Arcelormittal South Africa Limited · JSE:ACL
Arcelormittal South Africa — FY2012 Earnings Presentation
30 slides from Arcelormittal South Africa's earnings presentation, December 2012
Slide 1: Financial results for the year ended December 2012
www.arcelormittalsa.com Financial results for the year ended December 2012
Slide 2: Overview
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Slide 3: Safety - Journey to Zero
Safety - Journey to Zero OVERVIEW Unit 2011 2012 Comments 5 LTIFR LTIFR AMSA 1.24 0.61 No fatalities 4 Vdbp 1.41 0.31 New record at 107 3 days Saldanha 0.26 1.12 Completed 370 LTI- 2 free days Newcastle 0.94 0.71 Best ever performance 1 Vereeniging 1.63 0.78 Solid performance 0 2002 2003 2004 2005 2
Slide 4: Overview
Overview OVERVIEW Net result of lower steel and C&C EBITDA Headline loss of R518m (2011 = loss of R52m) (YoY change) R 400 EBITDA of R1 121m (2011 = R1 720m) and margin 4% (6%) R 200 R 361 Steel prices in dollar declined on average by 7% and 3% but increased in rand by 5% and 10% respectively R 0 fo
Slide 5: Key result drivers
Key result drivers OVERVIEW Q4 2012 vs Q4 2011 2012 vs 2011 Flat steel product prices in Rand -3% 5% Long steel product prices in Rand -6% 10% Liquid steel production -13% -7% Total sales volume 0% -2% Domestic sales volume -4% -5% Export sales volume 9% 7% HRC Rand cash cost per tonne 6% 5% Billet
Slide 6: Steel market overview
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Slide 7: Global economy
Global economy STEEL MARKET OVERVIEW Year on Year Growth (%) USA China Euro Zone RSA Global GDP 2011 1.8% 9.2% 1.4% 3.5% 3.8% GDP 2012 2.2% 7.5% -0.4% 2.6% 2.3% 2011 Steel Production (mt) 86mt 695mt 177mt 7.5mt 1 500mt Growth % 7.1% 8.9% 2.8% -1.3% 6.8% 2011 Steel Consumption (mt) 89.1mt 624mt 153mt
Slide 8: Global environment – raw material prices
Global environment – raw material prices STEEL MARKET OVERVIEW $1 400 90% 80% $1 200 70% $1 000 60% $ 800 50% $ 600 40% 30% $ 400 20% $ 200 10% $0 0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 Scrap Iron ore Coal HRC price % available for other costs & margin Sources: AME, AMS and TEX Report Globa
Slide 9: Electricity costs
Electricity costs STEEL MARKET OVERVIEW ArcelorMittal South Africa Eskom’s pricing structure increased by R 45 000 R 2 500 21% pa over past 6yrs • Tariff 18% pa R 40 000 • Fixed distribution and admin charge R 35 000 R 2 000 22% pa R 30 000 • Environmental levy 29% pa since 2009 R 1 500 R 25 000 R 2
Slide 10: Total domestic market – shipments (000t)
Total domestic market – shipments (000t) STEEL MARKET OVERVIEW CAGR over 20 year period Flat 0.6% pa 3000 Long 1.8% pa 2500 2000 1500 1000 500 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Long Flat Source : SAISI actuals up to 2008, there
Slide 11: Domestic market – consumption by major sector (000t)
Domestic market – consumption by major sector (000t) STEEL MARKET OVERVIEW 3.9mt 4.8mt 4.5mt 5.9mt 5.8mt 5.9mt 4.3mt 4.9mt 5.2mt 4.9mt 7000 6000 7% 7% 6% 13% 11% 5000 12% 15% 10% 18% 8% 8% 15% 9% 20% 15% 10% 4000 13% 12% 11% 10% 13% 15% 14% 12% 14% 14% 15% 8% 3000 9% 14% 2000 64% 65% 65% 65% 67% 67%
Slide 12: Domestic market – inventory levels (000t)
Domestic market – inventory levels (000t) STEEL MARKET OVERVIEW 1100 16 1000 14 900 800 12 700 10 600 8 500 400 6 300 4 200 2 100 0 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Stocks Available stocks (weeks) Source : SAISI actuals up to
Slide 13: Operating results
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Slide 14: Steel products
Steel products Shipment volume (000t) OPERATING RESULTS 7000 100% 76% 86% 90% 6000 364 75% 80% 68% 72% 5000 69% 137 70% 1535 615 245 371 1540 621 60% 4000 1078 1039 1113 1033 994 50% 3000 577 1012 956 40% 915 780 2000 30% 2887 2835 20% 2336 2469 2223 1000 2078 10% 0 0% 2007 2008 2009 2010 2011 2012
Slide 15: Commercial coke
Commercial coke Shipment and import volumes compared to South African FeCr production (000t) OPERATING RESULTS 995 1000 4000 900 3 226 3 360 3 488 813 3500 3 139 800 3000 700 2 537 2 317 630 631 600 2500 500 460 2000 433 389 400 400 372 327 1500 300 263 1000 200 100 500 55 0 0 2007 2008 2009 2010 20
Slide 16: Environmental investment program
Environmental investment program OPERATING RESULTS 2007 2008 2009 2010 2011 2012 2013 Environmental R123m R221m R293m R331m R79m R128m R430m(e) Large projects • Waste • Upgrade of • Maturation • Remed of • Newcastle de- • Vdbp coal • Coke oven Disposal Site WDS ponds VDBP Dam 10 sulphur water batter
Slide 17: Finance
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Slide 18: Headline earnings (Rm)
Headline earnings (Rm) FINANCE 2011 2012 • Higher sales prices increased revenue Revenue 31 453 32 291 marginally EBITDA 1 720 1 121 • Accelerated depreciation on the EAF’s Depreciation -1 423 -1 598 and caster Profits / (loss) from operations 297 -477 • Net financing cost higher due to lower Net fi
Slide 19: EBITDA from segments (Rm)
EBITDA from segments (Rm) FINANCE 2011 2012 • Weaker performance driven by 2% Flat steel products 597 -266 decrease in sales Long steel products 500 770 • Flat products shipments decreased by 8% and long products increased by MCC 870 503 16% Corporate and other -247 114 • Sales prices in rand terms
Slide 20: Main steel cost drivers (R/t crude steel)
Main steel cost drivers (R/t crude steel) FINANCE % • Iron ore cost increased by 20% driven by 2011 2012 change Thabazimbi (+19%) as result of reduced Iron ore & pellets 949 1 142 20% volumes Scrap / DRI / HBI 328 199 -39% • Iron ore costs relating to Sishen Coking coal & other fuels 1 468 1 611 10%
Slide 21: Cash flow (Rm)
Cash flow (Rm) FINANCE 2011 2012 • Cash outflows consist of: Cash generated from operations 2 045 1 316 – R875m capital expenditure Working capital -2 813 695 Capex -1 190 -875 – R170m financing costs Interest & investment income 81 100 – R52m tax payments Finance cost -103 -170 – R366m relating to
Slide 22: Working capital movement (Rm)
Working capital movement (Rm) FINANCE 2011 2012 • Net working capital reduced by R695m Inventories -2 624 1 117 – R1 100m reduction in inventories of Finished products -112 -62 which R1 400m relates to lower volumes Work-in-progress -1 721 526 offset by a R300m price impact Raw materials -755 678 –
Slide 23: Financial ratios
Financial ratios FINANCE 2011 2012 • Both operating and EBITDA margins Operating margin 0.9% -1.5% reflect the poor trading conditions EBITDA margin 5.5% 3.5% • Return on equity dropped to negative 2.3% Revenue / invested capital (times) 1.2 1.2 • Net cash to equity ratio improved from Return on equ
Slide 24: Quarterly headline earnings and EBITDA trends (Rm)
Quarterly headline earnings and EBITDA trends (Rm) FINANCE Headline earnings EBITDA 5300 Variable Q3 2012 Q4 2012 4300 Liquid steel production volumes 1 320 000t 1 043 000t 3300 Local steel sales • Volume 802 000t 696 000t • NRP change -R121/t -R52/t 2300 Export steel sales 1300 • Volume 295 000t 29
Slide 25: Other key issues
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Slide 26: Other key issues
Other key issues OTHER KEY ISSUES Sishen arbitration Anti-trust matters Environmental compliance notices Click to edit Master text Financial Results for the year ended December 2012 26
Slide 27: Other key issues
Other key issues OTHER KEY ISSUES Sedibeng West District matric pass rate in 2012 rose 7% to 79% R40m Nelson Mandela Primary school in Mthata to be handed over in second quarter 2013 Since 2009, 44 new houses built in Orange Farm benefiting more than 264 people: 18 houses built in 2012 R9m TB/ARV we
Slide 28: Outlook
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Slide 29: Outlook for Q1'13
Outlook for Q1’13 OVERVIEW • Business environment – Domestic sales expected to improve – Improving environment for international steel prices – Increased production volumes after successful repairs at Vanderbiljpark and Newcastle • Earnings – Turnaround from lossmaking to breakeven position – Impact
Slide 30: Questions
www.arcelormittalsa.com Questions Financial results for the year ended December 2012
ArcelorMittal South Africa — FY2012 Earnings Presentation on 6ix