Nlmk · RUS:NLMK
Nlmk — Merger or Acquisition (April 2011)
23 slides from Nlmk's merger presentation, Apr 20, 2011
Slide 1: Acquisition of the Rolling Assets in Steel Invest and Finance
NLMK CORPORATE PRESENTATION ACQUISITION OF THE ROLLING ASSETS IN STEEL INVEST AND FINANCE 20 April 2011
Slide 2: Disclaimer
DISCLAIMER This document is confidential and has been prepared by NLMK (the “Company”) solely for use at the investor presentation of the Company and may not be reproduced, retransmitted or further distributed to any other person or published, in whole or in part, for any other purpose. This documen
Slide 3: Agenda
1. Transaction details 2. Integration with NLMK 3. SIF overview 4. Market situation 3
Slide 4: Transaction Details
TRANSACTION DETAILS • Acquisition of a 50% interest in Steel Invest and Finance (SIF) from Duferco Group for an all cash consideration of c.US$600m, payable in four equal annual installments. The transaction will result in SIF becoming a 100% subsidiary of NLMK • Upon closure of the deal SIF will tr
Slide 5: Transaction Rationale
TRANSACTION RATIONALE • Downstream vertical integration – Complements NLMK’s slab capacity expansion from 9.0 to 12.4 m tpa (after a new BF launch in mid‐2011) – … with a 2x increase of flat‐rolling capacities in key world markets – … thus boosting NLMK re‐rolling capabilities from the current 70% t
Slide 6: Integration with NLMK
1. Transaction details 2. Integration with NLMK 3. SIF overview 4. Market situation 6
Slide 7: Downstream Integration
DOWNSTREAM INTEGRATION Achieving Balanced Growth By Integrating Re-rolling Assets SEMIS SUPPLIES TO OWN/JV ASSETS • New slab production will be fully hedged ,000 t 3.4 mt increase in slab output is matched by 5.5 mt forecast New slab output fully downstream processing capacity growth processed S
Slide 8: Improved Regional Footprint
IMPROVED REGIONAL FOOTPRINT Steelmaking in Low Cost Locations, Processing in End Markets CAPACITY BY REGION • Asset base diversification setting a trend for ROLIING the industry mt CRUDE STEEL Upstream and steelmaking assets in low cost regions secure cost advantage Downstream assets located in
Slide 9: Improved Product Mix
IMPROVED PRODUCT MIX Value Added Products Growth, Better Sector Exposure 2011 PRODUCTION BY PRODUCT • JV consolidation materially improves NLMK % product portfolio… Finished product sales growth from 60% up to 90% of total sales even after a 40% growth in crude steel capacity High value added pr
Slide 10: SIF Overview
1. Transaction details 2. Integration with NLMK 3. SIF overview 4. Market situation 10
Slide 11: Geography of Acquired JV Assets
GEOGRAPHY OF ACQUIRED JV ASSETS NON-CORE ASSETS CARSID (BF) 2.1 m tpa Sharon Coating DLL (EAF) 0.9 m tpa HDG 0.8m tpa DLL (long products) 0.31 m tpa Clabecq Niche plates 0.9 m tpa Farrell HRC 1.8 m tpa CRC 0.7 m tpa Full hard: 0.9 m tpa RUSSIA Moscow Denmark USA Belgium Czech Rep. France Italy La Lo
Slide 12: Production Highlights
PRODUCTION HIGHLIGHTS ACQUIRED ASSETS ROLLED STEEL OUTPUT • Flat rolling capacities with large share of high ,000 t value added products – Rolling capacity of over 5.5 m tpa – Shipments of 3.4* m tpa in 2010 – 40% high value added grades – 70% av. capacity utilization through the cycle • Strong posi
Slide 13: Operational Performance
OPERATIONAL PERFORMANCE SALES REVENUE AND PROFITABILITY* m Euro • Profitability restored – 7‐10% EBITDA margin of re‐rolling business (ex‐crisis) – Revenues to improve in 2011 on stronger prices • Basis for further margin improvement – Capex over the last 4 years led to increased capacity and improv
Slide 14: Cost Structure and Debt Position
COST STRUCTURE AND DEBT POSITION EU FLAT FIXED COSTS EVOLUTION • Non-core assets disposals leads to lower cost base m€ – Rolling assets fixed costs are 50% lower than integrated – Efficiency initiatives undertaken over the last 2 years resulted in meaningful and sustainable cost savings • Materials
Slide 15: Market Positioning
MARKET POSITIONING GROWING SALES TO EU AUTO MARKET • Targeting premium segments .000 t Through value added grades – Positioned in the heart of stable and well expansion developed markets – Increasing sales to automotive sector – Growing exposure to other manufacturing sectors through niche products
Slide 16: Flat Europe
FLAT EUROPE ROLLING CAPACITY • Novolipetsk slabs supplies: up to 100% ,000 t • Well-balanced product mix Pre-painted – HRC ‐ > Pickled ‐ > CRC‐ > HDG/EZ ‐ > Pre‐painted Galvanized • Value added products expansion on track CRC – +10% growth in value added capacities by 2013 up to 50% share in total p
Slide 17: Plates Europe
PLATES EUROPE • Novolipetsk slabs supplies: 80% ROLLING CAPACITY** • Capacity: 1.9 m tpa, 10% of EU market (with DanSteel) ,000 t Total Value added • Broad range of gauges from 3.0 to 1,000 mm • Value added product growth – from 30% HVA share in 2010 to 70% in 2017 – 30% ‐ DQ/Q&T* high strength plat
Slide 18: Flat USA
FLAT USA • Reliable and flexible supplier CAPACITY – backed by imported and US‐made slabs ,000 t For processing – industry leading conversion costs Existing – well‐balanced product portfolio • Geared for stable industrial and construction sectors – c.50% of acquired capacities – value added producti
Slide 19: Market Situation
1. Transaction details 2. Integration with NLMK 3. SIF overview 4. Market situation 19
Slide 20: EU Manufacturing / Machinery
EU MANUFACTURING / MACHINERY IFO BUSINESS EXPECTATION • Recent recovery in auto and machinery sectors • Driven by continuing demand from EM • High level of industrial utilization rates to support capex in machinery and equipment going forward Source: Bloomberg PLATES CONSUMPTION OUTLOOK (EUROPE) EUR
Slide 21: EU Manufacturing
EU MANUFACTURING NEW CAR REGISTRATION, ITEMS • Late cycle sectors to demonstrate positive growth • Exposure to emerging market stable demand • Supplemented by a stabilization in the home markets Source: Bloomberg HRC CONSUMPTION OUTLOOK (EUROPE) COMPOSITE LEADING INDICATORS (OECD) million t CAGR10%
Slide 22: USA Market
USA MARKET • Fixed asset investment to accelerate COMPOSITE LEADING INDICATORS (OECD) • Capital goods sectors to further expand driving demand for flat steel – Power transmission and distribution sectors – Mining: Capital goods for mining as commodity prices grow and grades deteriorate – Engineering
Slide 23: NLMK Investor Relations
NLMK Investor Relations 18, bldg 1 Bakhrushina str. 115054, Moscow Russia t. +7 495 915 15 75 f. +7 495 915 79 04 email: ir@nlmk.com www.nlmk.com