Slide 1: Financial Results Half year ended 31 December 2016
For personal use only Financial Results Half year ended 31 December 2016 15 February 2017
Slide 2: Agenda
Agenda For personal use only Results Overview Galdino Claro, Group CEO Financial Results Fred Knechtel, Group CFO Strategic Progress & Outlook Galdino Claro, Group CEO Inspecting the metal shredder in Kwinana, Western Australia 2
Slide 3: Business improvements driving higher earnings
Business improvements driving higher earnings For personal use only Continued improvement in 1H FY17 earnings and return on capital Underlying EBIT of $77 million Underlying NPAT of $60 million Underlying Return on Capital of 6.8%1 Strategic initiatives on track to deliver on FY18 return targets Sal
Slide 4: 1H FY17 highlights
1H FY17 highlights For personal use only Sales Revenue Sales Volumes $2,385 million 4.36 million tonnes 1H FY16 2H FY16 1H 4.30 1H FY16 million | 2H 4.25 million 2H FY16 $2,412 million $2,240 million 4.30 million 4.25 million Underlying1 EBITDA Net Cash $133 million $311 million (31 Dec 2016) 1H$61
Slide 5: Higher earnings delivered on lower volumes
Higher earnings delivered on lower volumes For personal use only Underlying EBIT by Quarter 1Q FY17 Ferrous prices and volumes fell 24% and 11% respectively over 4Q FY16 70 2.6 Underlying EBIT decrease relates to lower 60 volumes 2.4 50 Gains from streamline actions drove a 2.2 material improvement
Slide 6: Financial Results
For personal use only Financial Results Fred Knechtel, Group CFO 6
Slide 7: Group financial performance
Group financial performance For personal use only A$m 1H FY16 2H FY16 1H FY17 Sales revenue was 6% above 2H FY16 due to higher volumes and non-ferrous prices Sales revenue 2,412.2 2,239.5 2,384.7 Statutory EBITDA (11.0) 94.0 153.3 Underlying EBITDA up 8% over 2H FY16 due to streamline actions, highe
Slide 8: Business segment financial performance
Business segment financial performance For personal use only Underlying EBIT (A$m) 1H FY16 2H FY16 1H FY17 North America Metals underlying EBIT of $31 million North America Metals (23.1) 25.4 30.7 - Earnings improvement in each sub-region ANZ Metals 14.0 25.7 25.9 Europe Metals 2.1 16.5 15.8 ANZ Met
Slide 9: Substantially reduced volume break-even point
Substantially reduced volume break-even point For personal use only Volume break even reduction Sales volume break-even point further lowered to 7.0 million, improving business stability and increasing earnings leverage to 11.9 higher future sale volume conditions 12 41% reduction in Break-even sale
Slide 10: Cash flow from earnings driving strong free cash flow
Cash flow from earnings driving strong free cash flow For personal use only A$m 1H FY16 2H FY16 1H FY17 Operating cash flow of $114 million driven by: Underlying EBITDA 61.4 123.0 132.9 - Higher underlying EBITDA Change in working capital 103.3 (111.0) 23.2 - $23 million working capital release Inte
Slide 11: Strategic Progress & Outlook
For personal use only Strategic Progress & Outlook Galdino Claro, Group CEO 11
Slide 12: Committed to deliver target 10% return on capital in FY18
Committed to deliver target 10% return on capital in FY18 For personal use only Grow Optimise Market share retention Adaptive market positioning to capitalise on growth markets Streamline Strengthen core drivers of Enter adjacent markets and profitability across: leverage competitive strengths 1) Su
Slide 13: Improving return on capital through internal actions
Improving return on capital through internal actions For personal use only 10.0% 10% 9% 8% 7% 6.8% Return on Capital 6% 5.5% 5% 4.6% 4% 3% 2.6% 2.3% 2% 1% 0% FY13 FY14 FY15 FY16 1H 1 target FY17 FY18 1) Underlying Return on Capital (ROC) is based on underlying effective tax rate of 30%, annualised b
Slide 14: Substantial pipeline of internal initiatives over FY17-FY18
Substantial pipeline of internal initiatives over FY17-FY18 For personal use only 1H FY17 2H FY17 FY18 Streamline Initiatives - Completion of asset sale in the central region - Closure of stainless steel operations - US e-recycling resetting Optimise Initiatives - Claremont terminal dredging - MRP i
Slide 15: Conclusion & outlook
Conclusion & outlook For personal use only 1H FY17 Highlights Completed sale and closure of underperforming non-core assets Volume break-even of 7.0 million tonnes, the lowest since the start of five-year strategic plan Underlying EBIT of $77 million, a turnaround from a $5 million loss in the prior
Slide 16: Appendix
For personal use only Appendix 16
Slide 17: Declining steel exports from China, lifting ferrous demand
Declining steel exports from China, lifting ferrous demand For personal use only China Steel Exports China’s exports of steel have been declining vs Ferrous Scrap Price since mid-2016 - China’s annual steel exports have fallen 8% since 12 400 July 2016 - Lower exports are supporting higher steel 11
Slide 18: Metal recycling industry beginning to rationalise
Metal recycling industry beginning to rationalise For personal use only US Industry-wide Over 160 reported closures of metals recycling 35 Metals Recycling Closures facilities since the start of 2015 30 # of facilities 25 20 Consolidation taking place through bankruptcies, 15 indefinite idling, cons
Slide 19: Group Profit & Loss
Group Profit & Loss For personal use only A$m 1H FY16 1H FY17 Chg % Sales revenue 2,412.2 2,384.7 (1.1) Statutory EBITDA (11.0) 153.3 NMF Underlying EBITDA 61.4 132.9 116.4 Statutory EBIT (249.3) 97.4 NMF Underlying EBIT (4.8) 77.0 NMF Net Interest expense (5.8) (5.0) 13.8 Statutory tax (expense)/be
Slide 20: North America Metals
North America Metals For personal use only A$m 1H FY16 1H FY17 Chg % Sales Revenue 1,235.6 1,111.0 (10.1) Statutory EBITDA (2.3) 81.4 NMF Underlying EBITDA 15.9 61.7 288.1 Depreciation 32.2 26.6 (17.4) Amortisation 6.8 4.4 (35.3) Statutory EBIT (167.2) 50.4 NMF Underlying EBIT (23.1) 30.7 NMF Assets
Slide 21: Australia & New Zealand Metals
Australia & New Zealand Metals For personal use only A$m 1H FY16 1H FY17 Chg % Sales Revenue 377.5 491.6 30.2 Statutory EBITDA 23.1 39.5 71.0 Underlying EBITDA 27.7 39.9 44.0 Depreciation 13.1 13.8 5.3 Amortisation 0.6 0.2 (66.7) Statutory EBIT 9.4 25.5 171.3 Underlying EBIT 14.0 25.9 85.0 Assets 47
Slide 22: Europe Metals
Europe Metals For personal use only A$m 1H FY16 1H FY17 Chg % Sales Revenue 372.3 414.9 11.4 Statutory EBITDA (40.5) 22.1 NMF Underlying EBITDA 9.2 22.1 140.2 Depreciation 7.1 6.3 (11.3) Amortisation 0.0 0.0 - Statutory EBIT (47.8) 15.8 NMF Underlying EBIT 2.1 15.8 652.4 Assets 218.7 256.0 17.1 Inta
Slide 23: Global E-Recycling
Global E-Recycling For personal use only A$m 1H FY16 1H FY17 Chg % Sales Revenue 426.8 353.9 (17.1) Statutory EBITDA 5.8 17.0 193.1 Underlying EBITDA 5.7 15.4 170.2 Depreciation 5.7 4.3 (24.6) Amortisation 0.3 0.0 (100.0) Statutory EBIT (46.2) 12.7 NMF Underlying EBIT (0.3) 11.1 NMF Assets 433.3 392
Slide 24: Corporate & Unallocated
Corporate & Unallocated For personal use only A$m 1H FY16 1H FY17 Chg % Sales Revenue 0.0 13.3 NMF Statutory EBITDA 2.9 (6.7) NMF Underlying EBITDA 2.9 (6.2) NMF Depreciation 0.4 0.3 (25.0) Amortisation 0.0 0.0 - Statutory EBIT 2.5 (7.0) NMF Underlying EBIT 2.5 (6.5) NMF Assets 348.9 270.7 (22.4) Em
Slide 25: 1H FY17 income tax expense considerations
1H FY17 income tax expense considerations For personal use only A$m Profit Before Tax Income Tax Expense Effective Tax % Statutory Result 92.4 12.4 13.4% Reconciling items: Deferred tax assets not recognized (0.4) Recognition of previously unrecognised tax 15.6 losses Underlying Results 27.6 29.9% 2
Slide 26: Significant items by region – 1H FY17
Significant items by region – 1H FY17 For personal use only NA ANZ Europe Global Pre-Tax After-Tax 1H FY17 (A$m) Unallocated Metals Metals Metals E-Recycling Total Total Reversal of fixed asset (0.9) - - (1.4) - (2.3) (1.8) impairment Gain on sale of property (24.3) - - - - (24.3) (24.3) Yard closur
Slide 27: Significant items by region – 1H FY16
Significant items by region – 1H FY16 For personal use only NA ANZ Europe Global Pre-Tax After-Tax 1H FY16 (A$m) Unallocated Metals Metals Metals E-Recycling Total Total Goodwill impairment - - 0.2 43.1 - 43.3 34.2 Other intangible asset 6.8 - - 2.9 - 9.7 8.6 impairment Impairment of investment in 1
Slide 28: Financial summary - Group
Financial summary - Group For personal use only A$m FY10 FY11 FY12 FY13 FY14 FY15 FY16 1H FY16 1H FY17 Group Results Sales Revenue 7,453 8,847 9,036 7,193 7,129 6,311 4,652 2,412 2,385 Underlying EBITDA 379 414 253 190 242 263 184 61 133 Underlying EBIT 235 283 123 67 119 142 58 -5 77 Underlying NPA
Slide 29: Financial summary – Segment
Financial summary – Segment For personal use only A$m FY10 FY11 FY12 FY13 FY14 FY15 FY16 1H FY16 1H FY17 Sales Revenue North America Metals 4,834 5,782 5,773 4,256 3,996 3,417 2,353 1,236 1,111 ANZ Metals 1,126 1,300 1,190 1,047 1,188 1,053 744 377 492 Europe Metals 783 954 1,056 935 1,063 1,037 759
Slide 30: Financial summary – Segment (cont.)
Financial summary – Segment (cont.) For personal use only A$m FY10 FY11 FY12 FY13 FY14 FY15 FY16 1H FY16 1H FY17 Sales tonnes (‘000) North America Metals 9,906 10,964 11,080 9,377 8,152 7,018 5,772 2,990 2,735 ANZ Metals 1,578 1,764 1,765 1,764 2,054 1,874 1,418 700 862 Europe Metals 1,394 1,466 1,6
Slide 31: Financial summary – Segment (cont.)
Financial summary – Segment (cont.) For personal use only A$m FY10 FY11 FY12 FY13 FY14 FY15 FY16 1H FY16 1H FY17 Sales tonnes (‘000) Ferrous Trading 9,068 10,115 10,320 9,396 9,331 8,325 6,768 3,361 3,505 Ferrous Brokerage 3,264 3,518 3,597 2,840 1,918 1,617 1,307 688 628 Non Ferrous 565 571 586 550
Slide 32: Metals Recycling global footprint
Metals Recycling global footprint For personal use only Europe Metals North America Metals Australia & New Zealand Metals Australia New Zealand Metal Shredder / Key Metals Recycling facility Metal Shredder (50% JV owned) 32
Slide 33: Electronics Recycling global footprint
Electronics Recycling global footprint For personal use only Europe, Africa, and Middle East UAE Europe North America South Africa United States Asia Pacific India Singapore Australia New Zealand Electronics Recycling facility 33
Slide 34: Disclaimer
Disclaimer For personal use only The material contained in this document is a presentation of information about the Group’s activities current at the date of the presentation, 15 February 2017. It is provided in summary form and does not purport to be complete. It should be read in conjunction with