Slide 1: Q2 FY14 Investor Update Presentation
Q2 FY14 Investor Update Presentation
Slide 2: HEG Limited - Profile
HEG Limited - Profile HEG Limited (henceforth HEG) is a leading graphite electrode manufacturer & exporter HEG produces two grades of graphite electrodes - High Power & Ultra High Power - used in manufacturing steel through the Electric Arc Furnace (EAF) route Exports over 75% of its production to m
Slide 3: Global Steel Industry
Global Steel Industry Major steelmaking overcapacity of more than 300 million tons (mt) at the global level Average utilization rate of less than 80% Steel prices are down by 10% in the year to mid-2013 squeezing the margins of manufacturers Global steel production for the first nine months of 2013
Slide 4: Graphite Electrodes Market & EAF
Graphite Electrodes Market & EAF Graphite electrodes find their biggest industrial use in Electric Arc Furnace (EAF) used in steel plants to melt steel scrap Graphite electrodes market has a current market size of over 1.1 million tonnes per year (US$ 3.5 billion); with the steel industry being the
Slide 5: Factors leading to rise of EAF capacities
Factors leading to rise of EAF capacities Environmental EAF route generates significantly less carbon emissions than BOF route (both in actual production process & also because EAF predominantly utilize and recycle ferrous scrap) As more carbon emission taxes and restrictions are being enforced by g
Slide 6: Changing Dynamics of EAF Steelmaking
DRI now becoming Changing Dynamics of Significantly less an economical feed; carbon emissions; Carbon Makes EAF secured EAF Steelmaking emissions taxes & other against volatility of steel restrictions imposed by govt. scrap prices; Streamlines EAF to discourage BOF steelmaking process; Opens up new
Slide 7: Economics turning favourable for EAF
Economics turning favourable for EAF In production of steel through EAF route – scrap steel is primarily used as feedstock. However Direct reduced iron (DRI), if available economically, can be used as furnace feed The shale gas revolution & the resultant affordable natural gas has revived DRI produc
Slide 8: Shale Gas & DRI Production
Shale Gas & DRI Production 8 Source: MetalsBulletin Research
Slide 9: EAF steelmaking route to overtake BOF by 2030
EAF steelmaking route to overtake BOF by 2030 Crude Steel Production by Blast Furnace Crude Steel Production by Electric Arc Furnace 100% 90% 163 mt 286 mt 348 mt 606 mt 80% 852 mt 1152 mt 1388 mt 70% 60% 50% 40% 697 mt 814 mt 1167 mt 1229 mt 30% 1278 mt 1248 mt 1282 mt 20% 10% 0% 2000 2005 2010 201
Slide 10: Financial Snapshot (over last 5 quarters)
Financial Snapshot (over last 5 quarters) In Rs. Crore (except EPS) Q2 FY13 Q3 FY13 Q4 FY13 Q1 FY14 Q2 FY14 Net Sales 439.77 350.07 443.28 234.10 301.64 EBITDA* 71.16 57.20 72.91 40.63 53.27 EBITDA Margin 16.2% 16.3% 16.4% 17.4% 17.7% EBIT 55.46 41.02 58.15 24.12 35.43 EBIT Margin 12.6% 11.7% 13.1%
Slide 11: Sales & Operating Margins
Sales & Operating Margins Net Sales EBITDA Margin EBIT Margin 500 20.0% 17.4% 17.7% 450 18.0% 16.2% 16.3% 16.4% 400 16.0% 350 13.1% 14.0% 12.6% 11.7% 11.7% 300 12.0% Rs. Crore 10.3% 250 10.0% 439.77 443.28 200 8.0% 350.07 150 301.64 6.0% 234.1 100 4.0% 50 2.0% 0 0.0% Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY
Slide 12: Impact of Forex on PAT Margins
Impact of Forex on PAT Margins 40 10.0% 35.91 35.14 8.2% 7.9% 8.0% 30 6.0% 20 4.0% Rs. Crore 3.3% 11.52 10 2.0% 1.7% 5.06 2.58 0.0% 0 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 -9.2 -2.0% -12.98 -15.32 -10 -9.32 -4.0% -4.0% -20 -6.0% 12 PAT Forex gains/loss PAT Margin
Slide 13: Segmental Performance – Graphite Electrodes
Segmental Performance – Graphite Electrodes In Rs. Crore Graphite Electrodes Q2 FY14 Q1 FY14 Q2 FY13 Net Sales 294.58 230.85 430.17 Export (% of sales) 77.3% 77.6% 79.7% EBITDA Margin 10.6% 7.3% 10.1% EBIT Margin 5.9% 1.7% 8.1% Capital Employed 1028.73 1109.45 1042.22 Capacity utilisation at 58% dur
Slide 14: Segmental Performance – Power
Segmental Performance – Power In Rs. Crore Power Q2 FY14 Q1 FY14 Q2 FY13 Net Sales 41.72 46.83 67.73 EBITDA Margin 42.8% 45.0% 36.5% EBIT Margin 37.8% 38.1% 34.1% Capital Employed 208.86 200.96 210.02 Generation continues to be affected by lower capacity utilisation in Graphite segment Period utilis
Slide 15: Future Outlook
Robust order book position, ensuring optimum capacity 1 utilisation for rest of FY14. Positive impact of economies of scale, to improve bottom-line significantly in near future • Higher capacity utilization coupled with reduction in key 2 Future Outlook raw material prices likely to improve net marg
Slide 16: Thank You
Thank You Mr. Raju Rustogi – Chief Financial Officer HEG Limited Ph: +91 120 244 4541 Fax: +91 120 254 1575 Email: r.rustogi@lnjbhilwara.com Mr. Parin Narichania ProActiv Teamwork Mo: +91 99300 25733 Email: parin@outlook.com 16