Tata Steel Limited · NSE:TATASTEEL
Tata Steel — Q2 FY2016 Earnings Presentation
37 slides from Tata Steel's earnings presentation, Nov 5, 2015
Slide 1: Results Presentation
Results Presentation Second quarter and half-year ended 30th September 2015 5th November 2015
Slide 2: Disclaimer
Disclaimer 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. Important facto
Slide 3: Tata Steel Group – Commitment towards excellence in Health & Safety
Tata Steel Group – Commitment towards excellence in Health & Safety 1.2 0.95 0.9 0.78 0.68 0.60 0.56 0.6 0.44 0.40 0.3 0 FY10 FY11 FY12 FY13 FY14 FY15 H1FY16 • Committed to ensuring all Tata Steel sites are sustainably fatality free on our way to ‗being the benchmark in H&S in our industry‘ • KPO st
Slide 4: Tata Steel's continued focus on engaging with communities and improving quality of life
Tata Steel’s continued focus on engaging with communities and improving quality of life Primary health care services delivery to nearly 275,000 H1 FY16 Spend Rs Crs people through static and mobile clinics Education 13 ‗MANSI‘ initiative is being implemented in Jharkhand district for last 5 year
Slide 5: Agenda
Agenda SN Particulars 1 Financial performance 2 India & SE Asia performance 3 Europe performance 4 Appendix
Slide 6: Commodity downcycle weighs intensely on the steel sector
Commodity downcycle weighs intensely on the steel sector Global crude steel production & capacity utilisation Downward revision of global steel demand forecasts World India EU China US In % 7.3 7.3 7.6 6.2 2.8 2.1 2.2 1.3 1.4 1.3 0.5 0.7 0.7 2015 (f) - old 2015 (f) - new 2016 (f) - old 2016 (f) - ne
Slide 7: Elevated level of exports by China despite rising protectionism
Elevated level of exports by China despite rising protectionism by many steel consuming countries China - Investment, production and sales (y/y% chg) Surge in China’s steel exports (MnT) 101 26 66 58 18 28 14 15 31 15 24 14 16 23 27 15 16 FY13 FY14 FY15 FY16 Q1 Q2 Q3 Q4 EU trade balance (MnT) Curren
Slide 8: Key highlights – Quarter ended 30th September'15
Key highlights – Quarter ended 30th September’15 1 Higher deliveries by Tata Steel India despite a weak market environment European volumes lower due to severe weakness in the market and operational restructuring 2 in UK Underlying Balance Sheet leverage stable despite translation loss on foreign de
Slide 9: Exceptional items in Q2FY16
Exceptional items in Q2FY16 Rs. Crores Geography Details of event Charges Gains Impairment of Strips Products, UK 7,319 Impairment of Long Products, UK 276 Impairment of other business 177 - Europe Restructuring provisions 89 Provisions for demands and claims 808 Net one-time credit in P&L on restru
Slide 10: Europe pension scheme successfully restructured
Europe pension scheme successfully restructured UK pension scheme successfully restructured to make it more sustainable BSPS highlights: Asset size £13.9 billion Pension surplus as on 30th Sep 2015 (under IGAAP) Rs.11,742 crores One-time net credit in P&L in Q2 FY16 Rs.8,570 crores The triennial val
Slide 11: Ongoing monetisation of non-core assets to strengthen balance sheet
Ongoing monetisation of non-core assets to strengthen balance sheet Stake sale of Dhamra Port Company Limited FY15: monetisation of ~Rs.2,900 crores Sale of Borivali land, Mumbai Monetisation of stake in Titan Limited and Tata Projects Limited Q1 FY16: monetisation of Other monetisations of Rs. 160
Slide 12: Financial Performance – Quarter Ended 30th September'15
Financial Performance – Quarter Ended 30th September’15 Figures in Rs. Crore unless specified Q2 FY16 Q1 FY16 Q2 FY15 Figures in Rs. Crore unless specified India Europe SE Asia Others Group Group Group & Elimn Deliveries (Mn T) 2.33 3.27 0.69 - 6.29 6.33 6.50 Turnover 9,531 16,948 2,001 825 29,305 3
Slide 13: Financial Performance – Half year ended 30th September'15
Financial Performance – Half year ended 30th September’15 Figures in Rs. Crore unless specified H1 FY16 H1 FY15 Figures in Rs. Crore unless specified India Europe SE Asia Others & Group Group Elimn Deliveries (Mn T) 4.48 6.71 1.38 0.05 12.62 12.95 Turnover 18,625 34,803 4,263 1,914 59,605 72,204 Raw
Slide 14: Group EBITDA Bridge H1 FY2016 vs. H1 FY2015
Group EBITDA Bridge H1 FY2016 vs. H1 FY2015 Rs.Crores 8,113 3,505 7,625 1,776 4,169 480 4,507 433 -151 -429 -575 -1,584 -8,113 Non-Controllable - (₹ 3,606 crs) Controllable - ₹ 3,117crs H1 FY'15 Revenue -Price Material -Price Regulatory Actuarial Others Adjusted Revenue - Cost -Volume & Manufacturin
Slide 15: Debt movement as at 30th September'15
Debt movement as at 30th September’15 Rs. Crores 82,380 2,690 80,701 294 80,903 7,289 1,973 138 1,213 73,614 73,477 Gross Debt Loans Movt Forex impact Gross Debt Loans Movt Forex impact Gross Debt Cash & Cash Net Debt Sep Derivatives Underlying Mar 15 Jun 15 Sep 15 Eq 15 Net Debt Sep 15 Capex incu
Slide 16: On track to meet long term goals despite macro challenges
On track to meet long term goals despite macro challenges India volumes to be ramped up Ferro alloys and Minerals Division to start contributing significantly from H2 FY16 Kalinganagar project to diversify our product basket and customer universe Focus on cost savings and improvement initiatives Res
Slide 17: Agenda
Agenda SN Particulars 1 Financial performance 2 India & SE Asia performance 3 Europe performance 4 Appendix
Slide 18: India and SE Asia – Global slowdown impacting steel demand
India and SE Asia – Global slowdown coupled with slower pace of reforms impacting the steel demand PMIs (manufacturing) - India and SEA countries Manufacturing activity in India continued its downtrend amid global uncertainties Underlying steel demand in the country continues to be subdued Sev
Slide 19: India – Weak demand, currency volatility and surge in imports pressure prices
India – Weak demand, volatility in currencies and surge in imports has put significant downward pressure on steel prices India Apparent steel demand & Net imports Decline in international steel prices and rising 100 5000 imports putting pressure on domestic steel prices Steel Demand in Million Ton
Slide 20: Higher deliveries across key segments despite weak demand environment
Higher deliveries across key segments despite weak demand environment Steel sales (in kt) FAMD sales (in kt) 2,331 35 2,110 2,143 366 342 336 27 26 23 779 21 756 768 12 13 10 9 10 722 756 907 7 7 7 290 283 279 Q2 FY15 Q1 FY16 Q2 FY16 Q2 FY15 Q1 FY 16 Q2 FY 16 Automotive and Special Products Branded
Slide 21: Branded products proportion has increased to 48% of gross turnover
Branded products proportion has increased to 48% of gross turnover in H1 FY16 (Rs.9,236 crores in H1 FY16) (Wires) (Roofing sheets) (Wooden finish steel doors) (Housing solutions) Tata Tiscon and Tata Shaktee recognised as ‘Superbrands’ 21
Slide 22: India EBITDA bridge Q2 FY2016 vs. Q1 FY2016
India EBITDA bridge Q2 FY2016 vs. Q1 FY2016 Rs. Crores 2,111 4,771 327 216 2,411 163 -36 -423 Q1 FY16 Revenue Vol/Mix Cost changes Regulatory Impact Others Sale of Quoted Q2 FY16 other Inv. Decline in steel prices due to depressed market conditions. Higher deliveries led to improved volume mix.
Slide 23: Kalinganagar project update
Kalinganagar project update Pan view of Kalinganagar Plant, Odisha RMHS (Coal Yard) Coke Oven Rs.22,300 crores invested in the project as of September 30, 2015 23
Slide 24: Kalinganagar project update ...contd
Kalinganagar project update ...contd Pan-view - SMS Main Gate Power plant Backside view of the power plant 24
Slide 25: Kalinganagar project: Will diversify our product basket and expand on customer universe
Kalinganagar project: Will diversify our product basket and expand on customer universe Production of high-end grades of Flat Largest Blast furnace in India with 4330 cubic products to meet the increasing demand of meter volume high strength coils upto 2050 mm width and upto 25mm thick catering to
Slide 26: SE Asia – Business update
SE Asia – Business update NatSteel Holdings Deliveries increased ex-China despite higher imports across the region Underlying profitability improved even though market spreads for rebar-scrap further contracted. Focus on exports to select niche markets coupled with cost savings & improvement ini
Slide 27: Business Outlook
Business Outlook Investment cycle is yet to revive, pace of economic growth likely to be slower Domestic steel prices to remain under pressure until meaningful uptick in steel demand. Declining international steel prices with strong local currency impacting the competitiveness of domestic steel indu
Slide 28: Agenda
Agenda SN Particulars 1 Financial performance 2 India & SE Asia performance 3 Europe performance 4 Appendix
Slide 29: EU steel demand was slightly up in H1 2015 as the recovery continues
EU steel demand was slightly up in H1 2015 (+0.9%) as the recovery continues GDP – Eurozone and UK (y/y%) Exchange rates 4% 2.2 Euro per GBP 2.0 US$ per GBP 2% 1.8 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 1.6 -2% Eurozone 1.4 -4% UK 1.2 -6% 1.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 EU
Slide 30: EBITDA performance down on previous quarters due to market headwinds in Europe
EBITDA performance down on previous quarters due to market headwinds in Europe Production (in MnT) Deliveries (in MnT) 3.96 3.44 3.82 3.36 3.58 3.27 Q2 FY15 Q1 FY16 Q2 FY16 Q2 FY15 Q1 FY16 Q2 FY16 Reduction in liquid steel production and focus on higher value sales in response to changing market c
Slide 31: EBITDA bridge Q2 FY2016 vs. Q1 FY2016
EBITDA bridge Q2 FY2016 vs. Q1 FY2016 £ million Selling Result impacted by lower selling prices in Europe with continued downward pressure on prices, particularly in UK due to increased imports from China Strategic decision to reduce Production Volume to focus on high value markets Manufacturi
Slide 32: A sustainable business in Europe: market and business improvements
A sustainable business in Europe: market and business improvements Challenges facing UK operations Low steel prices, strong sterling and unhelpful regulatory environment led to significant restructuring in UK‘s steel industry Restructuring of Tata Steel‘s UK operations to improve costs and highe
Slide 33: Business Outlook
Business Outlook The eurozone economy forecast to grow by 1.5% and the UK by 2.5% in 2015. Strength of pound expected to continue to hinder competitiveness of UK manufacturers EU steel demand expected to grow by +1.5% in 2015, but importers expected to continue to be biggest beneficiaries The Europe
Slide 34: Agenda
Agenda SN Particulars 1 Financial performance 2 India & SE Asia performance 3 Europe performance 4 Appendix
Slide 35: Standalone Results – QoQ Variations
Standalone Results – QoQ Variations All figures in Rs. Crore Particulars Q2 FY16 Q1 FY16 Key Reasons Net sales 9,446 9,006 Higher volumes partly offset by lower steel realisations Other operating income 85 88 At par with previous quarter Changes in inventories (132) (198) Inventory buildup during th
Slide 36: Consolidated Results – QoQ Variations
Consolidated Results – QoQ Variations All figures in Rs. Crore Particulars Q2 FY16 Q1 FY16 Key Reasons Lower deliveries in Europe and South East Asia partly compensated by Net sales 29,069 29,900 higher India deliveries. Lower realisations across geographies. Other operating income 236 400 Decrease
Slide 37: Contact Information
Contact Information For investor enquiries contact: For media enquiries contact: Devang Shah Kulvin Suri Tel: +91 22 6665 0530 Tel: +91 657 664 5512 / Email: devang.shah@tatasteel.com +91 92310 52397 Email:kulvinsuri@tatasteel.com Ramvikas Nag Bob Jones Tel: +91 22 6665 0557 Tel: +44 207 717 4532 Em