Tata Steel Limited · NSE:TATASTEEL
Tata Steel — FY2012 Earnings Presentation
40 slides from Tata Steel's earnings presentation, May 18, 2012
Slide 1: Consolidated Financial Results FY ended 31st March 2012
May 18, 2012 Consolidated Financial Results Financial Year Ended 31st March 2012 Annual Result Presentation
Slide 2: Agenda
Agenda Introduction and Consolidated Highlights Global Business Environment Performance of Indian and South East Asian Operations Performance of European Operations Group Financial Performance Corporate Developments 2
Slide 3: Tata Steel Group – Safety Performance
Tata Steel Group – Safety Performance Lost Time Injury Frequency (LTIF) Lost time injury frequency rate of 0.68 for 3.5 3.06 FY12 representing 14% improvement on 3 FY11 2.5 2.35 2.10 2 1.5 1.31 Common Health & Safety management 0.95 1 0.78 system being implemented across Tata 0.68 0.5 Steel Group 0
Slide 4: Group Financial Highlights
Group Financial Highlights Financial Year Ended 31st March’12 Deliveries Mn T Turnover US$ mn 26125 24.50 24.22 23344 Q4 6683 Q4 6.65 Q4 6.22 Q4 6649 Q3 5.90 Q3 5.84 Q3 6507 Q3 5718 Q2 6.06 6.12 Q2 Q2 6447 Q2 5631 Q1 5.90 Q1 6.05 Q1 5346 Q1 6487 FY11 FY12 FY11 FY12 EBITDA# US$ mn PAT* US$ mn 3365 17
Slide 5: Agenda
Agenda Introduction and Consolidated Highlights Global Business Environment Performance of Indian and South East Asian Operations Performance of European Operations Group Financial Performance Corporate Developments 5
Slide 6: Global Market Environment
Global Market Environment Global crude steel consumption & capacity utilisation Steel demand outlook – 2011 & 2012 (% Y/Y change) 140 100% 15% Crude steel consumption (Mt, LHS) 2011 130 Capacity utilization (%, RHS) 12% 2012 90% 120 10% 10% 110 80% 7% 6% 6% 100 5% 5% 6% 5% 4% 4% 4% 70% 4% 90 2% 80 6
Slide 7: Raw Materials and Steel Prices
Raw Materials and Steel Prices Iron ore fines, US$/tonne HRC spot price, US$/tonne 250 1,300 200 Germany domestic USA domestic (Midwest) 1,200 150 Russia export (FOB Black Sea) China (includes 17% VAT) 100 1,100 India (Mumbai) 50 Contract FOB Brazil 1,000 Spot CIF China (63.5% Fe) 0 900 2008 2009 20
Slide 8: Agenda
Agenda Introduction and Consolidated Highlights Global Business Environment Performance of Indian and South East Asian Operations Performance of European Operations Group Financial Performance Corporate Developments 8
Slide 9: India and South East Asian Steel Market
India and South East Asian Steel Market India crude steel consumption Indian passenger vehicle production 7 Crude steel consumption (Mt, LHS) 350 Vehicle production (000’ units) 120% 6 300 Vehicle production (Y/Y % change) 100% 5 250 80% 4 200 60% 3 150 40% 20% 2 100 0% 1 50 -20% 0 0 -40% 2008 2009
Slide 10: India - Performance
Tata Steel India - Performance Financial Year Ended 31st March’12 Production Mn T Deliveries Mn T 6.41 6.63 6.69 6.97 1.78 1.71 Q4 1.77 1.74 Q4 Q4 Q4 1.75 1.73 Q3 1.64 1.62 Q3 Q3 Q3 Q2 1.61 Q2 1.71 Q2 1.66 Q2 1.65 Q1 1.59 Q1 1.75 Q1 Q1 1.59 1.40 FY11 FY12 FY11 FY12 Turnover US$ mn EBITDA US$ mn 2285
Slide 11: India - Performance of Long Products
Tata Steel India - Performance of Long Products Deliveries YoY All figures in kt 3500 Increase in Retail Distribution 2880 2898 3000 sales by 43% in FY12 over 295 337 2500 117 FY11 254 30 145 330 6 2000 355 Value selling of Cut & Bend 585 1500 689 and Coupler products from 387 ‘Ready build’ centers
Slide 12: India - Performance of Flat Products
Tata Steel India - Performance of Flat Products Deliveries YoY Segment Composition - FY12 All figures in kt 4000 3735 3538 7% 11% 3500 258 28% 197 393 392 3000 505 467 2500 23% 2000 1027 1070 6% 1500 1000 26% 1455 1509 Auto 500 Steel Roofing 0 SME FY11 FY12 General Engineering & Export Tubes and Agr
Slide 13: India - Tubes SBU
Tata Steel India - Tubes SBU Deliveries YoY All figures in kt The Charkha - Steel monument dedicated 400 378 to the nation 366 349 350 106 108 300 93 250 78 88 89 200 150 100 178 181 172 50 0 FY10 FY11 FY12 Commercial Tubes Precision Tubes Structural Tubes Plan to grow through the conversion route:
Slide 14: India - Global Wires SBU
Tata Steel India - Global Wires SBU Total Production Capacity of 668,000 Tonnes/Annum Operational Highlights Entity Country Capacity in TPA Products 600 556 565 India 335,000 Tyre Bead 550 Wire, 520 518 Spring, PC 500 products, Galv Wire 450 Thailand 209,000 PC Products, 400 Wire Mesh 350 China 110,
Slide 15: India - Ferro Alloys & Minerals SBU
Tata Steel India - Ferro Alloys & Minerals SBU Quarterly Movement 1400 1,246 60 1,192 1,198 1200 50 48 1000 40 Global market share increased 800 29 26 post ramp up of Tata Steel KZN 30 600 419 351 425 20 in Oct’11 and new conversion 400 10 arrangements in India 200 0 0 Q4 FY11 Q3 FY12 Q4 FY12 Focus
Slide 16: India - Continuous Improvements
Tata Steel India - Continuous Improvements Figures in US$ Mn Savings on Improvement Initiatives Initiative Wise Break Up 400 5 362 350 73% 48 300 123 250 209 200 186 46 150 314 19 100 29 163 50 0 DMAIC/SIP TOC Marketing Initiative KVHS Synergy FY11 FY12 Cost savings Value addition Improvement Initia
Slide 17: 3 MTPA Expansion at Jamshedpur
3 MTPA Expansion at Jamshedpur Pellet Plant I Blast Furnace TSCR LD#3 TSCR 17
Slide 18: Status Update - 3 MTPA Schedule of Commissioning
Status Update - 3 MTPA Schedule of Commissioning Major Facilities Expected Completion schedule Mines– Noamundi (Fines) Trial production started. Mines – Joda & balance of Integrated trials completed. Production to start in Noamundi Jun’12 depending on shutdowns. Pellet Plant Trial Production started
Slide 19: South East Asia - Performance
South East Asia - Performance Financial Year Ended 31st March’12 Production Mn T Deliveries Mn T 3.09 2.86 2.79 2.95 Q4 0.78 0.73 Q4 0.74 Q4 0.69 Q4 Q3 0.63 Q3 0.78 Q3 0.66 Q3 0.72 Q2 0.73 Q2 0.73 Q2 0.79 Q2 0.79 Q1 0.67 Q1 0.74 Q1 0.75 Q1 0.78 FY11 FY12 FY11 FY12 Turnover US$ mn EBITDA US$ mn 2498
Slide 20: South East Asia - Improvement Initiatives
South East Asia- Improvement Initiatives NatSteel Holdings Upgradation of melt shop shaft furnace and bar mill line to result in both productivity enhancement and power cost savings Strengthening the downstream reinforcement business by increasing its volumes in value added products from the current
Slide 21: Agenda
Agenda Introduction and Consolidated Highlights Global Business Environment Performance of Indian and South East Asian Operations Performance of European Operations Group Financial Performance Corporate Developments 21
Slide 22: European Steel Market
European Steel Market Steel using sector output (index 2005 = 100) Sector PMIs (new orders) 130 70 Expansion 120 60 110 50 100 40 Contraction 90 Automotive (EU) 30 80 Engineering (EU) Construction (EU) 70 Germany - machinery & equipment EU metal goods production 20 Construction (UK) UK - machinery &
Slide 23: Europe - Performance
Tata Steel Europe - Performance Financial Year Ended 31st March’12 Production Mn T Deliveries Mn T 14.80 14.27 14.65 14.02 Q4 3.80 Q4 3.30 Q4 4.11 Q4 3.55 Q3 3.66 Q3 3.62 Q3 3.39 Q3 3.35 Q2 3.61 Q2 3.53 Q2 3.50 Q2 3.57 Q1 3.73 Q1 3.81 Q1 3.65 Q1 3.55 FY11 FY12 FY11 FY12 Turnover US$ mn EBITDA US$ mn
Slide 24: Tata Steel Europe Challenges Faced in FY12
Tata Steel Europe Challenges Faced in FY12 Market Operational performance Cost / Price Squeeze Continuing Eurozone Operational Performance crisis deflated European below plan steel demand after recovery in Jan - June Production issues primarily at Strip Products UK blast Raw material cost / price Li
Slide 25: Europe - Q3FY'12 vs Q4FY'12
Tata Steel Europe - Q3FY’12 vs Q4FY’12 4.00 Production & Sales Mn T Average Selling Prices 3.62 1200 US$ / T 3.55 3.50 3.35 3.30 $59/t 3.00 1000 1191 2.50 1132 800 2.00 Q3 FY12 Q4 FY12 Production (MT) Deliveries (MT) 600 Q3 FY12 Q4 FY12 Raw Material Consumed US$ / T 10 EBITDA/T US$ / T 600 8 0 $45/t
Slide 26: Europe - Improvement Initiatives
Tata Steel Europe - Improvement Initiatives EBITDA benefits identified FY’12 (£ mn) Robust process of EBITDA improvement ideas in place 190 Over £300 mn of structural EBITDA improvement ideas in the pipeline since June 2011 Over £200 mn ideas realised in FY’12 60 Improvement ideas are divided in Cor
Slide 27: Europe - Comprehensive Strategy
Tata Steel Europe – Comprehensive Strategy Investments to improve product mix and service offering: Rail: 108m Rail Hayange • BF 4 rebuild at Port Talbot Aerospace: vacuum arc remelting furnaces and specialist • Supply Chain Transformation testing equipment • Upgrade hot strip mill IJmuiden Automoti
Slide 28: Europe - Blast Furnace Rebuild at Port Talbot
Tata Steel Europe - Blast Furnace Rebuild at Port Talbot Campaign life of at least 20 years, taking best available technology from within the group and from leading international technology suppliers An additional 500kt productivity to 2.5mtpa, with increased inner volume and hearth diameter, and pr
Slide 29: Europe - Long Products Restructuring
Tata Steel Europe - Long Products Restructuring Challenging market environment Starting Point Volatile performance Low productivity Reach significant gross margin uplift through commercial levers: Mix improvements focussed on higher margin business Cost/price improvements Key Levers Achieve £130m fi
Slide 30: Agenda
Agenda Introduction and Consolidated Highlights Global Business Environment Performance of Indian and South East Asian Operations Performance of European Operations Group Financial Performance Corporate Developments 30
Slide 31: Group Financial Performance – Q4 FY'12
Group Financial Performance – Q4 FY’12 Figures in US$ Mn unless specified Q4 FY12 Q3 FY12 Tata Steel Tata Steel SE Tata Steel Tata Steel India Europe Asia Group (*) Group (*) Deliveries (Mn T) 1.77 3.55 0.72 6.22 5.84 Turnover 1,863 3,916 620 6,683 6,507 EBITDA 585 29 21 672 398 EBITDA Margin (%) 31
Slide 32: Group Financial Performance – FY'12
Group Financial Performance – FY’12 Figures in US$ Mn unless specified FY12 FY11 Tata Steel Tata Steel SE Tata Steel Tata Steel India Europe Asia Group (*) Group (*) Deliveries (Mn T) 6.63 14.02 2.95 24.22 24.50 Turnover 6,671 16,150 2,498 26,125 23,344 EBITDA 2,272 349 42 2,660 3,365 EBITDA Margin
Slide 33: Group - Debt Position
Tata Steel Group - Debt Position Net debt movement (US$ mn) Liquidity position (US$ mn) 961 Capex incurred in FY12: Total Liquidity US$3,359 mn 2398 US$2.4 billion 33 Cash and Cash Equivalents Undrawn Lines Conversion Rate: INR/USD – 50.87
Slide 34: Pensions Status – European Operations
Pensions Status – European Operations IAS 19 Valuation Figures in £ mn Mar-11 Dec-11 Mar-12 Total Scheme Retirement Benefit Assets 16,090 16,817 17,166 Total Scheme Retirement Benefit Liabilities (15,743) (16,727) (16,955) Net Pension Surplus (BSPS &SPH) 347 90 211 Pension Asset Composition – BSPS £
Slide 35: Agenda
Agenda Introduction and Consolidated Highlights Global Business Environment Performance of Indian and South East Asian Operations Performance of European Operations Group Financial Performance Corporate Developments 35
Slide 36: Key Corporate Developments
Key Corporate Developments On 31st May’11, Tata Steel completed the transfer of a 50.84% equity stake in Tata Refractories Limited (of its 77.46% stake) to Krosaki Harima Corporation (KHC) of Japan and received sale proceeds of Rs.576 crores (US$129 million) Tata Steel accepted an offer from Rio Tin
Slide 37: Financing Developments
Financing Developments Developments in Q4 FY’12 US$200 million of a US$500 million JPY ECB Loan facility was prepaid in March 2012 On 20th January’12, Tata Sons exercised the option to convert 12 million warrants into ordinary shares of the Company at a price of Rs. 594/- per share, which is at a pr
Slide 38: Raw Material Projects
Raw Material Projects Benga Project at Mozambique The plant was officially opened with the inauguration by the President of Mozambique on May 3, 2012 Railway siding completed Beira port commissioned and first coal exports in end May First Coal Chain & Benga Plant Inauguration 2012 850kt coking coal
Slide 39: Business Outlook
Business Outlook Global steel consumption to improve but production may dip again in the developed regions Chinese steel demand growth expected to moderate Falling exports and inventory indicate lift in domestic demand Indian steel industry is expected to grow at 6.9% in 2012 as per latest forecast
Slide 40: Thank You
qp TATA Thank You TATA STEEL