Eregli Demir Ve Celik Fabrikalari T.a.s. · BIST:EREGL

Eregli Demir Ve Celik Fabrikalari T.a.s — Ereğli Demir ve Çelik Fabrikaları T.A.Ş. — 9M 2014 Earnings Presentation

36 slides from Eregli Demir Ve Celik Fabrikalari T.a.s's earnings presentation, Oct 28, 2014

  1. Slide 1: Erdemir Group 2014 9 Months Consolidated Financial Results

    Erdemir Group 2014 9 Months Consolidated Financial Results 28 October 2014 1 / 35

  2. 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

  3. Slide 3: Agenda

    Agenda 2014 Market Overview 2014 9M Results 2014 Guidance 3 / 35

  4. Slide 4: Crude steel production and prices by region

    -50% -25% 25% 50% 75% 0% -50% -40% -30% -20% -10% 10% 20% 30% 40% 50% 60% 0% Sep-08 Sep-08 Dec-08 Dec-08 Mar-09 Mar-09 Jun-09 Jun-09 Sep-09 Sep-09 Source: * worldsteel ** Bloomberg Dec-09 Dec-09 Mar-10 Mar-10 Jun-10 Jun-10 Sep-10 Sep-10 Dec-10 Dec-10 Mar-11 Mar-11 Jun-11 Jun-11 Sep-11 Sep-11 Dec-11

  5. Slide 5: Iron ore price was 80 USD/ton at the end of October

    Iron ore price was 80 USD/ton at the end of October COKING COAL PRICES IRON ORE PRICES USD/TON (HCC PEAK DOWNS REGION FOB AUSTRALIA) (IODEX 62% FE CFR NORTH CHINA MID) USD/TON 200 160 USD/TON 150 180 140 160 130 120 140 110 120 100 90 100 80 80 70 06.2013 10.2012 12.2012 02.2013 04.2013 08.2013 10.2

  6. Slide 6: Turkish steel production increased by 2% in 2014 8M YoY

    Turkish steel production increased by 2% in 2014 8M YoY PRODUCTION ( 000 TONS ) 36.405 34.286 31.943 23.879 23.403 9.869 9.039 26.300 25.133 9.075 6.562 6.289 6.629 4.421 26.536 25.247 17.317 17.113 22.868 20.712 19.671 2014 8M 2013 8M 2013 2012 2011 2010 2009 Long Flat Total CONSUMPTION ( 000 TONS

  7. Slide 7: Turkish iron and steel product imports decreased by 9% in 2014 8M YoY

    Turkish iron and steel product imports decreased by 9% in 2014 8M YoY IRON AND STEEL PRODUCT EXPORTS ( 000 TONS ) 16.549 15.861 15.247 21 15.239 14.465 218 10.543 1 1.858 60 212 1.651 9.644 0,4 2.356 2.298 1.520 25 2.957 2.206 1.739 1.562 2.393 1.660 3.523 459 1.296 11.328 11.713 10.489 11.786 7.500

  8. Slide 8: Contraction in the automotive sector is expected

    Contraction in the automotive sector is expected CHANGES IN SECTOR DEVELOPMENT INDEX (% YoY) 40% 35% 33,4% 30% 32,6% 25% 22,1% 20% 20,0% 18,3% 15% 16,0% 10% 7,4% 11,3% 5,5% 7,1% 2,7% 3,0% 4,5% 11,2% 2,2% 4,0% 5% 6,8% 4,0% 0% 3,5% 0,6% 1,4% 1,0% -5% -0,5% -5,5% -10% 2010 2011 2012 2013 2014 (e) 2015

  9. Slide 9: October China HRC sales price lower than last year

    October China HRC sales price is 83 USD/ton lower than last year’s same month Çin 2.Kalite Kok Kömürü Spot İhraç Fiyatı ( USD/TON ) HRC PRICES ( USD/Ton ) 830 730 630 530 430 Feb-12 Feb-13 Feb-14 Jun-12 Jun-13 Jun-14 Oct-11 Oct-12 Oct-13 Oct-14 Aug-12 Aug-13 Aug-14 Dec-11 Dec-12 Apr-13 Dec-13 Apr-12

  10. Slide 10: Billet sales prices are significantly lower in China

    Billet sales prices are significantly lower in China Çin 2.Kalite Kok Kömürü Spot İhraç Fiyatı ( USD/TON ) BILLET PRICES ( USD/Ton ) 700 650 600 550 500 450 400 350 Feb-12 Feb-13 Feb-14 Jun-12 Jun-13 Jun-14 Oct-14 Oct-11 Oct-12 Oct-13 Apr-12 Aug-12 Apr-13 Aug-13 Apr-14 Aug-14 Dec-11 Dec-12 Dec-13 BI

  11. Slide 11: Agenda

    Agenda 2014 Market Overview 2014 9M Results 2014 Guidance 11 / 35

  12. Slide 12: Erdemir Group Key Figures

    ERDEMİR GROUP KEY FIGURES 2014 9M 2013 9M 2013 2012 Liquid Steel Production (000 Tons) 6.369 6.070 8.447 8.042 (1) Slab Production (000 Tons) 5.441 4.919 6.865 6.329 (2) Flat Steel Production (000 Tons) 5.223 4.629 6.427 5.983 Long Steel Production (000 Tons) 819 1.022 1.356 1.519 Flat Steel Shipmen

  13. Slide 13: Liquid steel production was 6,4 million tons in 2014 9M YoY

    Liquid steel production was 6,4 million tons in 2014 9M YoY LIQUID STEEL PRODUCTION ( 000 TONS ) 8.447 8.042 7.656 6.369 6.070 2.135 2.216 1.999 2.209 2.235 1.645 2014 2013 2014 2013 2014 2013 2014 2013 2013 2012 2011 1. Quarter 2. Quarter 3. Quarter 9 Months 13 / 35

  14. Slide 14: Crude steel capacity utilization ratio is higher than world average

    Crude steel capacity utilization ratio of ERDEMİR Group is higher than world average CRUDE STEEL CAPACITY UTILIZATION RATIO 96% 94% 93,3% 92,8% 92% 90% 88,4% 88% 86% 84,1% 84% 82% 80,2% 80% 78,3% 77,9% 78% 77,1% 76% 2011 2012 2013 2014 9M Erdemir Group World Source: worldsteel 14 / 35

  15. Slide 15: HRC production increased by 21% in 2014 9M YoY

    HRC production increased by 21% in 2014 9M YoY PRODUCTION VOLUMES ( 000 TONS ) 7.783 7.501 1.356 6.913 1.519 6.042 794 5.651 819 1.844 1.022 1.598 1.652 1.288 1.381 2.045 1.910 2.140 1.992 2.067 4.583 228 274 1.539 4.384 4.467 317 445 416 3.935 467 161 3.248 411 439 410 493 449 1.264 1.161 1.272 1.1

  16. Slide 16: Sales volumes increased by 6% in 2014 9M YoY

    Sales volumes increased by 6% in 2014 9M YoY SALES VOLUMES ( 000 TONS ) 7.684 7.448 6.647 1.346 6.085 1.468 5.725 791 848 1.778 1.052 1.627 1.553 1.299 1.346 1.973 2.108 2.023 2.025 2.089 205 1.592 4.560 4.353 4.303 352 456 420 291 176 3.938 423 444 3.327 432 429 464 453 1.239 1.140 1.345 1.224 1.35

  17. Slide 17: Net sales revenue was 4,0 billion USD in 2014 9M YoY

    Net sales revenue was 4,0 billion USD in 2014 9M YoY NET SALES REVENUE ( MILLION USD ) 5.340 5.338 5.142 580 771 931 3.975 3.867 491 495 4.562 4.569 4.407 1.324 1.364 1.285 1.426 1.366 1.077 3.484 3.372 250 175 139 70 174 178 1.150 1.114 1.107 1.251 1.227 1.007 2014 2013 2014 2013 2014 2013 2014 201

  18. Slide 18: Sales to pipe and profile industry increased in 2014 9M YoY

    Sales to pipe and profile industry increased in 2014 9M YoY 2014 9M FLAT STEEL DOMESTIC SALES BREAKDOWN (%) 2013 9M FLAT STEEL DOMESTIC SALES BREAKDOWN (%) 436Kt; 9% 469Kt; 11% 248Kt; 5% 1.476Kt; 245Kt; 6% 1.273Kt; 31% 30% 452Kt; 10% 414Kt; 10% 4.720Kton; 4.230Kton; 186Kt; 4% 90% 91% 195Kt; 4% 322Kt

  19. Slide 19: Flat steel sales to EU countries was 46% of flat export

    Flat steel sales to EU countries was 46% of our flat export in 2014 9M 2014 9M FLAT STEEL EXPORTS BREAKDOWN (%) 2013 9M FLAT STEEL EXPORTS BREAKDOWN (%) 49Kt; 9% 24Kt; 6% 22Kt; 5% 30Kt; 6% 240Kt; 46% 31Kt; 7% 81Kt; 16% 517Kton; 45Kt; 10% 443Kton; 10% 9% 320Kt; 72% 119Kt; 23% 2014 9M LONG STEEL EXPOR

  20. Slide 20: Average flat and long steel prices versus cost of sales

    Sep-12 Sep-12 USD/TON USD/TON Oct-12 Oct-12 Nov-12 Nov-12 Dec-12 Dec-12 Jan-13 Jan-13 Feb-13 Feb-13 Mar-13 Mar-13 Apr-13 Apr-13 May-13 May-13 Jun-13 Jun-13 Jul-13 Jul-13 Aug-13 Aug-13 Erdemir Group Flat Sales Price Erdemir Group Long Sales Price 20 / 35 Sep-13 Sep-13 Oct-13 Oct-13 645 USD/ton and 57

  21. Slide 21: Net profit increased by 36% in 2014 9M YoY

    Net profit increased by 36% in 2014 9M YoY EBITDA ( MILLION USD ) 1.400 1.241 48,0% 1.200 987 40,0% 1.000 848 751 32,0% 800 604 23,2% 24,0% 600 21,3% 20,7% 22,8% 20,3% 21,3% 19,8% 19,4% 19,2% 17,5% 312 16,0% 400 282 238 254 294 218 11,3% 200 8,0% 0 0,0% 2014 2013 2014 2013 2014 2013 2014 2013 2013 2

  22. Slide 22: EBITDA was 848 million USD in 2014 9M

    EBITDA was 848 million USD in 2014 9M Consolidated EBITDA => Consolidated Net Profit (Million USD) (148) 22 (49) (90) (21) 848 722 562 EBITDA Depreciation Interest inc. from Operating Income Finance Inc./Exp. Tax Inc./Exp. Non-Controlling NET PROFIT (1 Jan. - overdue sales / Interests (1 Jan. - 30 S

  23. Slide 23: EBITDA to consolidated net cash

    EBITDA was 848 million USD in 2014 9M Consolidated EBITDA => Consolidated Net Cash (Million USD) 724 20 (40) (59) 239 211 (113) (386) 43 848 895 763 EBITDA Changes in Interest Inc. from Interest Inc./ Taxes Paid Net Cash Used Free Cash Flow Increase in Dividend Paid Other INCREASE IN (1 Jan. - Worki

  24. Slide 24: EBITDA per ton for flat product was 142 USD/ton in 2014 3Q

    EBITDA per ton for flat product was 142 USD/ton in 2014 3Q EBITDA PER TON (USD/TON) 153 150 148 141 143 130 142 113 135 100 100 126 125 88 111 113 107 61 64 67 54 24 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2012 2013 2014 Flat Long 24 / 35

  25. Slide 25: Net assets was 4,3 billion USD at the end of 2014 3Q

    Net assets was 4,3 billion USD at the end of 2014 3Q CONSOLIDATED NET ASSETS (MILLION USD) WORKING CAPITAL (MILLION USD) 2.161 1.922 1.585 1.367 801 761 31.12.2013 30.09.2014 12 (27) (179) (236) Trade Receivables Inventories Trade Payables Other WORKING CAPITAL 25 / 35

  26. Slide 26: Net debt was 731 million USD at the end of 2014 3Q

    Net debt was 731 million USD at the end of 2014 3Q BORROWINGS ( MILLION USD ) 3.785 2.767 1.976 2.529 2.479 556 2.059 787 1.945 1.851 1.135 1.640 1.924 693 1.452 1.172 2.211 1.283 1.809 1.742 1.344 731 947 678 2009 2010 2011 2012 2013 2014 3Q Long-Term Debt Short-Term Debt Net Debt 26 / 35

  27. Slide 27: Net debt was 731 million USD at the end of 2014 3Q

    Net debt was 731 million USD at the end of 2014 3Q NET DEBT (MILLION USD) (895) (43) 1.283 386 731 731 - - - - Net Debt Free Cash Flow Dividend Paid Other Net Debt (December 2013) (Sept. 2014) 27 / 35

  28. Slide 28: Cash and cash equivalents and borrowings maturity profile

    Erdemir Group has 1.119 million USD cash and cash equivalents at the end of 2014 3Q BORROWINGS MATURITY PROFILE (MILLION USD) 887 41 466 1.119 373 20 284 244 22 9 207 380 262 71 235 4 146 39 2 11 67 37 1 Sept.14 Oct.-Dec. 2014 2015 2016 2017 2018 2019 2020 Cash 2014 Principal Revolving Trade Financi

  29. Slide 29: Raw materials made up 71% of the cost of sales in 2014 9M

    Raw materials made up 71% of the cost of sales in 2014 9M COST OF SALES BREAKDOWN* - % 5% 5% 5% 3% 4% 1% 1% 4% 4% 5% 6% 6% 7% 7% 12% 12% 11% 11% 71% 72% 74% 75% 2014 9M 2013 2012 2011 Raw Materials Personnel Expenses Purchased Energy Expenses Depreciation and Amortization Exp. Non-operating Expenses

  30. Slide 30: Flat cost per ton excluding raw materials and depreciation was 144 USD/ton

    Flat cost per ton excluding raw materials and depreciation was realised as 144 USD/ton in 2014 3Q FLAT PRODUCTS ( USD/TON )* 500 1.797 1.866 2.100 450 1.600 1.651 1.675 1.682 400 1.378 1.600 350 300 1.100 250 200 600 150 90 85 87 82 80 81 78 100 100 50 65 67 70 72 60 68 63 0 -400 1Q 2Q 3Q 4Q 1Q 2Q 3

  31. Slide 31: Capital expenditures of 172 million USD planned for 2014

    Capital expenditures of 172 million USD is planned for 2014 ( M USD ) 1.017 718 731 634 961 445 675 731 576 264 242 377 200 158 162 172 171 159 106 143 107 96 140 55 68 56 59 57 93 83 55 51 76 43 17 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014 2015 - 9M 2018 Fixed Assets Acquisition and Ma

  32. Slide 32: Number of employees was 13.224 as of September 2014

    Number of employees was 13.224 as of September 2014 NUMBER OF EMPLOYEES 14.637 13.553 13.433 13.161 13.224 13.045 12.801 2008 2009 2010 2011 2012 2013 2014 September 32 / 35

  33. Slide 33: Agenda

    Agenda 2014 Market Overview 2014 9M Results 2014 Guidance 33 / 35

  34. Slide 34: 2014 Guidance

    2014 GUIDANCE Production (M. Tons) Sales (M. Tons) 8,1 8,1 7,8 7,7 6,7 6,3 6,7 6,4 1,4 1,4 1,4 1,4 2013 Actual 2014 Budget 2013 Actual 2014 Budget Long Flat Long Flat 34 / 35

  35. Slide 35: EBITDA and Net Profit Margins

    2014 GUIDANCE EBITDA and Net Profit Margins  EBITDA and Net Profit Margins were 19.2% and 9.4% respectively in 2013.  EBITDA and Net Profit Margins are expected to be 18- 20% and 11-13% respectively in 2014. 35 / 35

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