33 slides from Eregli Demir Ve Celik Fabrikalari T.a.s's earnings presentation, Aug 16, 2013
Slide 1: Erdemir Group 2013 6 Months Consolidated Financial Results
Erdemir Group 2013 6 Months Consolidated Financial Results 16 August 2013
Slide 2: Disclaimer
DISCLAIMER Ereğli Demir Çelik Fabrikaları T.A.Ş. (Erdemir) may, when necessary, make written or verbal announcements about forward-looking information, expectations, estimates, targets, assessments and opinions. Erdemir has made the necessary arrangements about the amounts and results of such inform
Slide 3: Agenda
Agenda 2013 Market Overview 2013 6 Months Results 3 / 32
Slide 4: Crude steel production YoY: CIS and EU27
-50% -25% 25% 50% 75% 0% -50% -40% -30% -20% -10% 10% 20% 30% 40% 50% 60% 0% Jun-06 Jun-06 Sep-06 Sep-06 Dec-06 Dec-06 Mar-07 Mar-07 Jun-07 Jun-07 Source: * Worldsteel Sep-07 Sep-07 ** Bloomberg Dec-07 Dec-07 Mar-08 Mar-08 Jun-08 Jun-08 Sep-08 Sep-08 Dec-08 Dec-08 Mar-09 Mar-09 Jun-09 Jun-09 Sep-09
Slide 5: Crude steel capacity utilization ratio of Erdemir Group is increasing
Crude steel capacity utilization ratio of Erdemir Group is increasing CRUDE STEEL CAPACITY UTILIZATION RATIO 100,0% 97,2% 95,0% 90,0% 88,4% 84,1% 85,0% 80,2% 79,2% 80,0% 78,3% 75,0% 70,0% 2011 2012 2013 6M Erdemir Group World Source: Worldsteel 5 / 32
Slide 6: Iron ore and scrap prices are increasing
100 150 200 250 300 350 400 300 350 400 450 550 600 650 700 750 800 500 07.2009 01.2011 USD/TON USD/TON 10.2009 03.2011 01.2010 05.2011 Source: Bloomberg Platts/IODEX 04.2010 07.2011 07.2010 09.2011 10.2010 11.2011 01.2011 01.2012 EFFECTIVE PRICE 04.2011 ERDEMIR GROUP HRC 03.2012 07.2011 05.2012 10.
Slide 7: Turkish steel consumption increased by 7% in 2013 6M YoY
Turkish steel consumption increased by 7% in 2013 6M YoY PRODUCTION ( 000 TONS ) 34.277 31.943 9.039 26.300 26.684 17.647 16.951 9.075 25.133 6.629 4.421 4.543 4.861 4.302 25.238 22.868 19.671 20.712 22.141 12.786 12.649 2012 2011 2010 2009 2008 2013 6M 2012 6M Long Flat Total CONSUMPTION ( 000 TONS
Slide 8: Turkish iron and steel product imports increased by 29% in 2013 6M YoY
Turkish iron and steel product imports increased by 29% in 2013 6M YoY IRON AND STEEL PRODUCT EXPORTS ( 000 TONS ) 16.563 16.806 8.404 8.461 15.239 15.861 21 14.465 94 0,3 16 60 218 1.859 1.368 924 212 1.651 1.416 2.298 1.520 2.407 2.957 2.206 1.222 1.323 2.393 3.523 11.726 11.786 12.937 6.198 10.48
Slide 9: After the contraction in 2009, all markets are expanding
After the contraction in 2009, all markets are expanding CHANGES IN SECTOR DEVELOPMENT INDEX (% YoY) 40% 33,4% 30% 32,6% 22,1% 20,0% 20% 16,0% 18,3% 10% 11,3% 2,7% 5,5% 2,0% 5,9% 6,0% 11,2% 4,0% 0% -0,2% 0,6% 2,5% 4,0% 2,5% 4,0% -10% -5,5% -16,1% -20% -22,9% -30% -30,0% -40% 2009 2010 2011 2012 2013
Slide 10: HRC sales prices are lower than last year
HRC sales prices are lower than last year Çin 2.Kalite Kok Kömürü Spot İhraç Fiyatı ( USD/TON ) HRC PRICES ( USD/Ton ) 900 800 700 600 500 Jul-10 Nov-10 Mar-11 Jul-11 Jul-12 May-11 Nov-11 Mar-12 May-12 Nov-12 Mar-13 Jul-13 May-13 Sep-10 Sep-11 Sep-12 Jan-11 Jan-12 Jan-13 CIS EXPORT HRC BLACKSEA/BALT
Slide 11: Billet sales prices are lower than last year
Billet sales prices are lower than last year Çin 2.Kalite Kok Kömürü Spot İhraç Fiyatı ( USD/TON ) BILLET PRICES ( USD/Ton ) 750 700 650 600 550 500 450 May-11 May-12 May-13 Nov-10 Mar-11 Nov-11 Mar-12 Nov-12 Mar-13 Jul-10 Jul-11 Sep-11 Jul-12 Sep-12 Jul-13 Sep-10 Jan-11 Jan-12 Jan-13 BILLET CHINA E
Slide 12: Agenda
Agenda 2013 Market Overview 2013 6 Months Results 12 / 32
Slide 13: Erdemir Group Key Figures
ERDEMİR GROUP KEY FIGURES 2013 2012 2012 2011 First Half First Half Liquid Steel Production (000 Tons) 4.425 3.723 8.042 7.656 (1) Slab Production (000 Tons) 3.470 3.030 6.329 6.660 (2) Flat Steel Production (000 Tons) 3.251 2.866 5.983 6.119 Long Steel Production (000 Tons) 861 604 1.519 794 Flat S
Slide 14: Liquid steel production increased by 19% in 2013 6M YoY
Liquid steel production increased by 19% in 2013 6M YoY LIQUID STEEL PRODUCTION ( 000 TONS ) 8.042 7.656 7.311 4.425 3.723 2.216 2.037 2.209 1.686 2013 2012 2013 2012 2013 2012 2012 2011 2010 1. Quarter 2. Quarter 1. Half 14 / 32
Slide 15: Production increased by 19% in 2013 6M YoY
Production increased by 19% in 2013 6M YoY PRODUCTION VOLUMES ( 000 TONS ) 7.501 6.913 6.793 1.519 794 1.420 1.598 1.652 1.501 4.112 861 3.470 604 932 2.045 2.067 774 1.784 4.384 4.467 416 1.686 3.872 445 278 326 439 370 493 404 2.319 2.092 1.161 1.136 1.158 956 2013 2012 2013 2012 2013 2012 2012 20
Slide 16: Sales volumes increased by 16% in 2013 6M YoY
Sales volumes increased by 16% in 2013 6M YoY SALES VOLUMES ( 000 TONS ) 7.448 6.647 6.524 1.468 791 1.393 1.627 1.553 4.133 1.457 876 3.564 538 893 817 2.025 2.108 1.837 1.727 4.353 4.303 456 420 3.674 282 256 429 414 464 403 2.364 2.209 1.140 1.141 1.224 1.068 2013 2012 2013 2012 2013 2012 2012 20
Slide 17: Exports revenue increased by 17% in 2013 6M YoY
Exports revenue increased by 17% in 2013 6M YoY NET SALES REVENUE ( MILLION USD ) 5.340 5.338 771 931 4.427 594 2.790 2.667 425 364 4.569 4.407 3.833 1.364 1.361 1.426 1.306 249 152 176 212 2.365 2.303 1.115 1.209 1.250 1.094 2013 2012 2013 2012 2013 2012 2012 2011 2010 1. Quarter 2. Quarter 1. Half
Slide 18: Sales to automotive industry and secondary production increased
Sales to automotive industry and secondary production increased in 2013 6M YoY 2013 6M FLAT STEEL DOMESTIC SALES BREAKDOWN (%) 2012 6M FLAT STEEL DOMESTIC SALES BREAKDOWN (%) 376Kt; 13% 340Kt; 13% 156Kt; 5% 127Kt; 5% 991Kt; 34% 982Kt; 37% 292Kt; 10% 2.872Kton; 250Kt; 9% 2.676Kton; 88% 88% 135Kt; 5%
Slide 19: Flat steel sales to EU countries was 74% of flat export
Flat steel sales to EU countries was 74% of our flat export in 2013 6M 2013 6M FLAT STEEL EXPORTS BREAKDOWN (%) 2012 6M FLAT STEEL EXPORTS BREAKDOWN (%) 19Kt; 5% 33Kt; 9% 43Kt; 11% 7Kt; 2% 18Kt; 5% 65Kt; 19% 20Kt; 5% 385Kton; 350Kton; %12 %12 193Kt; 55% 53Kt; 15% 285Kt; 74% 2013 6M LONG STEEL EXPORT
Slide 20: Erdemir Group sales prices and cost of sales
Jul-10 Jul-10 Aug-10 USD/TON Aug-10 USD/TON Sep-10 Sep-10 Oct-10 Oct-10 Nov-10 Nov-10 Dec-10 Dec-10 Jan-11 Jan-11 Feb-11 Feb-11 Mar-11 Mar-11 Apr-11 Apr-11 May-11 May-11 Jun-11 Jun-11 Jul-11 Jul-11 Aug-11 Aug-11 Sep-11 Sep-11 Oct-11 Oct-11 Nov-11 Nov-11 Erdemir Group Flat Sales Price Dec-11 Dec-11 2
Slide 21: Net profit increased by 147% in 2013 6M YoY
Net profit increased by 147% in 2013 6M YoY 1.400 EBITDA ( MILLION USD ) 1.241 32,0% 1.200 963 1.000 23,2% 24,0% 20,7% 21,8% 800 19,1% 17,5% 603 16,0% 600 533 10,6% 11,3% 400 8,6% 294 9,6% 238 255 8,0% 200 117 138 0 0,0% 2013 2012 2013 2012 2013 2012 2012 2011 2010 1. Quarter 2. Quarter 1. Half EBIT
Slide 22: EBITDA was 533 million USD: EBITDA to net profit
EBITDA was 533 million USD in 2013 6M Consolidated EBITDA => Consolidated Net Profit (Million USD) (114) 45 (71) (80) 533 (12) 463 301 EBITDA Depreciation Interest inc. Operating Finance Tax Inc./Exp. Non-Controlling NET PROFIT (1 Jan - from overdue Income Inc./Exp. Interests (1 Jan - 30 June 2013)
Slide 23: EBITDA was 533 million USD: EBITDA to net cash
EBITDA was 533 million USD in 2013 6M Consolidated EBITDA => Consolidated Net Cash (Million USD) 724 2 (49) (89) (74) 533 397 (262) 61 EBITDA Changes in Interest Inc./(Exp.), Net Cash Used in Free Cash Flow Dividends Paid Net Cash Used in INCREASE IN (1 Jan - Working Capital Tax and Other Investing
Slide 24: EBITDA was 533 million USD: 1Q to 2Q bridge
EBITDA was 533 million USD in 2013 6M Consolidated EBITDA 2013 1Q => Consolidated EBITDA 2013 2Q (Million USD) 2 22 23 9 294 238 EBITDA Quantity, Mix Price Cost Other EBITDA (1 Jan - (1 April - 31 March 2013) 30 June 2013) 24 / 32
Slide 25: EBITDA per ton for flat segment increased in 2013 2Q
EBITDA per ton for flat segment increased in 2013 2Q EBITDA PER TON (USD/TON) 155 139 126 104 134 100 102 116 100 67 92 84 88 61 50 53 43 9 1Q 2Q 3Q 4Q 1Q 2Q 2012 2013 Hot Cold Long 25 / 32
Slide 26: Net debt was 1.033 million USD at the end of 2013 2Q
Net debt was 1.033 million USD at the end of 2013 2Q BORROWINGS ( MILLION USD ) 3.785 2.998 2.767 1.976 2.529 2.478 2.354 556 1.507 787 2.040 1.924 2.059 1.134 1.945 910 2.211 1.452 1.033 1.809 1.742 1.491 1.344 1.130 2008 2009 2010 2011 2012 2013 6M Long-Term Debt Short-Term Debt Net Debt 26 / 32
Slide 27: Net debt was 1.033 million USD at the end of 2013 2Q
Net debt was 1.033 million USD at the end of 2013 2Q NET DEBT (MILLION USD) (397) 74 (96) 1.452 1.033 - Net Debt - Flow Free Cash Dividend -Payment - Foreign Cur. Diff. - Net Debt (Dec. 2012) and Other (June 2013) 27 / 32
Slide 28: Erdemir Group has 1.007 million USD cash at end of 2013 2Q
Erdemir Group has 1.007 million USD cash and cash equivalents at the end of 2013 2Q BORROWINGS MATURITY PROFILE (MILLION USD) 42 1.007 65 44 121 393 23 421 8 345 285 187 164 3 32 8 62 1 0,2 1 13 July-Dec. June 2013 2014 2015 2016 2017 2018 2019 2020 Cash 2013 Principal Revolving Trade Financing Loan
Slide 29: Raw materials made up 71% of the cost of goods sold
Raw materials made up 71% of the cost of goods sold in 2013 6M COST OF PRODUCTION BREAKDOWN* - % 5% 5% 5% 3% 5% 3% 4% 4% 7% 6% 6% 6% 10% 11% 12% 12% 71% 76% 74% 75% 2013 6M 2012 6M 2012 2011 Raw Materials Personnel Expenses Purchased Energy Expenses Depreciation and Amortization Exp. Other RAW MATER
Slide 30: Flat cost per ton excluding raw materials
Flat cost per ton excluding raw materials was realised as 179 USD/ton in 2013 2Q FLAT 500 PRODUCTS ( USD/TON )* 2.100 450 1.565 1.621 1.624 1.600 1.651 400 1.489 1.505 1.428 1.506 1.360 1.493 1.600 1.326 1.262 1.322 1.284 1.278 350 1.174 1.050 300 1.100 250 200 600 150 120 103 116 116 104 97 101 90
Slide 31: Capital expenditures of 255 million USD is planned for 2013
Capital expenditures of 255 million USD is planned for 2013 ( M USD ) 1.017 718 634 961 445 423 675 576 264 242 255 377 200 158 423 171 159 92 199 143 140 67 68 56 59 57 93 83 25 55 43 17 2005 2006 2007 2008 2009 2010 2011 2012 2013 6M 2013 2014+ Fixed Assets Acquisition and Maintenance Capital Expe
Slide 32: Number of employees was 12.710 as of June 2013
Number of employees was 12.710 as of June 2013 NUMBER OF EMPLOYEES 15.063 14.637 13.553 13.433 13.161 13.045 12.710 2007 2008 2009 2010 2011 2012 2013 June 32 / 32
Slide 33: Q&A
Q&A