
Global Market Environment Quarterly apparent steel use & capacity utilisation Steel demand outlook – 2010 & 2011 (% Y/Y change) 40% 2008-09 2009-10 2010-11 37% 400 100 2010 2011 34% 35% Global capacity 90 350 utilisation 30% 30% 80 300 70 25% 250 21% 60 20% 200 50 World excl. China 15% 13% 13% 40 12
Slide 8: Raw Materials and Steel Prices
Raw Materials and Steel Prices Iron ore fines, US$/tonne HRC spot price, US$/tonne 250 Contract FOB Brazil Spot CIF China (63.5% Fe) 1,400 200 India (Mumbai) 150 Chinese domestic (incl VAT) USA domestic (FOB Gulf) 1,200 Russia export (FOB Black Sea) 100 Germany domestic 50 1,000 0 Jun- Dec- Jun- Dec
Slide 9: Performance of Indian and South East Asian Operations
Performance of Indian and South East Asian Operations Tata Steel Works, Jamshedpur 9
Slide 10: India and South East Asian Steel Market
India and South East Asian Steel Market Indian construction activity (billion 2004-05 rupees, Y/Y % change) Indian light vehicle assembly (million units, Y/Y % change) Billon 2004-05 rupees Y/Y % change Million units Y/Y % change 1,200 16% 5 FORECAST 35% 2008-09 2009-10 2010-11 FORECAST 2011-12 14%
Slide 11: Performance of Tata Steel India
Performance of Tata Steel India Financial Year Ended 31st March’11 Deliveries (MnT) Turnover (US$ Mn) 6.17 6.42 6,593 5,612 1.70 1.71 1,871 1,646 1.60 1.64 1,659 1,430 1.45 1.67 1,594 1,276 1.42 1.40 1,260 1,469 FY10 FY11 FY10 FY11 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 EBITDA (US$ Mn) PAT* (US$ Mn) 2,742 1,540 2,
Slide 12: Operating Performance – Tata Steel India
Operating Performance –Tata Steel India Flat Products 785 887 917 949 • Crossed 1 Mtpa 836 798 839 1,100 792 890 880 870 860 850 840 830 820 810 sales to automotive 1 800 790 780 770 760 900 2 98 125 1 130 750 740 730 720 710 700 690 680 670 segment in FY11 2 660 650 640 630 620 700 112 331 314 340
Slide 13: Value Additions – Tata Steel India
Value Additions – Tata Steel India Tube Division Wire Division 120 1,200 90 1,026 1,200 975 80 945 976 926 953 923 100 914 1,000 1,000 70 81 80 91 100 800 60 68 800 85 90 58 50 60 600 51 600 40 40 400 30 400 20 200 20 200 10 - - - - Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Del
Slide 14: Ferro Alloys & Minerals Division – Tata Steel India
Ferro Alloys & Minerals Division – Tata Steel India Quarterly Movement 1500 1,406 55 60 1,200 1,360 Increased automotive production in 50 40 1000 31 40 Asia and US resulted in improvement 30 500 406 377 419 20 in demand and deliveries for stainless 10 0 0 Q4 FY10 Q3 FY11 Q4 FY11 steel in FY11 FAMD D
Slide 15: Flat Products Expansion – Tata Steel India
Flat Products Expansion – Tata Steel India Material Flow Diagram Capacity in kt Hot Strip Mill (HSM) Thin Slab Casting & Rolling (TSCR) 4095 2540 Total Hot Rolled Coils 6635 Hot Rolled Coils Hot Rolled Coils (Value Additions - (Value Additions - Hot Rolled Coils Internal) External) 2472 2600 1563 Co
Slide 16: 'Kar Vijay Har Shikhar', flagship initiative – Tata Steel India
‘Kar Vijay Har Shikhar’, flagship initiative – Tata Steel India "Kar Vijay Har Shikhar" a new initiative launched during the year, focuses on Tata Steel’s aspiration to improve its earnings. It is a multi-unit, multi- location, cross functional improvement programme. This initiative spans across the
Slide 17: Continuous Improvements – Tata Steel India
Continuous Improvements – Tata Steel India Figures in US$ Mn Savings on Improvement Initiatives Initiative Wise Break Up 425 238 1 450 Aspire / Synergy 400 350 70 TOC 300 250 200 386 112 Marketing Initiatives 150 186 100 Kar Vijay Har Shikar 50 39 52 42 Synergy - 13 FY10 FY11 Value Added Cost Cuttin
Slide 18: Performance of South East Asia
Performance of South East Asia Financial Year Ended 31st March’11 Deliveries (MnT) 2.98 3.09 Turnover (US$ Mn) 2,540 0.77 0.78 2,111 695 0.78 537 0.73 655 544 0.80 0.78 604 579 0.68 0.75 586 451 FY10 FY11 FY10 FY11 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 EBITDA (US$ Mn) PAT* (US$ Mn) 87 20 3 80 14 6 21 13 24 19 29
Slide 19: Outlook – Tata Steel India & South East Asia
Outlook – Tata Steel India & South East Asia Tata Steel India • Key steel consuming sectors like construction, automotive, infrastructure showing robust outlook • Steel demand is expected to grow unabated despite near term uncertainty caused by increasing interest rates to tame surging inflation Nat
Slide 20: Performance of European Operations
Performance of European Operations Pan view of the IJmuiden plant 20
Slide 21: Performance of Tata Steel Europe
Performance of Tata Steel Europe Financial Year Ended 31st March’11 14.42 Deliveries (MnT) Turnover (US$ Mn) 14.87 17,044 14,768 3.78 4.13 4,924 3,833 3.69 3.47 4,024 3,758 3.84 3.56 4,124 3,761 3.11 3.71 3,972 3,416 FY10 FY11 FY10 FY11 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 EBITDA (US$ Mn) PAT* (US$ Mn) 374 943 -
Slide 22: European Steel Market
European Steel Market Steel using sector output (index 2005 = 100) European Steel Service Centre Stocks (mt, months of supply) 130 Months supply 2.6 Mt 3.4 120 Stock levels 3.2 2.4 110 3.0 2.2 Months 100 supply 2.8 2.0 2.6 90 2.4 Germany - machinery & equipment 1.8 80 UK - machinery & equipment 2.2
Slide 23: Quarterly Trends – European Operations
Quarterly Trends – European Operations Average Selling Prices US$ / T US$ / T Raw Materials Costs Per Tonne 1,200 1,096 1,093 600 -0.3% 494 486 1,000 500 -1.6% 800 400 600 300 Lower December 400 200 quarterly contract 200 100 price of coal and - 0 iron ore Q3 FY11 Q4 FY11 Q3 FY11 Q4 FY11 Mn T EBITDA
Slide 24: Strategies for a new brand in the European Market
Strategies for a new brand in the European Market Operational excellence with cost leadership Technological Innovation Operational • Process innovation • Product innovation Excellence Confidence restored • The right steels and grades are available to our • Optimise Supply Chain customers • Reliabili
Slide 25: Customer Focus
Customer Focus Progress with our customer focus and market sector teams Picture of Lifting & Excavating sector Premium product sales Lifting & Excavating Automotive New three year deal with First shipments of steel for Majority share of new vehicle customer, which gives them leading mining machinery
Slide 26: Technological innovation and operational excellence
Technological innovation and operational excellence All strategic building blocks being actively progressed Picture of Lifting & Excavating sector Launch of Hisarna Photovoltaics New grades at Port Talbot New concept in use of Significant commitment with CAPL now making DP600, powdered raw materials
Slide 27: Cost Leadership: Long Products Europe Transformation
Cost Leadership: Long Products Europe Transformation Subject to the consultation process launched on 20 May Total demand for structural steel in the UK is still one third less than it was before the recession Reason for the Despite achieving valuable cost savings during the worst of the crisis, the
Slide 28: Outlook – Tata Steel Europe
Outlook – Tata Steel Europe • EU27 apparent consumption has softened as customers delay purchases in anticipation of lower prices • Exports continue to be a key driver of European manufacturing recovery • The EU export orders PMI at 57.7 signals continued growth in manufacturing export demand • EU i
Slide 29: Group Financial Performance
Group Financial Performance People – graphic (R&D) 29
Slide 30: Group Financial Performance – Q4 FY11
Group Financial Performance – Q4 FY11 Figures in US $ Mn unless specified Q4 FY11 Q3 FY11 Tata Steel Tata Steel SE Tata Steel Tata Steel India Europe Asia Group (*) Group (*) Deliveries (Mn T) 1.71 4.13 0.78 6.54 5.68 Turnover 1,871 4,924 695 7,586 6,524 EBITDA 687 350 21 1,055 757 EBITDA Margin (%)
Slide 31: Group Financial Performance – FY11
Group Financial Performance – FY11 Figures in US $ Mn unless specified FY11 FY10 Tata Steel Tata Steel SE Tata Steel Tata Steel India Europe Asia Group (*) Group (*) Deliveries (Mn T) 6.42 14.87 3.09 23.54 23.61 Turnover 6,593 17,044 2,540 26,635 22,966 EBITDA 2,742 943 80 3,836 2,095 EBITDA Margin
Slide 32: Debtor and Inventory Turnover Ratio
Debtor and Inventory Turnover Ratio Tata Steel India Tata Steel Europe 4 0.45 1 0.18 0.37 0.37 0.15 0.15 0.36 0.36 0.40 1 0.16 0.16 4 0.35 1 0.61 0.12 0.14 3 2.68 2.75 2.78 1 0.56 0.12 0.30 0.53 3 2.27 1 0.46 0.10 0.25 2 0 0.08 0.20 2 0 0.06 0.15 1 0.10 0 0.04 0 0.02 1 0.05 0 - 0 - Q1 FY11 Q2 FY11 Q
Slide 33: Tata Steel Group Gross Debt Movement & Net Debt Position
Tata Steel Group Gross Debt Movement & Net Debt Position US$ mn 8844 510 13611 11910 10459 9830 (7653) (3152) (629) Gross Debts Loans taken Loans repaid Exch. (G)/L Gross Debts Cash & Cash Net Debts Fwd Cover Under- lying Mar-10 Mar-11 Eq Mar-11 Mar-11 Mar-11 Cash & Cash Equivalents include current
Slide 34: Pensions Management – European Operations
Pensions Management – European Operations £ Mn FY10 FY11 Total Scheme Retirement Benefit Assets 15,887 16,090 Total Scheme Retirement Benefit Liabilities (15,628) (15,743) Net Pension Surplus (BSPS &SPH) 259 347 Pension Asset Composition – BSPS 120% 10,968 11,365 11,317 £ Mn 100% 3% 2% 2% 80% 64% 63
Slide 35: Corporate Developments
Corporate Developments Kalinganagar Project, Odisha 35
Slide 36: Key Corporate Milestones
Key Corporate Milestones • Launched a 57 million equity shares Follow on Public Offer (FPO) on January19 and raised Rs. 3,477 crores (US$ 778 million) • Completed India’s first ever offering of Corporate Hybrid Securities with an Fund Raising/ issuance of Rs. 1,500 crores (US$ 332 million) in Mar’11
Slide 37: Odisha Project Status Update
Odisha Project Status Update SINTER PLANT BLAST FURNACE AREA SINTER COOLER AREA PILING WORK IN PROGRESS IN CONVERTER AREA 37
Slide 38: Odisha Project Update
Odisha Project Update Setting up of a 6 mtpa integrated steel plant in two phases at Kalinganagar, Odisha for the manufacture of flat products The project cost of Rs. 34,500 crores (US$ 7.8 Bn) for both phases combined was approved by the Board in February’11. Project cost is inclusive of cold rolli
Slide 39: Business Outlook
Business Outlook Developed world recovery to stay muted due to on-going deleveraging and fiscal restraint Euro Area growth to be sustained by stronger investment and net trade surplus despite fiscal headwinds China to continue with tightnening monetary policy to control inflation despite concerns ov
Slide 40: Thank You
qe TATA Thank You TATA STEEL