Emsteel Building Materials Pjsc · ADX:EMSTEEL
Emsteel Building Materials Pjsc — Emirates Steel Arkan — Investor Presentation (September 2023)
39 slides from Emsteel Building Materials Pjsc's investor presentation, September 2023
Slide 1: Investor Presentation
INVESTOR PRESENTATION September 2023 EMIRATES STEEL ARKAN. | 1
Slide 2: Legal Disclaimer
LEGAL DISCLAIMER These materials have been prepared by Emirates Steel Arkan (“EMSTEEL” or the “Company”). The Company relies on information obtained from sources believed to be reliable. No representation, warranty or undertaking, stated or implied, is given as to the accuracy of the information con
Slide 3: Table of Contents
TABLE OF CONTENTS Business Overview 4 Key ESG Credentials 12 Market Context 18 Growth Strategy 22 Board and Executive Committee 27 Financial and Operational Highlights 30 Appendix 34 EMIRATES STEEL ARKAN. | 3
Slide 4: Business Overview
BUSINESS OVERVIEW EMIRATES STEEL ARKAN. | 4
Slide 5: Quick Facts About the Group
QUICK FACTS ABOUT THE GROUP Steel Emirates Steel Arkan is among the top 30% cheapest Merged in Oct 2021 steel mills on the global cost curve* production Steel assets utilizing latest DRI Steel rebar production costs $/t (2021 data) capacity: technology, 1000 15 years old 3.5 mtpa 800 600 FY22 400 20
Slide 6: Merger Recap: Key Milestones
MERGER RECAP: KEY MILESTONES • Arkan listed on ADX • ACF** construction starts Arkan Arkan ACF Dry Mortar August 9 April 27 inception operation starts Operation Starts Arkan General Assembly Adopting ‘Emirates Steel approves merger Arkan’ as interim brand and trading ticker change 2006 2007 2012 201
Slide 7: Geographic Footprint
GEOGRAPHIC FOOTPRINT Steel sales, FY22: The Group exports steel UAE steel market share: products to more than 60% of rebar and wire rod and 80% 70 countries. of heavy sections and sheet piles. EMIRATES STEEL ARKAN. | 7
Slide 8: Our Product Lines
OUR PRODUCT LINES A leading producer of A prominent wire rod The largest producer of The only producer of Rebar in Coils provides high-quality rebar with a producer in the GCC with heavy and jumbo sections in hot-rolled sheet piles in the greater efficiencies production capacity of a production capa
Slide 9: Our Steel Division
OUR STEEL DIVISION Plants, Production Process and Products DIRECT REDUCTION FINISHED 01 02 STEEL MAKING 03 ROLLING 04 PROCESS PRODUCTS Three Direct Reduction Plants Three Steel Making Plants with Heavy Section Mill, Three Rebar, Wire Rod, Sheet Piles with a capacity of 4.2 MTPA a capacity of 3.6 MTP
Slide 10: How We Make Our Steel
HOW WE MAKE OUR STEEL MATERIAL HANDLING DIRECT REDUCTION PLANT (DRP) JETTY AREA CONVEYOR BELT IRON ORE Natural gas-based direct reduction process to DIRECT REDUCED IRON (DRI) Unloading of iron ore, transports the iron ore is stocked in yards ready reduce iron oxides to metallic iron at temperatures
Slide 11: Our Building Materials Division
OUR BUILDING MATERIALS DIVISION Al Ain Cement Factory LIMESTONE RAW GRINDING & GRINDING, STORAGE, 01 02 03 QUARRY BURNING PACKING, DISPATCH 1. EXTRACTION : 1. RAW GRINDING : 1. GRINDING : The raw materials used to manufacture The raw materials are very finely The clinker and the gypsum are very ceme
Slide 12: Key ESG Credentials
KEY ESG CREDENTIALS EMIRATES STEEL ARKAN. | 12
Slide 13: Our Net-Zero Roadmap
OUR NET-ZERO ROADMAP We are committed to reducing our carbon emissions by 40% by 2030 (vs 2019 baseline) and work towards achieving Net Zero emissions by 2050 How Why • Clean and Green • Industry • 44% lower Power mobilization emissions than • Sustainable Value • Regulatory WSA average Chain require
Slide 14: First Steelmaker Worldwide to Capture Its CO2 Emissions
FIRST STEELMAKER WORLDWIDE TO CAPTURE ITS CO2 EMISSIONS CO2 Al Reyadah CCUS Molten steel Emirates Steel Arkan is the world’s first steel company to capture its CO2 emissions. Partnership with ADNOC allows us to accumulate up to 800 kt of CO2/year as part of Carbon Capture Utilization and Storage (CC
Slide 15: Actively Implementing an Industry-Leading Sustainability Program
… ACTIVELY IMPLEMENTING AN INDUSTRY-LEADING SUSTAINABILITY PROGRAM ESA is constantly working to deliver on its sustainability commitment. In 2022 we reduced Scope 1&2 emissions from our steel business by 35% YoY. This was partially driven by securing clean energy from solar and nuclear sources total
Slide 16: And Well Positioned for CO2-Conscious Market
… AND WELL POSITIONED FOR CO2-CONSCIOUS MARKET EMSTEEL is operating state-of-art, low-carbon-footprint On the demand side, there is growing momentum in CO2-related production facilities based on direct-reduced iron (DRI) initiatives led by steel buyer coalitions, such as SteelZero in EU. • SteelZero
Slide 17: Focus on People – The Bedrock of ESA
FOCUS ON PEOPLE – THE BEDROCK OF ESA World Steel Association Avg vs. ESA LTI Rate ESA believes that health and 1.50 safety of employees is one of 1.17 the key indicators of a 1.01 0.97 0.85 successful and balanced 1.00 0.84 0.83 0.81 0.81 0.71 0.76 ESG program. 0.67 0.50 In 2022 Lost Time Injury Rat
Slide 18: Market Context
MARKET CONTEXT EMIRATES STEEL ARKAN. | 18
Slide 19: UAE Is Set to Continue Growing
UAE IS SET TO CONTINUE GROWING The UAE’s GDP is expected to grow by 2.4-3.5%* in 2023, supported by sustained high oil prices as well as by strong non-oil sector performance. Future growth is driven by UAE steel demand ambitious state vision programs. forecast to grow by 3% YoY in 2023 and 2024 Ambi
Slide 20: UAE Electricity Tariff Incentive Program (ETIP)
UAE ELECTRICITY TARIFF INCENTIVE PROGRAM (“ETIP”) According to World Steel Association energy (incl. electricity) constitutes a significant portion of the cost of steel production, from 20% to 40%. In this context it’s important that Abu Dhabi Government incentivizes manufacturing entities, that suf
Slide 21: Global Trends Affecting the Steel Market
GLOBAL TRENDS AFFECTING THE STEEL MARKET 1. Markets decoupling following increased trade barriers caused by geopolitics and intentions to protect from global overcapacities. 2. Raw material supply chains need to be secured to limit risks of shortages. 3. Decarbonization requires careful capex manage
Slide 22: Growth Strategy
GROWTH STRATEGY EMIRATES STEEL ARKAN. | 22
Slide 23: Strategy: Vision and Value Pillars
STRATEGY: VISION AND VALUE PILLARS Vision: ➢ To be the region's steel and building materials champion ➢ To deliver value to our shareholders ➢ To invest in innovation enhancing customers possibilities ➢ To lead from the front towards a sustainable and circular economy Maximize Current Diversify Prod
Slide 24: Strategy: Maximize Current Business Value
STRATEGY: MAXIMIZE CURRENT BUSINESS VALUE A vivid example of this Value Pillar is the Namaa’ project: • Namaa’ is part of a business transformation process The Namaa’ cost reduction and which consolidates all our business improvement ideas transformation program, launched 2022 EBITDA (operational an
Slide 25: ES600: An Example of Product Diversification
ES600: AN EXAMPLE OF PRODUCT DIVERSIFICATION ES600 is our new product, a type of rebar with a higher tensile to Yield strength ratio, meaning higher durability. ES600 promotes sustainability in construction by reducing steel usage (by 18-24%) and, REDUCTION IN consequently, reducing concrete usage.
Slide 26: Strategy: Integrated Iron Ore Value Chain
STRATEGY: INTEGRATED IRON ORE VALUE CHAIN EMSTEEL has partnered with ITOCHU and JFE Steel to carry out feasibility studies to consider the construction of a ferrous raw material production facility in Abu Dhabi. TYO : 8001 Subsidiary of JFE Holdings, Inc. – TYO: 5411 One of the largest Japanese Lead
Slide 27: Board and Executive Committee
BOARD AND EXECUTIVE COMMITTEE EMIRATES STEEL ARKAN. | 27
Slide 28: Board of Directors
BOARD OF DIRECTORS Hamad Abdulla Jamal Salem Eng. Saeed Nabeel Qadir Abdulaziz Abdulla Fatima Abdulla Farah Abdulla Mohamed AlShorafa Al Dhaheri Ghumran Ismail Mohamed Mohamed Sharif Mohamed Ali Al Hammadi Al Remeithi Al Hajri Abdulla Al Fahim Al Mazrui BOARD MEMBER CHAIRMAN VICE CHAIRMAN BOARD MEMB
Slide 29: Executive Committee
EXECUTIVE COMMITTEE Eng. Saeed Stephen J Jasem Mohamed Eng. Saeed Khalfan Eng. Hassan Salim Vladimir Angelo Saeed Ghumran Pope Al Khateri Al Ghafri Shashaa Arshinov Di Martino Al Dhaheri Al Remeithi GROUP CHIEF HUMAN GROUP CHIEF PROJECT GROUP CHIEF GROUP CHIEF STRATEGY CEO & VP COMMERCIAL, GROUP CEO
Slide 30: Financial and Operational Highlights
FINANCIAL AND OPERATIONAL HIGHLIGHTS EMIRATES STEEL ARKAN. | 30
Slide 31: Overview of FY 2022 Results
OVERVIEW OF FY 2022 RESULTS Revenue The growth of Group’s Revenue was supported by efforts to diversify sources of income, driven by AED 9.5bn an expansion of Company’s international footprint to 70 countries from 56 in 2021, a 25% increase +10% YoY* EBITDA “Namaa” cost reduction and transformation
Slide 32: 1H 2023: Resilience Against Market Conditions
1H 2023: RESILIENCE AGAINST MARKET CONDITIONS Revenue Marginal YoY decline in Revenue is explained by high comparison base of 1H 2022 when a global AED 4.43bn supply-demand imbalance had temporarily pushed up the sales prices for the Group’s products. +4% YoY* EBITDA Enhanced efficiency levels acros
Slide 33: FY 2022 Operational & Financial Results
FY 2022 OPERATIONAL & FINANCIAL RESULTS STEEL CEMENT & CLINKER FINANCIAL RESULTS* Production, kt Production, kt Revenue, AED bn EBITDA (AED mn) & EBITDA Margin 3,211 3,244 3,021 2,894 +10% +51% 2,722 2,711 2,653 2,486 2,275 2,141 9.5 1.2 1,832 8.6 1,568 5.8 0.8 0.2 12.6% 9.3% 2020 2021 2022 2020 202
Slide 34: Appendix
APPENDIX EMIRATES STEEL ARKAN. | 34
Slide 35: Some of the Projects We Are Proud Of
SOME OF THE PROJECTS WE ARE PROUD OF Burj Khalifa Sheikh Zayed Bridge Dubai Metro Khalifa Port Suez Canal Fulham Football Ground Louvre Abu Dhabi Yas Island Emirates Palace Ferrari World AD International Airport Guggenheim Museum EMIRATES STEEL ARKAN. | 35
Slide 36: Consolidated Statement of Financial Position
CONSOLIDATED STATEMENT OF FINANCIAL POSITION Assets, AED mn 1H23 2022 2021 Equity and Liabilities 1H23 2022 2021 Non-current assets Net equity 8,009 7,728 7,179 PPE 6.706 6,904 7,239 Non-current liabilities Goodwill - - 14 Lease liabilities 463 461 480 Right-of-use assets 366 381 451 Provision for e
Slide 37: Consolidated Statement of Profit or Loss
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AED mn 2022 2021* 1H23 1H22 Revenue 9,453 3,022 4,430 4,612 Cost of sales (8,483) (2,745) (3,921) (4,100) Gross profit 969 277 509 511 Selling and distribution expenses (53) (51) (25) (28) General and administrative expenses (358) (163) (158) (173) Other inco
Slide 38: Consolidated Statement of Cash Flows
CONSOLIDATED STATEMENT OF CASH FLOWS AED mn 2022 2021* 1H23 1H22 Cash flows from operating activities Operating cash flows before movements in working capital 1,179 316 629 612 Net movements in working capital 303 513 (84) 292 Cash generated from operations 1,482 829 545 904 Employees' end of servic
Slide 39: Thank You
THANK YOU Gleb Diachkov-Gertcev Director of Investor Relations ir@emiratessteel.com EMIRATES STEEL ARKAN. | 39
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