Arcelormittal South Africa Limited · JSE:ACL
Arcelormittal South Africa — FY2018 Earnings Presentation
30 slides from Arcelormittal South Africa's earnings presentation, March 2019
Slide 1: Financial results for the year ended 31 December 2018
Financial results For the year ended 31 December 2018
Slide 2: Disclaimer
Disclaimer Forward looking statements This presentation includes forward-looking information and statements about ArcelorMittal South Africa (“AMSA”) and its subsidiaries that express or imply expectations of future events or results. Forward-looking statements are not historical facts. These statem
Slide 3: Contents
Contents Overview Steel Operational Financial Outlook market review review Questions CEO CEO CEO CFO CEO Financial results for the year ended 31 December 2018 3
Slide 4: Overview
Overview Kobus Verster | transformingtomorrow \ ArcelorMittal
Slide 5: Salient features
Salient features Overview • Structural enhancement in global steel market supported improved performance • Local demand remained weak with apparent Revenue Sales Cost per steel consumption decreasing 4% 16% volumes tonne • Capacity utilisation improved to 84% 5% 2% • Improved liquid steel production
Slide 6: Safety
Safety Performance • Various health and safety initiatives resulted in a substantial improvement in safety metrics Achievements • Improved risk awareness and management LTIFR 0.53 (0.66) progammes TIFR 6.91 (7.66) DIFR 0.85 (0.87) Initiatives • Man/machine separation, crushing and machine safeguardi
Slide 7: Steel market
Steel market Kobus Verster WF}: transformingtomorrow
Slide 8: The industry - global
The industry - global Global steel output (million tonnes) 1 648 1 593 1 607 1 730 1 808 1 203 1 271 1 122 1 091 1 109 28 27 29 35 39 15 45 13 44 12 40 15 44 16 44 121 111 111 116 121 106 101 102 101 101 61 59 61 42 42 145 141 137 168 168 2014 2015 2016 2017 2018 European Union (15) Other Europe C.I
Slide 9: The industry - materials
The industry - materials International raw material basket (Weight in % and spread in US$/tonne ($/t)) 55% 49% 43% 41% 38% AMSA AMSA Commodity International ($/t) (R/t) 228 271 220 % change % change % change 158 Iron ore -2% 0% 0% 146 Hard coking coal 9% -6% -6% 41% 42% 30% 39% 25% Scrap 16% 11% 11%
Slide 10: The industry - domestic
The industry - domestic Primary carbon steel sales into the South African domestic market Total steel sales (‘000 tonnes) Long product sales (‘000 tonnes) 2 006 1 898 1 879 1 802 1 838 168 226 271 193 120 5 046 5 023 4 863 4 921 4 730 785 561 442 677 641 993 1 340 1 158 959 769 1 053 1 111 1 166 932
Slide 11: The industry - domestic
The industry - domestic Total steel imports (‘000 tonnes) 1600 26.6 1400 23.5 1 340 1200 19.4 19 1 158 1114 1000 16.2 825 887 766 649 993 959 800 226 271 168 193 769 120 600 35.1 29.5 26.1 24.6 22 400 14.1 11.5 10.5 6.7 8.3 200 0 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Total steel imports
Slide 12: The industry - domestic
The industry - domestic Primary carbon steel inventory levels in South Africa outside the primary steel producers Total steel inventory (‘000 tonnes) Flat & long steel inventory (‘000 tonnes) 760 10 7.5 740 7.0 6.9 6.9 7.1 600 10 8.9 741 8.5 8.4 9 720 500 7.6 7.8 503 8 700 6.6 6.4 6.0 7 400 6.0 5.9
Slide 13: Operational review
Operational review Kobus Verster
Slide 14: Flat steel division
Flat steel division Liquid steel output (‘000 tonnes) 3 586 3 561 • Debottlenecking initiatives underway resulting in better plant performance 86% 3 458 85% • 3% improvement in capacity utilisation from 82% to 85%, with production 3 221 82% increasing by 103kt 3 145 • Focus on reliability and mainte
Slide 15: Long steel division
Long steel division Liquid steel output (‘000 tonnes) • Debottlenecking initiatives delivering 1 694 results 1 550 1 531 1 452 • 5% improvement in capacity utilisation from 76% to 81%, with production increasing by 79kt 932 81% 82% • Marked improvement in blast furnace 81% production in H2 76% • Sco
Slide 16: Coke & Chemical division
Coke & Chemical division Commercial coke (‘000 tonnes) 511 442 452 406 • Commercial coke production remained flat for the year 341 • Increased efforts to commercialise steel slag at Vanderbijlpark and 251 Saldanha 190 181 184 158 2014 2015 2016 2017 2018 Commercial Coke production Commercial Coke sa
Slide 17: Capex (Rm)
Capex (Rm) FY 2018 FY 2017 Maintenance 860 1 098 Expansion 328 151 Environmental 105 41 AMSA Other 73 92 R1 366m Total expenditure 1 366 1 382 Financial results for the year ended 31 December 2018 17
Slide 18: Financial review
Financial review Desmond Maharaj
Slide 19: Headline earnings (Rm)
Headline earnings (Rm) FY 2018 FY 2017 Revenue 45 274 39 022 EBITDA 3 608 (315) Depreciation and amortisation (831) (976) Once-off items - 71 Profit/(loss) from operations 2 777 (1 220) Profit from disposal of investment 415 - Impairment (10) (2 604) Net finance costs (2 013) (1 441) Income after ta
Slide 20: Sale of non-core asset (Rm)
Sale of non-core asset (Rm) Macsteel International Holdings BV FY 2018 Fair value investment when recognised as an asset-held-for-sale 2 752 Revaluation of fair value* 469 Proceeds on Effective Date 3 221 Derecognition of equity accounted investment (4 404) Realised foreign exchange gains on investm
Slide 21: Divisional EBITDA
Divisional EBITDA FY 2018 FY 2017 Flat steel products (Rm) 2 670 264 EBITDA margin 8.4% 0.9% Net realised price R/t 9 514 8 581 Long steel products (Rm) 808 (945) EBITDA margin 5.4% (8.0%) Net realised price R/t 8 828 7 760 Coke and Chemicals (Rm) 370 365 EBITDA margin 26.9% 26.0% Corporate and othe
Slide 22: Cost dynamics and breakdown
Cost dynamics and breakdown Weight FY 2018 FY 2017 Change 48% Raw materials 3 794 3 818 (1%) F 31% Auxiliaries & consumables 2 420 2 289 6% l 21% Fixed costs 1 714 1 663 3% a 100% Total 7 928 7 770 2% t Liquid steel (kt) 3 561 3 458 3% Average ZAR rate 13.24 13.32 (1%) Average NRP (R/t) 9 514 8 581
Slide 23: Cash flow and analysis (Rm)
Cash flow and analysis (Rm) FY 2018 FY 2017 Cash generated from/(utilised in) operations before working capital 3 228 (645) Working capital (946) (67) Cash generated from/(utilised in) operations 2 282 (712) Capital expenditure (1 256) (1 324) Net finance costs (481) (667) Investment in associates a
Slide 24: Working capital movement and analysis (Rm)
Working capital movement and analysis (Rm) FY 2018 FY 2017 Inventories (520) (353) Finished products (339) 198 Work-in-progress 4 (397) Raw materials (80) (134) Plant spares and stores (105) (20) Receivables (1 005) (1 207) Payables 579 1 493 Working capital movement (946) (67) 24 Financial results
Slide 25: Net borrowings bridge 2017 – 2018 (Rm)
Net borrowings bridge 2017 – 2018 (Rm) 3 228 3 221 67 -475 946 481 1 256 -3 262 912 Net Cash Working Net finance Capital Realised FX Proceeds on Other Net borrowings generated capital costs expenditure movements the sales of borrowings Dec 2017 from Macsteel Dec 2018 operations before working capita
Slide 26: Outlook
Outlook Kobus Verster zx ArcelorMittal transformingtomorrow
Slide 27: Transforming for sustainability and growth
Transforming for sustainability and growth Cost competitiveness - Business Transformation Programme Public private De-bottlenecking partnership of steel production initiatives at all sites Saldanha – Restart of volume Vereeniging increase Electric Arc through Furnace investments Feasibility Commerci
Slide 28: Outlook H1 2019
Outlook H1 2019 • Intensify and fast-track implementation of Business Transformation Programme to support sustainable profitability and cash flow generation • Domestic steel demand and exports to remain stable • Collaboration with key stakeholders on economic recovery and growth initiatives • ZAR/US
Slide 29: Questions ?
Questions ? 4 — = = transformingtomorrow = ‘ArcelorMittal
Slide 30: ArcelorMittal South Africa Limited contact details
ArcelorMittal South Africa Limited Room N3-5 Main Building Delfos Boulevard Vanderbijlpark, 1911 South Africa www.arcelormittal.com/southafrica/
ArcelorMittal South Africa — FY2018 Earnings Presentation on 6ix