Arcelormittal South Africa Limited · JSE:ACL
Arcelormittal South Africa — FY2020 Earnings Presentation
31 slides from Arcelormittal South Africa's earnings presentation, March 2021
Slide 1: Financial Results
Financial Results For the year ended 31 December 2020
Slide 2: Disclaimer
Disclaimer Forward-looking statements This presentation includes forward-looking information and statements about ArcelorMittal South Africa and its subsidiaries that express or imply expectations of future events or results. Forward-looking statements are not historical facts. These statements incl
Slide 3: Agenda
AGENDA Overview Operations and Market Financial Review and Sustainability and Growth Conclusion and Outlook Review Capital Allocation Kobus Verster Kobus Verster Desmond Maharaj Kobus Verster Kobus Verster
Slide 4: Key messages and salient feature
Key messages and salient feature Kobus Verster
Slide 5: Overview and salient features
Overview and salient features R669 FULL YEAR EBITDA LOWER RAW MATERIAL STRUCTURAL FIXED R1 467 POSITIVE FREE 10% 33% million PROFITABILITY BASKET* COST REDUCTION million CASH FLOW 2020: R37 million (RMB) 2020: R5 066 million 2020: R117 million 2019: - R632 million 2019: R7 597 million 2019: - R1 350
Slide 6: Safety
Safety • Safety remains number one priority • Adopted proactive response to the pandemic • Employee communication campaign • World Health Organisation (WHO) and the South African Government guidelines implemented - strict hygiene and PPE practices; remote working becoming the norm • Gratefully ackno
Slide 7: Market and operational review
Market and operational review Kobus Verster
Slide 8: Managing through the pandemic
Managing through the pandemic • Rapid response • Long steel supply: Vereeniging electric arc furnace to continue operations • Adapting operations to keep employees and service providers safe • Accelerated implementation of strategic initiatives to achieve long-term • Fundamentally resizing cost stru
Slide 9: Steel environment - Global
Steel environment - Global PRODUCTION Global crude steel production (million tonnes) • Global crude steel production flat against 2019 at 1,8 billion tonnes 952 928 • China’s crude steel production increased to 1,1 billion tonnes; market share up from 54% to 58% 909 916 880 876 • Since Q2 2020 China
Slide 10: Steel environment - South Africa
Steel environment - South Africa • 2020 Real GDP anticipated to reduce by 8% Total Apparent Steel Consumption (ASC) (‘000 tonnes) • 20% fall in apparent steel consumption (ASC) to 3,7 million tonnes 3 000 35 • Steel imports increased by 4% to 937 000 tonnes (2019: 899 000 2 568 tonnes) 2 500 2 408 2
Slide 11: Steel environment - ArcelorMittal South Africa
Steel environment - ArcelorMittal South Africa VOLUMES Sales and production volumes (‘000 tonnes) • 48% reduction in liquid steel production to 2,3 million tonnes 3 000 • 47% reduction in sales volumes to 2,2 million tonnes • 37% excluding loss-making Saldanha Works volumes 2 500 2 366 2 147 2 110 2
Slide 12: Operating environment - Flat steel
Operating environment - Flat steel • Lower production and sales Flat steel product sales and production volumes (‘000 tonnes) • Loss-making Saldanha Works and Tin volumes removed 2 000 • Economic lockdown 1 616 • Rail and electricity supply disruptions 1 506 1 489 1 482 1 500 1 410 • 28% lower liqui
Slide 13: Operating environment - Long steel
Operating environment - Long steel • Lower production and sales Long steel product sales and production volumes (‘000 tonnes) • Strategic footprint adjustment 900 • Lower exports targeted 800 750 752 • Economic lockdown 701 700 641 643 621 • Blast furnace operational performance 600 • 49% lower liqu
Slide 14: Operating environment - Coke operations
Operating environment - Coke operations • 48% increase in commercial market coke production to 282 000 Coke & Chemical sales and production volumes (‘000 tonnes) tonnes (2019: 191 000 tonnes) 200 • 101% increase in sales volumes to 305 000 tonnes 185 (2019: 152 000 tonnes) • Resilient commercial mar
Slide 15: Financial review and capital allocation
Financial review and capital allocation Desmond Maharaj
Slide 16: Financial results - Financial performance
Financial results - Financial performance ArcelorMittal South Africa – EBITDA bridge (Rm) 37 303 -632 1 543 2 462 1 669 921 1 052 1 079 2 954 2 390 EBITDA Sales volume Sales price Exchange rate Exchange rate Raw material Other cost Fixed cost BTP Savings Stock variance EBITDA 2019 & mix Price cost p
Slide 17: Financial results - Net borrowings
Financial results - Net borrowings • R1 896 million of cash released by reduction in working capital levels • Inventories decreased by R1 555 million • Free Cash Flow positive at R117 million (2019: -R1 350 million) Net borrowings bridge (Rm) +117 269 509 28 1 896 -3 253 585 -3 370 1 029 -3 838 Net
Slide 18: Financial results - Capital allocation
Financial results - Capital allocation CAPITAL ALLOCATION (Rm) Spend per category 2020 2020 2019 Mill Rolls Vanderbijlpark 313 859 Maintenance R84 million Newcastle 70 150 R212 million Saldanha 4 153 Vereeniging 5 19 Coke operations, Corporate & other 14 23 Total 406 1 204 Expansion R32 million Envi
Slide 19: Transform for sustainability and growth
Transform for sustainability and growth Kobus Verster
Slide 20: Sustainability and growth
Sustainability and growth Business Other corporate transactions Transformation Programme (BTP) Raw materials • Disposal of iron ore interest and the conclusion of supply agreement 2021 • Phase 2 beneficiation of discard material planned at Thabazimbi mine • Focus of 2021: Further diversify raw mater
Slide 21: Conclusion
ArcelorMittal Conclusion Kobus Verster
Slide 22: Outlook – H1 2021
Outlook – H1 2021 • Increased infection rate continue to pose a risk • Continued focus on health and wellbeing of employees • Strong international steel prices expected to remain in the near-term • Benefits of cost savings and asset footprint adjustments to be sustained • Improved performance from H
Slide 23: Appendix
ArcelorMittal Appendix
Slide 24: Headline earnings (Rm)
Headline earnings (Rm) 2020 FY 2019 FY Revenue 2020 2019 per quarter Revenue 24 643 41 353 Q1 8 011 10 627 EBITDA and exceptional items (368) (1 529) Q2 4 003 11 116 Depreciation and amortisation (556) (830) Q3 6 764 10 602 Loss from operations (924) (2 359) Q4 5 865 9 008 Reclassification of foreig
Slide 25: Statement of financial position (Rm)
Statement of financial position (Rm) 2020 2019 2020 2019 Non-current assets 9 333 9 794 Shareholders Equity 2 130 4 477 Property, plant and equipment 7 675 7 966 Stated Capital 4 537 4 537 Investment properties 983 1 080 Non-distributable reserves (3 976) (3 568) Intangible assets 72 70 Retained inc
Slide 26: Cash flow (Rm)
Cash flow (Rm) 2020 2019 Movement in Working Capital * 2020 2019 Cash (utilised in)/generated from operations before Inventories 1 555 3 415 (1 029) (1 366) movement in working capital Receivables 1 196 1 208 Movement in Working capital * 1 896 1 609 Payables (614) (2 876) Cash generated from operat
Slide 27: Reconciliation of loss from operations to EBITDA
Financial results - Reconciliation of loss from operations to earnings before interest, tax, depreciation and amortization (Rm) 2020 2019 Loss from operations (924) (2 359) Adjusted for: Depreciation 546 819 Amortisation of intangible assets 10 11 Saldanha Works wind-down cost 396 Restructuring cost
Slide 28: Divisional EBITDA (Rm)
Divisional EBITDA (Rm) 2020 2019 Flat steel products (Rm) 414 (574) EBITDA margin % 2,6 (2,1) Net realised price R/t 10 275 9 620 Long steel products (Rm) (683) (369) EBITDA margin % (7,8) (2,5) Net realised price R/t 9 162 8 598 Coke and Chemicals (Rm) 295 250 EBITDA Margin % 15,4 19,1 Corporate an
Slide 29: Our value creation model
Our value creation model Inputs Our working business model Outputs and outcomes We produce iron and steel, commercial coke and Natural capital useful by-products, in processes that sustain hundreds of thousands of jobs. Financial capital Raw materials consumed (kilotonne) Shareholders, investors, em
Slide 30: Socio-economic footprint
Socio-economic footprint The Thusong Projects Soup kitchen, located in Vanderbijlpark, Sponsorship to Lusa Community Chest for Xmas YES Learners who completed their 12- continues to provide nutritious meals to less fortunate community program - Wish Upon A Star - to purchase gifts and month training
Slide 31: Thank you
Thank you ArcelorMittal South Africa Limited Room N3-5 Main Building Delfos Boulevard Vanderbijlpark,1911 South Africa www.arcelormittal.com/southafrica/
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