Arcelormittal South Africa Limited · JSE:ACL
Arcelormittal South Africa — FY2019 Earnings Presentation
25 slides from Arcelormittal South Africa's earnings presentation, Feb 6, 2020
Slide 1: Financial Results
Financial Results For the year ended 31 December 2019 6 February 2020
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 Key messages Market and Financial review Outlook and salient operational Capital Sustainability features review Questions allocation Kobus Kobus Desmond Kobus Kobus Verster Verster Maharaj Verster Verster Page 3 Financial results for the year ended 31 December 2019
Slide 4: Key messages and salient features
Key messages and salient features Kobus Verster
Slide 5: Key Messages and Salient Features
Key Messages and Salient Features • Best annual injury frequency safety metrics ever reported • Average international steel prices fell by 15% • Business Transformation Programme (BTP) delivered EBITDA improvements of Liquid steel Sales production volumes Revenue R1 450 million ($24 per tonne) (cumu
Slide 6: Safety
Safety • Safety remains the number one priority • Despite the firm intention to achieve zero fatalities and injuries, regrettably one fatal incident at Newcastle Works on 27 October 2019 • Critical to create a consistent safety culture with clear accountability • Injury frequency rates’ are the best
Slide 7: Market and Operational review
Market and Operational review Kobus Verster
Slide 8: Steel Environment - Global
Steel Environment - Global PRODUCTION Global crude steel output (mt) • Global crude steel production increased to 1,8 billion tonnes, 3% 922 903 910 higher than 2018 29 875 28 28 858 • China constitutes 54% of global steel production (2018: 51%) 839 28 27 801 805 25 • China exports increased 7% to 9
Slide 9: Steel Environment - South Africa
Steel Environment - South Africa Total Apparent Steel Consumption (ASC) (‘000 tonnes) VOLUMES – South Africa 3 000 30 2 586 2 568 2 408 2 443 2 364 2 398 • 6% reduction in apparent steel consumption to 4,5 million tonnes 2 500 2 337 2 144 25 Source: SAISI • 27% reduction in apparent steel consumptio
Slide 10: Steel Environment - ArcelorMittal South Africa
Steel Environment - ArcelorMittal South Africa SALES PRICE • 9% reduction in overall realised dollar steel price ArcelorMittal South Africa Steel basket prices compared to an international RMB • Average USD/ZAR exchange rate weakened by 9% 110 • Weaker USD/ZAR exchange rate aided in absorbing the 9%
Slide 11: Operating Environment - Flat Steel
Operating Environment - Flat Steel Flat steel product sales and production volumes (‘000 tonnes) • Production volumes adjusted to align with market conditions 2 000 1 616 • 19% lower liquid steel production to 2,9 million tonnes 1 500 1 489 1 506 1 489 1 482 1 410 1 247 1 249 • Lower plant utilisati
Slide 12: Operating Environment - Long Steel
Operating Environment - Long Steel • Vereeniging Works’ electric arc furnace restarted in January 2019 Long steel product sales and production volumes (‘000 tonnes) • 1% lower liquid steel production to 1,5 million tonnes 900 • Lower plant utilisation of 66% (2018: 81%) 800 753 750 752 701 700 • 18%
Slide 13: Operating Environment - Coke & Chemicals
Operating Environment - Coke & Chemicals • 4% increase in commercial market coke production to Coke & Chemical sales and production volumes (‘000 tonnes) 191 000 tonnes (2018: 184 000 tonnes) 140 • 4% reduction in sales volumes to 152 000 tonnes 120 (2018: 158 000 tonnes) 98 • Electricity load-shedd
Slide 14: Financial review Capital allocation
Financial review Capital allocation Desmond Maharaj
Slide 15: Financial Results - Financial performance
Financial Results - Financial performance ArcelorMittal South Africa – EBITDA bridge (Rm) • Revenue decreased by 9% 1 282 • EBITDA decreased to a loss of R632 million 3 608 1 979 3 430 Divisional EBITDA (Rm) 2 026 184 1 450 -632 747 -574 Flat steel EBITDA Exchange Sales Sales price RM prices Other c
Slide 16: Financial Results - Reconciliation of Loss from operations to Earnings
Financial Results - Reconciliation of Loss from operations to Earnings before interest, tax, depreciation, amortisation and exceptional items 2019 2018 (Loss)/profit from operations (2 359) 2 777 Adjusted for: Depreciation 819 817 Amortisation of intangible assets 11 14 Exceptional items: Saldanha W
Slide 17: Financial Results - Net Borrowings
Financial Results - Net Borrowings Net borrowings bridge 2018 to 2019 (Rm) 244 -475 1 940 1 491 1 517 180 105 1 508 -3 370 Net borrowings Cash utilised in Working capital Net finance costs Capital Realised foreign Other Capitalisation of Net borrowings 2018 operations before expenditure exchange Gro
Slide 18: Financial Results - Capital Allocation
Financial Results - Capital Allocation Capital allocation per division (Rm) Capital allocation per category 2019 (Rm) 859 Blast Furnace D Vanderbijlpark Interim repair 215 833 150 Newcastle 281 Coke Oven Maintenance 153 V4 Bracing 56 462 Saldanha 162 19 Vereeniging 37 Other 93 AMCC, Corporate 23 & o
Slide 19: Transform for sustainability and Growth
Transform for sustainability and Growth Kobus Verster
Slide 20: Sustainability - Strategic Asset Footprint Review
Sustainability - Strategic Asset Footprint Review STRATEGIC ASSET FOOTPRINT REVIEW STRATEGIC ASSET FOOTPRINT REVIEW Phase 1: Saldanha Works Phase 2: Long Steel Products Strategic • Orderly and commercial wind-down Asset • Continue to engage key stakeholders to progressing according to plan Footprint
Slide 21: Sustainability - Raw Material Cost Base and Corporate Actions
Sustainability - Raw Material Cost Base and Corporate Actions RAW MATERIAL COST BASE CORPORATE ACTIONS Cost-linked raw material supply By-product monetisation Strategic • Cap and reduce by-product generation and • Pockets of opportunity in the pursuit of cost Asset disposal footprint linked raw mate
Slide 22: Sustainability – Enabling 'Transformation through Sustainability and Growth'
Sustainability – Enabling ‘Transformation through Sustainability and Growth’ COST COMMUNICATION Achieving the Business Transformation Straightforward, mature and regular Programme (BTP), EBITDA improvement communication with stakeholders, including target, implementing the ‘One Organisation’ employe
Slide 23: Conclusion
-_ ArcelorMittal Conclusion Kobus Verster
Slide 24: Outlook - First Half 2020
Outlook - First Half 2020 • Internationally margins have been tightly squeezed though elements of normalisation are becoming evident • Expected low domestic growth will require immediate interventions • Continued focus on: ❑ Business Transformation Programme ❑ ‘One Organisation’ implementation and o
Slide 25: Thank you
Thank you ArcelorMittal South Africa Limited Room N3-7 Main Building Delfos Boulevard Vanderbijlpark, 1911 South Africa www.arcelormittal.com/southafrica/
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