Vulcan Steel Ltd. · ASX:VSL
Vulcan Steel — Investor Presentation (February 2024)
35 slides from Vulcan Steel's investor presentation, Feb 13, 2024
Slide 1: Investor Presentation 1H FY24
INVESTOR PRESENTATION 1H FY24
Slide 2: Disclaimer
VULCAN INVESTOR PRESENTATION 1H FY24 VULCAN.CO Disclaimer The material contained in this document is a presentation They may also be based on factors which are subject to of information about Vulcan Steel Limited’s (“Vulcan”) significant uncertainties and contingencies which may activities current a
Slide 3: Agenda
VULCAN INVESTOR PRESENTATION IH FY24 VULCAN.CO Agenda 01 OVERVIEW It has been a busy first half of FY24 at Vulcan, as our team continues to diligently integrate our aluminium business, 02 FINANCIALS AND OPERATIONS concurrently enhancing many facets of our operations in the Group. Despite the challen
Slide 4: Overview
VULCAN INVESTOR PRESENTATION IH FY24 VULCAN.CO 01 Overview 4
Slide 5: Performance highlights
VULCAN INVESTOR PRESENTATION IH FY24 VULCAN.CO Performance highlights REVENUE 1 GROSS PROFIT $/TONNE 1 GROSS MARGIN NZ$564m -6.8% 35.4% 2 -12% on NZ$638m in 1H FY23 1H FY24 on 1H FY23 -0.5% vs 35.9% in 1H FY23 ADJUSTED EBITDA1,3 ADJUSTED NPAT 5 (EXCLUDING SIGNIFICANT ITEMS 4) (EXCLUDING SIGNIFICANT
Slide 6: Vulcan’s business
VULCAN INVESTOR PRESENTATION 1H FY24 VULCAN.CO Vulcan’s business Vulcan aims to be the most customer focused distributor and value-added processor of steel and metal products in the Australasian market STEEL METALS STEEL DISTRIBUTION PLATE PROCESSING COIL PROCESSING STAINLESS STEEL ENGINEERING STEEL
Slide 7: Value creation & growth strategy
VULCAN INVESTOR PRESENTATION 1H FY24 VULCAN.CO Value creation & growth strategy • Overriding principle - Provide a service proposition that adds value to customers and that is also accretive to Vulcan shareholder value • Approach to value capture - Greenfield and brownfield initiatives as well as di
Slide 8: Vulcan’s network
VULCAN INVESTOR PRESENTATION IH FY24 VULCAN.CO Vulcan’s network Opportunity to drive more operating leverage from our footprint and scale 69 STRATEGICALLY LOCATED SITES 1,283 COMPANY EMPLOYEES 1 DARWIN CAIRNS TOWNSVILLE x 2 WHANG ARE I x 2 MACKAY x 2 AU C K L AND x 5 S I L VE RDAL E ROCKHAMPTO N TAU
Slide 9: Business implementation update
VULCAN INVESTOR PRESENTATION 1H FY24 VULCAN.CO Business implementation update • Priorities for FY24 - Continue to embed Vulcan’s business model, service mindset and culture in the company’s aluminium business - Execute on hybrid site optionalities • Bathurst, Darwin, Auckland launched • On track to
Slide 10: Financials & operations
VULCAN INVESTOR PRESENTATION IH FY24 VULCAN.CO 02 Financials & operations 10
Slide 11: Operating backdrop during 1H FY24
VULCAN INVESTOR PRESENTATION 1H FY24 VULCAN.CO Operating backdrop during 1H FY24 • Businesses continue to adjust to the restrictive interest rate environment in both Australia and New Zealand - Trading conditions weakened in 1H FY24 compared with 1H FY23 and also 2H FY23 - Destocking activity among
Slide 12: Global sector indicators
VULCAN INVESTOR PRESENTATION 1H FY24 VULCAN.CO Global sector indicators World steel demand growth is forecast Steel production in 2H of CY23 was 2.0% ahead of to remain modest for CY24 2H CY22 with utilisation rate estimated at 75% GLOBAL STEEL DEMAND FORECAST (m tonnes) 1 WORLD MONTHLY CRUDE STEEL
Slide 13: Steel, stainless, nickel, aluminium & freight prices
VULCAN INVESTOR PRESENTATION 1H FY24 VULCAN.CO Steel, stainless, nickel, aluminium & freight prices HRC price has been range-bound in 2H CY23 Nickel price re-established past correlation to stainless steel price HOT ROLLED COIL PRICE (East Asia, FOB, $/tonne) NICKEL & STAINLESS STEEL PRICE 2 1600 60
Slide 14: Australian and New Zealand economic trends
VULCAN INVESTOR PRESENTATION 1H FY24 VULCAN.CO Australian and New Zealand economic trends Australian economic activity New Zealand economic activity AU QUARTERLY ECONOMIC GROWTH 1 NZ QUARTERLY ECONOMIC GROWTH 3 (seasonally adjusted, %) (seasonally adjusted, %) 7 15.0 6 12.5 5 10.0 4 3 7.5 2 5.0 1 2.
Slide 15: Australian and New Zealand building activity
VULCAN INVESTOR PRESENTATION 1H FY24 VULCAN.CO Australian and New Zealand building activity Australian building activity New Zealand building activity AU CONSTRUCTION ACTIVITY - VALUE 1 NZ QUARTERLY BUILDING ACTIVITY VALUE 3 (seasonally adjusted, A$m) (seasonally adjusted, NZ$m) 45000 10000 40000 90
Slide 16: Group financial performance
VULCAN INVESTOR PRESENTATION 1H FY24 VULCAN.CO Group financial performance • Overall revenue decline of 12% YoY in 1H FY24 was due to a 6% YoY NZ$m 1H FY24 1H FY23 % change fall in volume and 5% YoY reduction in revenue per tonne Revenue 564.0 638.0 -11.6% Adjusted EBITDA 1,4 81.8 116.6 -29.8% - Act
Slide 17: Half-yearly volume and financial trends
VULCAN INVESTOR PRESENTATION 1H FY24 VULCAN.CO Half-yearly volume and financial trends REVENUE (NZ$m) TOTAL SALES VOLUME (tonnes per day) 700 1400 440 440 600 410 1200 429 500 250 1000 160 400 800 160 300 600 200 400 100 200 0 0 1H FY21 2H FY21 1H FY22 2H FY22 1H FY23 2H FY23 1H FY24 1H FY21 2H FY21
Slide 18: Key drivers of EBITDA change
VULCAN INVESTOR PRESENTATION 1H FY24 VULCAN.CO Key drivers of EBITDA change • Lower sales volume led to NZ$15m YoY decline in 1H FY24 EBITDA, noting this included an additional month of volume for aluminium compared with five months of ownership in the previous corresponding period (pcp) • A decline
Slide 19: Steel segment, Steel GP$/tonne
VULCAN INVESTOR PRESENTATION 1H FY24 VULCAN.CO Steel segment, Steel GP$/tonne • Revenue decline of 20% YoY in 1H FY24 was driven by 11% YoY falls in Steel, NZ$m 1H FY24 1H FY23 % change volume and revenue per tonne, respectively Revenue 252.3 316.5 -20.3% EBITDA 1,2 37.8 62.1 -39.2% - New Zealand co
Slide 20: Metals segment
VULCAN INVESTOR PRESENTATION 1H FY24 VULCAN.CO Metals segment • Revenue decrease of 3% YoY in 1H FY24 was driven by 5% higher Metals, NZ$m 1H FY24 1H FY23 % change volume offset by 8% lower revenue per tonne Revenue 311.7 321.4 -3.0% EBITDA 1,2,3 53.0 65.0 -18.5% - Aluminum had only five months of c
Slide 21: Group OPEX
VULCAN INVESTOR PRESENTATION 1H FY24 VULCAN.CO Group OPEX • Group OPEX excluding depreciation & amortisation OPEX, NZ$m 1H FY24 1H FY23 % change (“Group OPEX”) increased by NZ$5m (5%) YoY in 1H FY24 Employee benefits 71.5 70.4 1.6% - Group OPEX was approximately NZ$6m higher in 1H FY24 Selling & dis
Slide 22: Cashflow & working capital
VULCAN INVESTOR PRESENTATION 1H FY24 VULCAN.CO Cashflow & working capital • Strong cash flow generation was driven by a disciplined approach NZ$m 1H FY24 1H FY23 % change to managing working capital Receipts from customers 591.1 681.6 -13.3% - Inventory level further reduced by NZ$59m in 1H FY24 Pay
Slide 23: Balance sheet metrics & dividend
VULCAN INVESTOR PRESENTATION 1H FY24 VULCAN.CO Balance sheet metrics & dividend • Vulcan remains financially well-positioned to execute on growth NET DEBT COVER (Net debt/EBITDA, pre NZ IFRS 16) 3.0 opportunities 2.5 - Optimising between the return of funds to shareholders and 2.1 1.9 1.9 investing
Slide 24: Outlook
VULCAN INVESTOR PRESENTATION IH FY24 VULCAN.CO 03 Outlook 24
Slide 25: Outlook
VULCAN INVESTOR PRESENTATION 1H FY24 VULCAN.CO Outlook • Trading was variable in the first six months of the current financial year with some weakness observed in the December quarter, especially in the NZ market and the Steel segment in Australia as foreshadowed at our ASM in November 2023. • Sales
Slide 26: Q&A
VULCAN INVESTOR PRESENTATION IH FY24 VULCAN.CO 04 Q&A 26
Slide 27: Supplementary information
VULCAN INVESTOR PRESENTATION IH FY24 VULCAN.CO 05 Supplementary information 27
Slide 28: Profit and loss segment disclosure
VULCAN INVESTOR PRESENTATION 1H FY24 VULCAN.CO Profit and loss segment disclosure Steel Metal Corporate Total Post NZ IFRS 161, NZ$m 1H FY24 1H FY23 % change 1H FY24 1H FY23 % change 1H FY24 1H FY23 % change 1H FY24 1H FY23 % change Revenue 252.3 316.5 -20.3% 311.7 321.4 -3.0% 0.0 0.0 - 564.0 638.0
Slide 29: Statutory and non-GAAP earnings
VULCAN INVESTOR PRESENTATION 1H FY24 VULCAN.CO Statutory and non-GAAP earnings Revenue EBITDA EBIT NPAT EPS (NZ cents) 1H FY24 1H FY23 1H FY24 1H FY23 1H FY24 1H FY23 1H FY24 1H FY23 1H FY24 1H FY23 NZ$m (unless stated) Statutory basis 564.0 638.0 81.8 115.1 59.1 94.1 26.1 54.4 19.9 41.4 + Integrati
Slide 30: Balance sheet
VULCAN INVESTOR PRESENTATION 1H FY24 VULCAN.CO Balance sheet NZ$m 30 Dec 23 30 Jun 23 % change Trade and other receivables 141.3 170.7 -17.2% Inventories 378.7 437.7 -13.5% Less trade and other payables -144.6 -166.9 -13.4% Working capital excluding tax items 375.4 441.5 -15.0% Property, plant and e
Slide 31: Vulcan’s business model at a glance
VULCAN INVESTOR PRESENTATION 1H FY24 VULCAN.CO Vulcan’s business model at a glance... O U T CO M E Accountable profit centres 97% Delivery in full, on time E N ABL E RS Internally developed fit-for-purpose IT Flat Structure O P E RAT I O NA L EX C EL L ENC E Inventory Management Processing Capabilit
Slide 32: Growth strategy
VULCAN INVESTOR PRESENTATION 1H FY24 VULCAN.CO Growth strategy Expansion of Business Brownfield Entry into new product and/or Mergers and improvement expansion geographies service offering Acquisitions initiatives • Strong track record in • Expanded into 10 regional • Increasing the breadth • Acquir
Slide 33: Operational footprint
VULCAN INVESTOR PRESENTATION 1H FY24 VULCAN.CO Operational footprint New Zealand Australia Steel National footprint Competes selectively1 Plate Processing National footprint Competes selectively1 Coil Processing National footprint Competes selectively1 Stainless Steel National footprint National foo
Slide 34: Vulcan’s environment & sustainability update
VULCAN INVESTOR PRESENTATION 1H FY24 VULCAN.CO Vulcan’s environment & sustainability update Health & Safety Environment • Committed to providing a safe and healthy work environment • Scope 1 and 2 greenhouse gas (GHG) emissions for pre-existing businesses was 737 • Trialling Inviol artificial intell
Slide 35: VULCAN.CO
VULCAN. VULCAN -cOo