Tubacex, S.a. · BME:TUB

Tubacex — Investor Day (July 2016)

49 slides from Tubacex's investor day presentation, July 2016

  1. Slide 1: Analyst Presentation July 2016

    Analyst Presentation July 2016

  2. Slide 2: Index

    Index 1. ASSESSMENT OF 2015 2. PROSPECTS FOR 2016 3. H1 2016 RESULTS 4. STRATEGIC PLAN 5. STOCK EXCHANGE

  3. Slide 3: Assessment of 2015

    1 ASSESSMENT PROPUESTA OF DE 2015 ACUERDOS

  4. Slide 4: Macroeconomic environment

    Assessment of 2015 Macroeconomic environment  Increasing uncertainty regarding growth sustainability has impacted the stocks markets and raw materials Nickel price evolution (US$/ton) Brent price evolution (US$/barrel) 25.000 140 22.000 120 19.000 100 16.000 80 13.000 60 10.000 40 7.000 20  The pr

  5. Slide 5: Oil sector

    Assessment of 2015 Oil sector Investments in E&P ($mm)  We are facing the worst crisis in the sector since 1986 -43% 673.170  It is lasting longer and is more intense than expected -27%  Investment expenditure fell by 43% in 2015, the largest drop since 1986 382.544  The fall projected for 2016

  6. Slide 6: Investment in Oil sector

    Assessment of 2015 Investment in Oil sector Upstream capex evolution Capex in Refining (b$) Europe -43% -16% +3% 8,1 North America Middle East 7,0 -40% -39% 6,4 6,2 -54% -5% India, Asia, Australia -46% -18% LatAm Africa -39% -26% -86% -44% 2014 2015 2016E 2017E Region Expected fall Fall in Capex in

  7. Slide 7: General assessment of the year

    Assessment of 2015 General assesment of the year  Existence of external factors with an adverse impact on TUBACEX’s results… Drop of nickel: Nickel price has fallen by more than 40% during 2015. In average terms, the average price of NEGATIVE EFFECTS nickel during 2015 was 30% lower than its averag

  8. Slide 8: Management Focus

    Assessment of 2015 Management Focus 1. Gain market share 2. Continue doing the same things but better • Sales organization strengthening • Specific strategic product plan • Technical standardization • Global value offer for customers • TxPS implementation in all plants • Accelerated pending • Action

  9. Slide 9: Launched projects

    Assessment of 2015 Launched projects Mgt Board/ Committee Project Leader Sponsor Steering Comitee Project team 1 Project team 2 Project team 3 Sponsor: Appointed by Mgt Board. Supports, takes part in Steering Committee, guaranties the correct resource allocation, consultants. Management Committee: D

  10. Slide 10: New Perimeter

    Assessment of 2015 New Perimeter • Reinforced competitive position • Greenfield Project in Cantabria • Sectoral diversification • Offer of value-added services: • Combined offer of tubes and fittings • Machining • Manufacturer offering a wider • Coatings dimensional range • Shot-peening • Plants in

  11. Slide 11: Business Strategy

    Assessment of 2015 Business Strategy Focus on added value Long-term objective Product breakdown Premium products Premium Value chain New products 75% Standard 72% Margin 66% 60% 60% 56% 56% 50% 50% 50% 40% 53% 2015 50% 2013 2014 46% 42% 2012 36% 28% 29% 20% D C B A 50% Type of product 2012 2013 (Val

  12. Slide 12: Operational Strategy

    Assessment of 2015 Operational Strategy Integrated focus on improvement Milestones 2015  Reorganization of the Roadmap, giving greater flexibility to plants and Continuous integrating Health and Safety as Improvement basic components Continuous  Significant improvement in the use of Improvement ma

  13. Slide 13: Operational Strategy

    Assessment of 2015 Operational Strategy TxPS Deployment Roadmap Results 2015 TxPS 4: TxPS 3: TxPS 2: TxPS 1: TxPS B: Innovation 2015: Integration of Safety tools in TxPS B and reorganization of other tools to facilitate integration in new companies in less time Analyst Presentation 2016 13

  14. Slide 14: Innovation Strategy

    Assessment of 2015 Innovation Strategy  Business vision focus on client Transforming the most demanding needs into customized solutions of high technological value developed in co-creation with customers  Support of EIB through a loan to finance the Innovation and Technological Development plan de

  15. Slide 15: Management strategy

    Assessment of 2015 Management strategy Initiatives Better management of resources • Implementation of management cycles:  Strengthening of sales organization Management • Shift / day / month / week / management plan / strategic cycle Cycles • Higher standardization and PDCA deployed to over 180 peo

  16. Slide 16: FY 2015 P&L

    Assessment of 2015 FY 2015 P&L Mill.€ 2014 2015* % var. Revenues 546,7 533,4 -2,4% EBITDA 64,1 48,9 -23,7% EBITDA margin 11,7% 9,2% EBIT 43,7 15,6 -64,4% EBIT margin 8,0% 2,9% Net Profit 23,8 8,4 -64,6% Net margin 4,3% 1,6% * Significant change in the consolidation perimeter vs. 2014 Resilience to c

  17. Slide 17: Balance Sheet

    Assessment of 2015 Balance Sheet Mill.€ 2014 2015* Var. (M€) Non current assets 287.3 394.4 107.1 Net working capital 202.4 210.1 7.7 Total Net Assets 489.7 604.5 114.8 Total Equity (1) 285.1 317.5 32.4 Net Financial Debt(2) 151.5 220.5 69.0 Others (net) 53.1 66.5 13.4 Total Equity and Liabilities 4

  18. Slide 18: Financial position

    Assessment of 2015 Financial position NFD/EBTIDA (times) Cash flow before acquisitions Gross Cash flow 152M€ generated in 3 years 305M€ generated in 3 years 68 129 5,7x 47 96 4,5x 80 3,8x 37 2,4x 16 2012 2013 2014 2015 2012 2013 2014 2015 2012 2013 2014 2015 -25 Debt maturities schedule 47% 32% 28%

  19. Slide 19: Prospects for 2016

    2 PROSPECTS FOR 2016

  20. Slide 20: Market environment and action plan

    Prospects for 2016 TUBACEX Action Plan We do not foresee a change in the market  Raw Materials: sharp fall in nickel,  Diversification: of sectors, products MARKET ENVIRONMENT ferrous alloys, molybdenum and oil and markets.  Oil&Gas Sector: investment cuts  Cost Control: Adjustment plan in all a

  21. Slide 21: Key issues for the 2016 FY

    Prospects for 2016 Key issues for the 2016 FY  Providing the best solution by… New Products New Tecnologies New services • Co-development with customers • Lean manufacturing • Additional treatments and • New grades and materials practices finishes • Offer of new dimensions and • New production proc

  22. Slide 22: Key Aspects

    Prospects for 2016 Key Aspects  Concentration on cash generation and defensing the Balance Sheet  Continuation of the projects launched in 2015  Focus on the plan to reduce overheads  Growth from the increased market share in strategic products and markets and entry into new sectors other than O

  23. Slide 23: Commitment to growth (M&A)

    Prospects for 2016 Commitment to growth (M&A)  TUBACEX has signed an Letter of Intent to acquire a significant stake in the stainless steel Fittings division of Awaji in the forthcoming months  The Division's aim is to invoice 20-25 million euros over 3 years  The transaction shows the commitment

  24. Slide 24: H1 2016 Results Release

    TUBACEX GROUP eres uf" , . o ) , RESULTS | al a seen Lorrie :

  25. Slide 25: Expected Trends 2016

    H1 2016 RESULTS RELEASE Expected Trends 2016  It will take some years to return to the level of new projects launched in 2013-2014  Only projects that are sustainable at barrel prices of 50-60 USD will be approved  Capex level required for similar projects before the crisis will be reduced by 20-

  26. Slide 26: Our Response

    H1 2016 RESULTS RELEASE Our Response  We must be proactive, offering the market:  Co-design in the prior phase to optimize costs  Standardization in the design of plants  Multi-year framework contracts offering “just in time” services and better prices  Elimination of “non-value” in the whole s

  27. Slide 27: Main financials H1 2016

    H1 2016 RESULTS RELEASE Main financials H1 2016 Mill.€ H1 2015 H1 2016 % var. Revenues 302.5 261.5 -13.5% EBITDA 33.7 19.9 -40.9% EBITDA margin 11.1% 7.6% EBIT 17.9 3.1 -82.5% EBIT margin 5.9% 1.2% Net Profit 14.0 1.7 -87.7% Net margin 4.6% 0.7% Dec. 2015 H1 2016 % var. Net working capital 210.1 206

  28. Slide 28: Main financials Q2 2016

    H1 2016 RESULTS RELEASE Main financials Q2 2016 Mill.€ Q1 2016 Q2 2016 % var. Revenues 121.4 140.2 +15.5% EBITDA 7.8 12.2 +56.7% EBITDA margin 6.4% 8.7% EBIT -0.6 3.7 n.m. EBIT margin neg. 2.7% Net Profit -0.4 2.2 n.m. Net margin neg. 1.6% Q1 2016 Q2 2016 Var (M€) Net working capital 221.2 206.7 -14

  29. Slide 29: Sales breakdown by sector

    H1 2016 RESULTS RELEASE Sales breakdown by sector*  E&P Oil & Gas: 5% 3% – Fall in the importance of E&P as a result of the 13% 13% cuts in the Capex of oil companies – Better relative performance of the gas sector – Gradual increase helped by the big OCTG order 26%  Power Generation: 45% – Record

  30. Slide 30: Geographical breakdown

    H1 2016 RESULTS RELEASE Geographical breakdown USA & Canada Europe Asia  Weak general market  Low order intake in the  Very good development of situation North Sea the power generation  Important orders in GoM  Good performance of the sector Downstream segment  Great importance of gas in Middl

  31. Slide 31: Summary of Perspectives 2016

    Strategic Plan Summary of Perspectives 2016 Prospects  We maintain a sound financial position  We hope to have touched rock bottom in the first quarter of the year  We are taking the appropriate measures to optimize the short term without jeopardizing the medium and long term  We are active in i

  32. Slide 32: Strategic Plan

    4 STRATEGIC PROPUESTAPLAN DE ACUERDOS

  33. Slide 33: Strategic Plan 2013–2017: Strategic Goals

    Strategic Plan Strategic Plan 2013 – 2017: Strategic Goals Clients People Market Shareholders Be a benchmark Be the Company for Reduce market Double the supplier for which people want volatility Company’s value in customers to work 5 years • Market share • Safety • Break-even vs. sales • Results: EB

  34. Slide 34: Strategic Plan 2013–2017: Phases

    Strategic Plan Strategic Plan 2013 – 2017: Phases Successful fulfillment of Phase I 1. Sales growth 2012 assuming the stable nickel price of 2012 Analyst Presentation 2016 34

  35. Slide 35: Strategic Plan 2013–2017

    Strategic Plan Strategic Plan 2013 - 2017 Strategic Plan 2013 Strategic Plan 2014 Strategic Plan 2015 Lay the bases and improve the Organic and inorganic growth Consolidation of the realm Balance Sheet and P&L  We think we have fulfilled the proposed level in the Strategic Plan 2013-3017  Growth t

  36. Slide 36: Strategic Plan 2013–2017

    Strategic Plan Strategic Plan 2013 - 2017  Under normal market circumstances, 2015 would have been the year for the consolidation of the Strategic Plan, practically fulfilling the objective set for 2017 If it were not for the oil crisis, we would have fulfilled our Strategic Plan We launch a new pl

  37. Slide 37: Strategic Plan 2016–2020: Objectives

    Strategic Plan Strategic Plan 2016 – 2020: 4 Objectives 1 Reinforce TUBACEX’s positioning as provider global tubular solutions 2 Reduce volatility by diversifying risks Others 5,0% Industrial Petrochem. Oil&Gas 14,0% Oil&Gas 67,0% Other Power Gen energies 14,0% Power Gen Revenues 2013 Revenues 2020

  38. Slide 38: Strategic Plan 2016–2020: Objectives

    Strategic Plan Strategic Plan 2016 – 2020: 4 Objectives Achieve Revenues > 1,000M€ in a recovered market situation 3 Step 1 EBITDA 100M€ • Market recovery • Natural growth of our current products Revenues Step 2 • Accomplish fully assembled tubular 1,000M€ systems positioning Achieve an excellence l

  39. Slide 39: Strategic Plan 2016–2020: Goal #1

    Strategic Plan Strategic Plan 2016 – 2020: Goal #1 1 Reinforce TUBACEX’s positioning as provider global tubular solutions Concept design Product design Manufacture Logistics Operation Develop already achieved market share Internal Developments External Developments From tube manufacturer to premium

  40. Slide 40: Strategic Plan 2016–2020: Goal #2

    Strategic Plan Strategic Plan 2016 – 2020: Goal #2 2 Reduce volatility by diversifying risks PRODUCT  Maximum dependence on a product 20%  Commercial positioning in accordance with HUB  Industrial positioning diversifying: GEOGRAPHY  >30% Competitive cost (ideal)  Geographical balance  Natural

  41. Slide 41: Strategic Plan 2016–2020: Goal #3

    Strategic Plan Strategic Plan 2016 – 2020: Goal #3 3 Achieve Revenues > 1,000M€ in a recovered market situation External  Market volume similar to 2013/2014 Issues  Market prices slightly recovered  Stable and low nickel price (although a bit above current ones) USD  Parity = 2015  Operational

  42. Slide 42: Strategic Plan 2016–2020: Goal #4

    Strategic Plan Strategic Plan 2016 – 2020: Goal #4 4 Achieve an excellence level silver Q for management quality in EFQM model, with all the results above 50% both in internal and external audit Analyst Presentation 2016 42

  43. Slide 43: Strategic Plan 2016–2020: Financial Objectives

    Strategic Plan Strategic Plan 2016 – 2020: Financial Objectives Revenues 1,000 M € EBITDA Margin 15% NFD /EBITDA 2-3x Net Working Capital / Sales 35% INTERNAL PROJECTS EXTERNAL PROJECTS  Commercial positioning  Development of testing capabilities (EIC)  TSS- full development of global logistics 

  44. Slide 44: Stock Exchange

    5 STOCK EXCHANGE

  45. Slide 45: Stock price evolution

    Tubacex Share Stock price evolution +7.3% +45.6% +34% -43.5% 09.18.2014 04.26.2016 4.33€ 12.31.2015 2.38€ 1.75€ 12.31.2013 12.31.2014 2.89€ 3.10€ Dec. 2012 01.20.2016 07.15.2016 1.985€ 1.41€ 2.35 Better performance of the share after significant drop in 2015 Data as of 20 July 2016 Analyst Presentat

  46. Slide 46: Share Evolution

    Tubacex Share Share Evolution Evolution since June 2014 Evolution since 2013 +18% -37% -45% -43% Tubacex Comparable index Tubacex Comparable index Since the start of the oil crisis, Tubacex performance has Since the start of the new Strategic Plan, the value of been the best in the sector Tubacex sh

  47. Slide 47: Liquidity

    Tubacex Share Liquidity Traded securities (million securities) Traded securities (million securities) +5% 200 170,6 120 162,0 101,0 160 99,2 100 Bagoeta’s exit 120 108,1 80 75,6 60 55,3 80 43,7 42,1 40 23,3 40 20 0 0 2012 2013 2014 2015 H1 2012 H1 2013 H1 2014 H1 2015 H1 2016 Improvement of traded v

  48. Slide 48: Other key matters

    Tubacex Share Other key matters Relationship with Investors Shareholder Structure Stable core of shareholders JM Aristrain 11,0% committed to the long-term project Cartera Industrial Rea 7,0% Only change in significant Ecofin 4,9% shareholders: increase of Cartera Norges Bank* 4,1% Industrial Rea’s

  49. Slide 49: Thank you!

    THANK YOU! WWW.TUBACEX.COM WWW.TUBACEX.COM Analyst Presentation 2016 49

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