Tata Steel Limited · NSE:TATASTEEL
Tata Steel — Q4 FY2017 Earnings Presentation
39 slides from Tata Steel's earnings presentation, May 16, 2017
Slide 1: Results Presentation
Results Presentation Financial Quarter and year ended 31st March 2017 16th May 2017 1
Slide 2: Safe harbor statement
Safe harbor statement Statements in this presentation describing the Company’s performance may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results may differ materially from those directly or indirectly expressed, inferred or implied. Impo
Slide 3: Tata Steel is committed towards excellence in Health and Safety
Tata Steel is committed towards excellence in Health and Safety 1 LTIFR* data for Tata Steel Group Ambition: 0.95 Committed to ensuring all Tata Steel sites are sustainably 0.9 fatality free on our way to ‘being the benchmark in H&S in our industry’ 0.8 0.78 Key Focus areas: 0.7 0.68 39% H&S Exc
Slide 4: Focused on engaging with communities and improving quality of life
Focused on engaging with communities and improving quality of life Education Health Lively hood CSR Spend -India (Rs. Crs) Thousand School Project has 4.7 lakh cases related to primary 13,500 farmers adopted System of 212 linked over 5,800 children back to health responded to in areas of 204 1
Slide 5: Awards & recognitions conferred in various categories
Awards & recognitions conferred in various categories Received the Prime Minister’s trophy for Best Performing Integrated Steel Plant for the year 2013 -14, the Steel Minister’s Trophy for the year 2012-13 and a Certificate of Excellence 2011-12 for being the ‘Best Performing Integrated Steel Plant’
Slide 6: Agenda
Agenda I Consolidated Financial Performance II India & SE Asia performance III Europe performance IV Appendix 6
Slide 7: Global Steel | Demand gaining momentum, amid rising volatility
Global Steel | Demand gaining momentum, amid rising volatility Finished Steel Demand (% growth) Upside surprise from China and recovery in emerging & developing 7.1% 6.1% countries aids demand recovery in CY16. 4.9% 4.1% 4.0% Inflationary expectations, cost push & re-stocking from lower levels 2
Slide 8: Global Steel | Cross-border dynamics at play
Global Steel | Cross-border dynamics at play MT Chinese Steel Capacity Cuts & Mill Utilisation Rates % Despite capacity cuts & environment curbs, China production continue to 0 84% rise as mill utilization levels increase. Global steel inventories move higher, (10) but still below peak. 80% 80% (2
Slide 9: Highlights
Highlights Consolidated revenues of Rs. 35,305 crores, up 22% q/q and 30% y/y. India deliveries grew 7% q/q and 18% y/y and now contribute 47% of group deliveries. Realisations increased across geographies. Consolidated EBITDA of Rs.17,025 crores for FY17 and Rs. 6,982 crores for Q4 FY17, up
Slide 10: Strategic Developments
Strategic Developments Completion of sale of Specialty Steels business for a total consideration of £100 million. Phased efforts to arrive at a structural solution to BSPS BSPS shifted from defined benefit to defined contribution. BSPS curtailment charge of £413 Mn , interim step towards de-
Slide 11: Milestones: Phased approach towards de-risking British Steel Pension Scheme
Milestones: Phased approach towards de-risking British Steel Pension Scheme Sep 2015 Triennial Valuation as of 31 March 2014 completed with the then funding deficit agreed at £90m. The first step in the restructuring of the BSPS was completed, with the closure of the defined benefit section to f
Slide 12: Quarterly Financial Performance as per Ind-AS1
Quarterly Financial Performance as per Ind-AS1 Rs Crores Consolidated India Q4 FY17 Q3 FY17 Q4 FY16 FY17 FY16 Q4 FY17 Q3 FY17 Q4 FY16 FY17 FY16 Deliveries(MT) 6.83 6.07 6.32 23.88 23.54 3.21 2.99 2.72 10.97 9.54 Turnover 35305 29025 27071 1,17,420 1,06,340 17113 14106 11736 53261 42697 Raw material
Slide 13: Quarterly Financial Performance as per Ind-AS1
Quarterly Financial Performance as per Ind-AS1 Rs Crores Europe SEA Others & Eliminations Q4 Q3 Q4 Q4 Q3 Q4 Q4 Q3 Q4 FY17 FY16 FY17 FY16 FY17 FY16 FY17 FY17 FY16 FY17 FY17 FY16 FY17 FY17 FY16 Deliveries(MT) 2.85 2.34 2.85 9.93 10.97 0.66 0.65 0.67 2.61 2.70 - - - - - Turnover 15,244 12,170 12,982 52
Slide 14: Group EBITDA Bridge FY17 Vs FY16
Group EBITDA Bridge FY17 Vs FY16 288 746 17,186 7,528 1,123 7,501 FY16 Selling Result Cost Changes Volume/Mix Others FY17 Note: Consolidated EBITDA consists of EBITDA across four operating entities –TSI, TSE, NSH & TSTH Higher realisations across geographies and improvement in product basket suppo
Slide 15: Group EBITDA Bridge Q4 FY17 Vs Q3 FY17
Group EBITDA Bridge Q4 FY17 Vs Q3 FY17 3,211 Rs Crores 931 6,442 381 4,226 (2,308) Q3 FY17 Selling Result Cost Changes Volume/Mix Others Q4 FY17 Note: Consolidated EBITDA consists of EBITDA across four operating entities –TSI, TSE, NSH & TSTH Note: Consolidated EBITDA consists of EBITDA across four
Slide 16: Consolidated Debt Bridge
Consolidated Debt Bridge Rs Crores 777 84,752 2,880 81,987 83,014 674 217 5 1,742 72,367 10,648 Gross Debt Loans Movt Finance lease Forex impact & Disposal of UK Gross Debt Dec Loans Movt Forex impact & Gross Debt Mar Cash, Bank & Net Debt Mar Mar'16 obligation Others Longs Business 16 Others 17 Cur
Slide 17: Consolidated Cash Flow Bridge for FY17
Consolidated Cash Flow Bridge for FY17 17,573 Rs Crores 4,843 1,835 2,885 7,716 5,993 724 677 119 4,832 4,993 950 Opening Cash & Operating Cash Change in Direct taxes Capex Monetisation Purchase of Net Debts Changes in Interest paid Dividend Others Closing Cash & Cash Eq on 1st flow before WC Workin
Slide 18: Agenda
Agenda I Consolidated Financial Performance II India & SE Asia performance III Europe performance IV Appendix 18
Slide 19: India Steel | Growth momentum gaining traction post demonetization transition
India Steel | Growth momentum gaining traction post demonetization transition Strong GDP growth and Reducing Fiscal Deficit (%) India registered 6.7% growth during FY17 and remained the 8.0% 7.60% 7% fastest growing major economy. 7.5% 7.20% 6% Automotive growth regains post demonetization. PV s
Slide 20: India Steel | Production outpaces consumption | India turns net exporter
India Steel | Production outpaces consumption | India turns net exporter Production Outpace Consumption In Q4, post transitory impact of demonetization, domestic production 11% Steel Demand Growth grew at 11% outpaces consumption of 6%. Inc in Dom Import Production Growth Demand Substitution Dec
Slide 21: Tata Steel India | Strong growth reflects the strength of the franchise
Tata Steel India | Strong growth reflects the strength of the franchise Ramp-up of Kalinganagar steel plant enabled higher deliveries Outpaced the market growth Volumes in KT 18% 7% 15% 3,208 2,994 2,719 432 8% 399 9% 10,973 396 947 9,542 11% 1582 1% 937 1430 983 3% 3466 3357 1526 1351 32% 4768 1038
Slide 22: Ferro Alloys and Minerals-Improved realisations resulted in higher profitability
Ferro Alloys and Minerals-Improved realisations resulted in higher profitability Kt Rs/Tonne 600 120,000 101,000 525 500 100,000 76,558 75,149 400 80,000 65,000 336 300 270 60,000 200 168 176 40,000 153 140 128 101 83 100 48 48 38 51 57 20,000 13 29 13 0 - Q3 FY17 Q4 FY17 FY16 FY17 Dolomite Ferro Ma
Slide 23: Continuous de-commoditization of steel has been the cornerstone of Tata Steel India branding journey
Continuous de-commoditization of steel has been the cornerstone of Tata Steel India branding journey… Brands launched 55% Brand Identity & establishing channel Enhancing Service Capability & consumer 50% experience 48% 50% a) Appointment. of excl. Distributors 46% a) Launch of service centers b) Cre
Slide 24: Investments in Services & Solutions segment continue
Investments in Services & Solutions segment continue In Scale up Mode In Pilot & Trial mode Pre Fab Housing Water ATM EzyNest solution for urban sanitation Gates & Grills Pravesh Steel door CYAN-Wardrobes Solar Panel Mobinest Portable cabin 24
Slide 25: Tata Steel India | Some facts we are proud of
Tata Steel India | Some facts we are proud of 1 out of every 7 Individual house builders build their homes with Tata Tiscon rebars 3 among every 4 medium & heavy commercial vehicles run on chassis made from Tata Steel HR coil 1 in every 3 GC roofs in rural India is made with Tata Shaktee 1 in every
Slide 26: Tata Steel India | Our track record of improving operational efficiencies and minimizing environmental impact
Tata Steel India | Our track record of improving operational efficiencies and minimizing environmental impact Coke rate (kg/thm) PCI rate (kg/thm) 550 Good Good 496 200 181 487 483 479 500 468 168 180 455 455 443 443 160 450 140 122 123 126 116 117 380 110 400 120 360 91 93 100 81 350 80 300 60 FY07
Slide 27: Tata Steel India | EBITDA Bridge – Q4FY17 vs Q3FY17
Tata Steel India | EBITDA Bridge – Q4FY17 vs Q3FY17 961 571 4,324 273 3,393 133 (1,006) Q3 FY17 Selling Result Revenue Cost Vol/Mix FAMD Others Q4 FY17 Selling Results improved on back of higher realisations. Cost changes impacted by higher coal prices. Deliveries improved by 7% q/q. Increas
Slide 28: South East Asia | Business environment
South East Asia | Business environment Singapore Manufacturing PMI & Thailand Manufacturing Index Singapore construction spend hit lowest in last 6 years. Softening 52 demand led to fierce competition on tender prices. 51 Spreads continue to be supportive during the quarter on back of 50 increas
Slide 29: Tata Steel South East Asia | Business Update
Tata Steel South East Asia | Business Update Nat Steel Holdings Q4 Profitability improved on improved realisations and better spreads management Deliveries got impacted on sluggish construction market and Chinese new year holidays reducing by 7.5% qoq Exports basket increased to 60 countries o
Slide 30: India & South East Asia | Business Outlook
India & South East Asia | Business Outlook The overall outlook for the steel market remains constructive on optimism on US infra spend and China supply side I reforms. The recent slide in commodity prices, however threatens to dampen this optimism Thrust on infrastructure & affordable housing along
Slide 31: Agenda
Agenda I Consolidated Financial Performance II India & SE Asia performance III Europe performance IV Appendix 31
Slide 32: Europe Steel | Market Context
Europe Steel | Market Context EU market supply (Mt, import share %) 20 20% The Eurozone and UK economies improved in 2016, but the main 18 driver of growth continued to be services 16 15% 14 Growth of the European steel-using sectors remained mixed. The 12 10% construction and machinery sectors
Slide 33: Improving offering to customers
Improving offering to customers Customer-focused developments: Business focused on developing differentiated products and services which help make customers more competitive Sales of differentiated products increased from 32% to more than 37% – as a proportion of overall mix Launched 20 new pr
Slide 34: Tata Steel Europe | EBITDA Bridge – Q4FY17 vs Q3FY17
Tata Steel Europe | EBITDA Bridge – Q4FY17 vs Q3FY17 £ millions 229 (126) 2 11 230 28 £92m 86 Q3FY17 Selling result Cost changes Production volume Manufacturing Central & Others Q4FY17 Selling Result improved with favourable market conditions Cost Changes have been impacted by the higher price o
Slide 35: Europe | Business Outlook
Europe | Business Outlook EU and UK economies expected to grow 1.8% in 2017. Uncertainties following EU referendum have led to I weaker pound benefiting UK exporters II European steel demand expected to grow by 1.3% in 2017 in line with modest economic growth III European steel mills expected to con
Slide 36: Agenda
Agenda I Consolidated Financial Performance II India & SE Asia performance III Europe performance IV Appendix 36
Slide 37: Standalone Results – Q/Q Variations
Standalone Results – Q/Q Variations Rs Crores Q4 FY17 Q3 FY17 Key Reasons Gross sales 16,693 13,972 Higher volumes and supportive pricing for Steel and Ferro chrome business Other operating income 420 134 EPCG benefit on higher exports Changes in inventories 96 (488) Inventory buildup in sequential
Slide 38: Consolidated Results – Q/Q Variations
Consolidated Results – Q/Q Variations Rs Crores Q4 FY17 Q3 FY17 Key Reasons Gross sales 34,833 28,912 Increase in revenue across geographies driven by higher volumes and realisations Other operating income 472 113 Increase mainly in India Changes in inventories (295) (1,566) Inventory buildup in seq
Slide 39: Contact
Contact Investor enquiries : Devang Shah Tel: +91 22 6665 0530 Email: devang.shah@tatasteel.com Media enquiries: Kulvin Suri Tel: +91 657 664 5512 / +91 92310 52397 Email: kulvinsuri@tatasteel.com Rob Simpson Tel: +44 207 717 4404/ +44 7990 786531 Email: rob.simpson@tatasteel.com 39