Arcelormittal South Africa Limited · JSE:ACL
Arcelormittal South Africa — H1 2021 Earnings Presentation
30 slides from Arcelormittal South Africa's earnings presentation, August 2021
Slide 1: Financial Results
Financial Results For the six months ended 30 June 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: Agenda
AGENDA Key messages and salient Operations and Market Financial Review and Sustainability and Growth Conclusion and Outlook features Review Capital Allocation Kobus Verster Kobus Verster Desmond Maharaj Kobus Verster Kobus Verster
Slide 4: Key messages and salient features
Key messages and salient features Kobus Verster
Slide 5: Overview and salient features
Overview and salient features STRONG EBITDA POSITIVE FREE CASH LIQUID STEEL BUSINESS TRANSFORMATION +R4 474 PROFITABILITY +R1 291 FLOW +36% PRODUCTION +51% PROGRAMME (BTP) SAVINGS million million H1 2021: R3 218 million H1 2021: R985 million H1 2021: 1 526 kt H1 2021: R1 001 million H1 2020: - R1 25
Slide 6: Safety
Safety • Regrettably, four fatalities in H1 2021: three at Vanderbijlpark Works (17 February 2021) and another at Newcastle Works (19 June 2021) • We are determined to improve our safety performance and eradicate fatalities at the Company • Stepped up focus and intensity – regular alignment and info
Slide 7: Environmental, social and governance (ESG)
Environmental, social and governance (ESG) ARCELORMITTAL GROUP • Committed to leading the steel industry globally on sustainability • XCarb™ brand brings together ArcelorMittal’s reduced, low and zero‐carbon products • ArcelorMittal Sestao to become the world’s first full-scale steel plant to manufa
Slide 8: Market and operational review
Market and operational review Kobus Verster
Slide 9: Context
Context INTERNATIONALLY • Recovery of global steel environment observed since second half of 2020, accelerated in 2021 • Strong demand coupled with low supply chain inventories supported a strong recovery in steel spreads SOUTH AFRICA, THE REGIONAL ECONOMY AND OUR COMPANY • One of the most challengi
Slide 10: Steel environment - Global
Steel environment - Global PRODUCTION Global crude steel production (million tonnes) • Global crude steel production increased by 14% against H1 2020 to 1 001 million tonnes* 1 001 • China’s crude steel production increased by 11% to 560 million tonnes, maintaining its market 952 928 share at 56% 90
Slide 11: Steel environment - South Africa
Steel environment - South Africa • 2021 real GDP anticipated to improve by 4,5% from a 7% decline in 2020 Total Apparent Steel Consumption (ASC) (‘000 tonnes) • 9% increase from the preceding six months (H2 2020) in apparent steel consumption (ASC) to 2,2 million tonnes* 2 443 2 500 2 364 2 378 35 •
Slide 12: Steel environment - ArcelorMittal South Africa
Steel environment - ArcelorMittal South Africa VOLUMES Sales and production volumes (‘000 tonnes) • 36% increase in liquid steel production to 1,5 million tonnes 1 000 • 10% increase in sales volumes to 1,3 million tonnes 900 • 21% increase in local sales volumes to 1,1 million tonnes 786 800 • 39%
Slide 13: Operating environment - ArcelorMittal South Africa
Operating environment - ArcelorMittal South Africa STEEL OPERATIONS ArcelorMittal South Africa plant capacity utilisation* 80 • Focus to achieve greater operational reliability and improve plant utilisation 67% 67% • Excluding Saldanha Works current capacity utilisation of 85% (H1 2021: averaged 59%
Slide 14: Financial review and capital allocation
Financial review and capital allocation Desmond Maharaj
Slide 15: Financial results - Financial performance
Financial results - Financial performance ArcelorMittal South Africa – EBITDA evolution (Rm) 768 3 218 328 757 268 107 338 3 791 1 381 -1 256 EBITDA Sales volume Sales price Raw material Lockdown Covid risk Restorative BTP savings Other EBITDA H1 2020 and mix prices & other idle cost mitigation & fi
Slide 16: Financial results - Net borrowings
Financial results - Net borrowings • Free Cash Flow positive at R985 million (H1 2020: -R306 million) • R1 661 million of cash invested in working capital level as a result of higher activities • Receivables increased by R2 360 million Net borrowings bridge (Rm) 1 661 3 169 130 350 186 -2 782 -3 624
Slide 17: Financial results - Capital allocation
Financial results - Capital allocation The Company is committed to continued investment in its assets CAPITAL ALLOCATION (Rm) • Maintenance investments to preserve and increase asset capacity H1 2021 H1 2020 • Newcastle Works blast furnace mini reline (interim stave and shell repairs) for long term
Slide 18: Transforming for sustainability and growth
Transforming for sustainability and growth Kobus Verster
Slide 19: Strategic initiatives and growth opportunities
Strategic initiatives and growth opportunities Focus for 2021 Business Transformation Programme (BTP) • Contributed a further R1 billion in improvements adding to the R3,6 billion since 2018 and foreseeable Customer centricity future • Improve service delivery, product lead times and customer experi
Slide 20: Conclusion and outlook
Conclusion and outlook Kobus Verster
Slide 21: Outlook – H2 2021
Outlook – H2 2021 • During the civil unrest in the second week of July 2021, we were able to effectively protect both our workforce and physical assets, but lost some production and shipments • Continued focus on health and wellbeing of employees • Full impact of healthier market should be more full
Slide 22: Appendices
ArcelorMittal Appendices
Slide 23: Headline earnings (Rm)
Headline earnings (Rm) H1 2021 H1 2020 Revenue H1 2021 H1 2020 per quarter Revenue 18 596 12 014 Q1 7 939 8 011 EBITDA 3 218 (1 256) Q2 10 657 4 003 Depreciation and amortisation (273) (272) H1 18 596 12 014 Profit/(Loss) from operations 2 945 (1 528) Reclassification of foreign currency differences
Slide 24: Statement of financial position (Rm)
Statement of financial position (Rm) H1 2021 H1 2020 H1 2021 H1 2020 Shareholders Equity 4 602 1 540 Non-current assets 9 184 9 665 Stated capital 4 537 4 537 Property, plant and equipment 7 735 7 830 Non-distributable reserves (3 687) (4203) Investment properties 751 1 139 Retained income 3 752 1 2
Slide 25: Cash flow (Rm)
Cash flow (Rm) H1 2021 H1 2020 Movement in working capital * H1 2021 H1 2020 Cash (utilised in)/generated from operations before Inventories (616) 1 960 3 169 (1 573) movement in working capital Receivables (2 360) 368 Movement in working capital * (1 661) 1 651 Payables 1 390 (465) Cash generated f
Slide 26: Reconciliation of profit/(loss) from operations to EBITDA
Financial results - Reconciliation of profit/(loss) from operations to earnings before interest, tax, depreciation and amortisation (Rm) H1 2021 H1 2020 Profit/(Loss) from operations 2 945 (1 528) Adjusted for: Depreciation 269 266 Amortisation of intangible assets 4 6 Earnings/(loss) before interes
Slide 27: Divisional EBITDA (Rm)
Divisional EBITDA (Rm) H1 2021 H1 2020 Steel operations (Rm) 3 120 (1 391) EBITDA margin % 16,1 (11,2) Net realised price R/t 13 260 9 338 Non-steel operations 351 108 EBITDA margin % 27,1 13,7 Corporate (253) 27 Total EBITDA 3 218 (1 256) EBITDA margin % 17,3 (10,5) Page 27 Financial results for th
Slide 28: Our value creation model
Our value creation model Inputs Our working business model Outputs and outcomes We produce iron and steel, commercial coke and Natural capital useful by-products, in processes that sustain hundreds of thousands of jobs. Financial capital Raw materials consumed (kilotonne) Shareholders, investors, em
Slide 29: Socio-economic footprint
Socio-economic footprint Project Description • Virtual and online teaching for Grade 10, 11 & 12 learners; Classroom contact for ECD classes and teachers; Grade 12 Matric Science Centres Holiday Programmes; Robotics Holiday Programme; Mid-year exam preparations; Introduction of Maths Week; Outreach
Slide 30: Thank you
Thank you ArcelorMittal South Africa Limited Room N3-5 Main Building Delfos Boulevard Vanderbijlpark,1911 South Africa www.arcelormittal.com/southafrica/
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