Tata Steel Limited · NSE:TATASTEEL
Tata Steel — Q4 FY2018 Earnings Presentation
32 slides from Tata Steel's earnings presentation, May 16, 2018
Slide 1: Results Presentation
1 Results Presentation Fourth quarter and year ended March 31, 2018 May 16, 2018 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: Commitment towards excellence in Health and Safety
Commitment towards excellence in Health and Safety LTIFR* of Tata Steel group reduced to 0.46 ▪ Felt Leadership programme Reduced by 85% Completed for all senior leaders, union committee members, and 83% officers in India 3.06 ▪ Best practices for Process Safety Deployed in high hazard operations wi
Slide 4: Focused on engaging with communities and improving quality of life
Focused on engaging with communities and improving quality of life CSR Spend India (Rs. crores) India 232 Education ▪ 6 Model Schools were inaugurated and handed over to Odisha 212 204 194 171 Government in FY18 under ‘30 Model School Construction Project’ ▪ Supported 3,269 students for their educat
Slide 5: Key highlights
Key highlights Delivering, growing and creating value Production (MT)1 Deliveries (MT) +3.6% +5.8% Pursuing 25.39 24.52 25.27 23.88 Enhancing Kalinganagar Strong 6.26 6.49 6.40 6.43 6.56 6.83 value added plant inorganic operating products expansion growth performance portfolio starts opportunities 4
Slide 6: Agenda
Agenda Business Environment Operational Performance Financial Performance Appendix 6
Slide 7: Global economic growth strengthens; steel demand continues to grow
Global economic growth strengthens; steel demand continues to grow ▪ Global economic growth outlook has further strengthened despite headwinds of rising protectionism and trade war concerns, geopolitical issues and rising interest rates ▪ CY18 global steel demand is expected to grow by ~29 mn tons;
Slide 8: Global steel spreads expand with favourable steel supply-demand balance
Global steel spreads expand with favourable steel supply-demand balance China steel exports and inventory (mn tons) ▪ Chinese steel production grew by 5%YoY in Major mills Inventory Annualised exports (RHS) Distributors Inventory 40 160 Mar’18 quarter; utilization was at elevated 30 120 levels with
Slide 9: Indian steel prices increased with improved demand environment
Indian steel prices increased with improved demand environment Steel production, demand and imports (mn tons) ▪ Acceleration in economic activities in Crude Steel Production 4QFY18 30 Apparent Finished Steel Usage Imports 2.6 2.8 2.6 25 26.7 25.9 25.7 2.4 25.2 24.6 24.6 24.2 24.0 23.7 22.8 22.4 20 2
Slide 10: Europe Steel demand grew, supported by growth across sectors
Europe Steel demand grew, supported by growth across sectors ▪ Eurozone economy grew 0.4%QoQ in 1QCY18 ▪ EU steel demand have grown by 1.6%YoY in 1QCY18, supported by growth across the main steel-using sectors ▪ The market share of imports of steel remains high EU market supply (mn tons, annualized)
Slide 11: SE Asia Rebar spreads declined amidst sluggish demand
SE Asia Rebar spreads declined amidst sluggish demand ▪ Long steel demand remained weak; Construction sector continues to remain sluggish in both Singapore and Thailand ▪ South East Asia rebar spreads declined due to sharp rise in scrap prices and weaker demand sentiments Construction GDP (% Change,
Slide 12: Agenda
Agenda Business Environment Operational Performance Financial Performance Appendix 12
Slide 13: Tata Steel India – continues to grow faster than market
Tata Steel India – continues to grow faster than market During FY18: Crude Steel Production Volume ▪ Production increased by 6.8% to 12.48 mn tons with ramp- +6.8% up at Kalinganagar 12.48 11.68 3.07 3.27 3.20 ▪ Deliveries grew by 10.7% to 12.15 mn tons vs. 7.9%* market growth 4Q 3Q 4Q FY18 FY17 FY1
Slide 14: Tata Steel India – defining standards at multiple levels
Tata Steel India – defining standards at multiple levels Market leading branded portfolio Unparalleled Pan India reach Branded products sales contributes BPRS touches 2.5 million customers 46% of total sales; continues to grow across India Market leader in Auto Steel Most enriched product mix First
Slide 15: Tata Steel India – adding value across segments
Tata Steel India – adding value across segments ✓ Started commercial HR supply from Kalinganagar Automotive ✓ 17%YoY growth in High end Auto sales in FY18, driven by skin panel and hi- tensile sales ✓ Advanced Technical Support to customers; continues to partner with them in their localization drive
Slide 16: Tata Steel India – continued focus on operational efficiencies and minimizing environmental impact
Tata Steel India – continued focus on operational efficiencies and minimizing environmental impact 479 455 443 Coke Rate (kg/thm) 380 360 348 27.3% reduction since FY13 FY 13 FY 14 FY 15 FY 16 FY17 FY18 1.00 0.88 Specific dust emission (kg/tcs) 0.57 0.50 0.44 0.41 59% reduction since FY13 FY 13 FY 1
Slide 17: Tata Steel Europe – improving offering to customers
Tata Steel Europe – improving offering to customers ▪ FY18 deliveries were marginally up; 4QFY18 deliveries were higher by 4.2% QoQ after the planned outages in 3QFY18 ▪ Launched 23 new products for customers in FY18, including 10 in Q4 – new products included a Nickel plated steel for batteries use
Slide 18: Tata Steel Europe – continued focus on operational efficiencies and minimizing environmental impact
Tata Steel Europe – continued focus on operational efficiencies and minimizing environmental impact 525 518 516 Specific Fuel Rate (kg/thm) 497 496 500 4.8% reduction since FY13 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 5.40 Specific energy intensity* (Gcal/tcs) 5.03 4.99 4.89 4.93 4.96 8.1% reduction sin
Slide 19: Tata Steel SEA – volumes maintained despite weaker markets
Tata Steel SEA – volumes maintained despite weaker markets ▪ 4QFY18 delivery volumes were flat on QoQ basis: o Nat Steel Singapore deliveries were down by 5.0%QoQ due to weaker construction demand, accentuated by New Year holidays o Tata Steel Thailand deliveries improved by 4.7%QoQ amidst lower exp
Slide 20: Business outlook
Business outlook India: Europe: demand SEA: demand is o Expect 6% steel demand growth in FY19 (5.5% in is expected to expected to 2018 as per WSA) grow by 2.3% in remain sluggish in Steel o Expect healthy growth in segments like Auto, 2018 in line with 2018 with weaker demand Railway, Engineering, C
Slide 21: Agenda
Agenda Business Environment Operational Performance Financial Performance Appendix 21
Slide 22: Financial Performance
Financial Performance Rs Crores Consolidated India 4QFY18 3QFY18 4QFY17 FY18 FY17 4QFY18 3QFY18 4QFY17 FY18 FY17 Turnover 36,132 33,447 35,305 133,016 117,420 16,281 15,596 17,113 60,519 53,261 Raw material cost1 13,210 12,980 12,742 52,208 43,843 4,211 4,302 4,454 17,525 13,378 Change in inventorie
Slide 23: Financial Performance contd..
Financial Performance contd.. Rs Crores Europe SEA Others & Eliminations 4QFY18 3QFY18 4QFY17 FY18 FY17 4QFY18 3QFY18 4QFY17 FY18 FY17 4QFY18 3QFY18 4QFY17 FY18 FY17 Turnover 16,208 14,693 15,244 59,985 52,085 2,631 2,492 2,275 9,542 8,245 1,013 666 674 2,970 3,829 Raw material cost1 7,089 6,659 6,6
Slide 24: Consolidated Debt movement
Consolidated Debt movement ₹ Crores 2,075 863 1,492 477 608 92,147 3,617 88,601 83,014 22,932 69,215 Gross Debt Loans Forex Others Gross Debt Loans Forex Others Gross Debt Cash, Bank Net Debt Mar 17 Movement Impact & Dec 2017 Movement Impact & Mar 2018 & Current Mar 2018 Others Others Investments 24
Slide 25: Group EBITDA movement – 4QFY18 Vs. 3QFY18
Group EBITDA movement – 4QFY18 Vs. 3QFY18 ₹ Crores 1,931 71 (1,084) (140) 6,579 5,801 3QFY18 Selling Result Cost Changes Volume/Mix Others 4QFY18 ▪ Better realisations across the geographies improved selling result ▪ Increase in cost mainly in India along with increase in Raw material cost in Europe
Slide 26: Tata Steel India EBITDA movement – 4QFY18 vs 3QFY18
Tata Steel India EBITDA movement – 4QFY18 vs 3QFY18 ₹ Crores 1,458 (823) (295) (164) 4,647 4,823 3QFY18 Selling result Cost Volume/Mix Others 4QFY18 ▪ Selling results increase with better steel realisations ▪ Increase in cost mainly due to wage revision arrears, lower absorption of fixed cost due to
Slide 27: Tata Steel Europe EBITDA movement – 4QFY18 vs 3QFY18
Tata Steel Europe EBITDA movement – 4QFY18 vs 3QFY18 £68mn £13mn £2mn £(2)mn £129mn £(24)mn £72mn 3 months to Selling Cost Production Manufacturing Central 3 months to Dec 2017 Result Changes Volume & Other Mar 2018 ▪ Improved selling result due to increased prices, selling volumes and selling mix ▪
Slide 28: Other key developments
Other key developments ✓ Engineering work is progressing as per plan; Construction work for steel making plant has started ✓ Expansion includes investments in upstream facilities, 2.2 MTPA Cold Rolling Mill and raw Kalinganagar material facilities. plant – 5MTPA expansion ✓ Project cost is Rs.23,500
Slide 29: Agenda
Agenda Business Environment Operational Performance Financial Performance Appendix 29
Slide 30: Standalone Results – QoQ Variations
Standalone Results – QoQ Variations Rs Crores 4QFY18 3QFY18 Key Reasons Gross Sales 15,946 15,310 Increase in realisations partly offset by lower volumes from TSK Other operating income 335 286 Higher export related benefits Raw materials consumed 3,998 4,211 On account of lower production Purchases
Slide 31: Consolidated Results– QoQ Variations
Consolidated Results– QoQ Variations Rs Crores 4QFY18 3QFY18 Key Reasons Income from operations 35,737 33,100 Improved realisations across geographies and higher deliveries in Europe Other operating income 395 347 Increased primarily in India Raw materials consumed 10,370 10,202 In line with previou
Slide 32: Contact
Contact Investor enquiries : Sandep Agrawal Tel: +91 22 6665 0530 Email: Sandep.agrawal@tatasteel.com 32