Arcelormittal South Africa Limited · JSE:ACL
Arcelormittal South Africa — AMSA RenCap Investor Conference (May 2021)
21 slides from Arcelormittal South Africa's conference presentation, May 26, 2021
Slide 1: ArcelorMittal South Africa Management Presentation
ArcelorMittal South Africa Management Presentation May 2021
Slide 2: Disclaimer
Disclaimer Forward-looking statements This presentation includes forward-looking information and statements about ArcelorMittal South Africa and its subsidiaries that express or imply expectations of future events or results. Forward-looking statements are not historical facts. These statements incl
Slide 3: Table of contents
Table of contents 1 Investment case 2 AMSA opportunity 3 Global steel market 4 Historical context 5 Roadmap to successful AMSA turnaround ▪ Restructuring ▪ Balance sheet ▪ Repositioning and Growth 6 Q&A Page 3
Slide 4: Investment case
Investment case • ArcelorMittal South Africa Limited (“AMSA”, the “Company”) has in the last decade, faced a number of headwinds that have acted as an impediment to the business’ performance • AMSA remains systemically important to South African industry and its key productive economic sectors, such
Slide 5: AMSA overview
AMSA overview Business Overview Key Investment Highlights Revenue • AMSA has been in existence since 1928; previously known as Iscor, a parastatal Rbn 41.4 ✓ Largest steel producer in Africa organisation with its first operations in Pretoria • AMSA is the largest steel producer in Africa with three
Slide 6: Survival, restructuring and turnaround initiative well underway
Since 2018, the survival, restructuring and turnaround initiative is well underway and will continue as an integral part of the Company’s DNA Key Financial Metrics Commentary on 2020 Performance 1 Revenue 2 EBITDA • Revenue decrease by 40% in FY2020 from FY2019 due to lower 1 Rm production and sales
Slide 7: Strategic initiatives to drive EBITDA recovery from FY 2019
Strategic initiatives to drive EBITDA recovery from FY 2019 Since 2018 to 2020 • Cash generated from operations remained under pressure • R5.9bn cash released from improved working capital management • Capex of R3.3bn paid over the last 3 years • Proceeds of R3.2bn realised from Macsteel Int share s
Slide 8: Environmental matters and climate change
Environmental matters and climate change Water management Air Quality Act By-products Saldanha - Care and maintenance Climate change • Carbon neutrality roadmap will depend upon national targets as will be set by the SA Government • Promising technologies to reduce Greenhouse Gas emissions are curre
Slide 9: Global steel market
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Slide 10: Temperature of the global steel market place
Temperature of the global steel market place “Iron ore eyes $200/t amid steel “Steel price have tripled. Sound the boom” – Wood Mackenzie alarm” – Bank of America “Iron ore prices hit record high “US Steel shipments decrease by with appetite for steel ‘far beyond 9.2% in February” – nwitimes.com exp
Slide 11: Temperature of the global steel market place (cont).
Temperature of the global steel market place (cont). *International HRC, rebar and iron ore price evolution ($/t) +97% +69% 220 +85% 1 000 +42% 200 900 180 800 160 700 140 600 120 500 100 400 80 300 60 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2020 2020 2020 2020 2021 2020 2020 2020 2020 2021 Average internatio
Slide 12: Historical Context
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Slide 13: Historical context
Historical context 1• International crude steel oversupply • Global crude steel production of 1,8 billion tonnes in 2020 2• Local economy and apparent steel consumption • Low / no growth / recessionary environment up to 2019, with real GDP anticipated to fall by ca. 8% in 2020 • 20% reduction in app
Slide 14: Structural Challenges in the South African Steel Sector
Structural Challenges in the South African Steel Sector Weak GDP Growth Over Supply of Steel Globally Threat of Imports GDP Annual % Change mt 952 mt 922 910 3000 30 903 30 3.3% 2.5% 3.0% 2.3% 2.2% 2,568 2.1% 875 1.8% 29 874 2,408 2,443 2,364 2,379 1.5% 1.5% 1.4% 858 28 1.2% 28 2500 25 0.8% 839 0.4%
Slide 15: COVID-19 impact on business sustainability
COVID-19 impact on business sustainability • Global steel supply chain disruptions has led to an international shortage of steel • In response to the tight supply, and as restocking takes place, steel and raw material prices have increase to record levels in all regions – starting in late 2020 and c
Slide 16: Managing through the pandemic
Managing through the pandemic 1 2 3 4 Rapid response to Covid-19: International markets: South Africa and the regional ArcelorMittal South Africa’s • Adapting operations to keep • Unexpected bounce in near- economy: reaction: employees and service term steel demand in H2 • Significant changes in • F
Slide 17: Path to a successful turnaround of AMSA
Path to a successful turnaround of AMSA
Slide 18: AMSA has formulated an achievable turnaround plan for its future success
AMSA has formulated an achievable turnaround plan for its future success The future financial performance of AMSA is dependent on the successful implementation of a turnaround plan predicated by three key elements 1 • Addressing, over the medium term, certain key constraints faced by the business an
Slide 19: Restructuring: International cost competitiveness
Restructuring: International cost competitiveness • Business Transformation Programme (BTP) – savings of R3.8bn by December 2020 since start of programme in late 2018 • BTP 2021 targets comprising primarily of: Total Fixed Cost (Rm)* • fixed costs -10% -35% 8 597 • strategic raw materials 7 761 5 06
Slide 20: Repositioning for Growth
Repositioning for Growth A number of aspects of AMSA’s financial and capital structure need to be addressed to deliver a reconstituted, sustainable national steel champion Becoming a Key Player in South Africa’s Industrial Manufacturing Programme Retain and enhance restructuring benefits • Repositio
Slide 21: ArcelorMittal
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ArcelorMittal South Africa — AMSA RenCap Investor Conference (May 2021) on 6ix