Tata Steel Limited · NSE:TATASTEEL
Tata Steel — Q1 FY2017 Earnings Presentation
37 slides from Tata Steel's earnings presentation, Sep 12, 2016
Slide 1: Results Presentation
Results Presentation Financial Quarter ended 30th June 2016 September 12, 2016 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 Group is committed towards excellence in Health and Safety
Tata Steel Group is committed towards excellence in Health and Safety LTIFR* data for Tata steel group Ambition: 1 Committed to ensuring all Tata steel sites are sustainably fatality 0.95 free 0.9 Being the Benchmark in H&S in our industry 0.78 Achievements: 0.8 0.68 Significant progress in fa
Slide 4: Focused on engaging with communities and improving quality of life
Focused on engaging with communities and improving quality of life India CSR Spend -India (`Crs) Nearly 49,000 students of government schools in Primary health care services delivery to nearly East Singhbhum and Seraikela-Kharsawan 1,09,000 people in areas of operation through static districts cover
Slide 5: Agenda
Agenda I Group Financial Performance II India & SE Asia performance III Europe performance IV Transition to Ind AS V Appendix 5
Slide 6: Global steel industry – Structural issues are being resolved
Global steel industry – Structural issues are being resolved Mn T % China exports to world Vs Capacity utilization% Shrinking global steel demand, overcapacity & increasing 12 100 low priced exports by China continue to pose a threat to 10 90 sustained revival in realisations 8 80 Despite a rise
Slide 7: China underlying changes – Translating to better HRC realisations
China underlying changes – Translating to better HRC realisations China liquidity push boosted construction, infrastructure China Investment, Production and Sales(YoY Change%) 20 10 and commodities which coupled with restocking and 9 frequent shutdowns during periods of national exposure 15 8 aide
Slide 8: Highlights for the quarter
Highlights for the quarter Group revenues of `26,406 crores on the back of improvement in realisations across geographies Europe deliveries ex-Longs impacted by strategic volume reduction at UK India deliveries stable Group EBITDA of `3,270 crores, up 21% on yoy and 65% on qoq India EBITDA
Slide 9: Quarterly Financial Performance as per Ind-AS
Quarterly Financial Performance as per Ind-AS ` Crores Group India Q1 FY17 Q4 FY16 Q1FY16 Q1 FY17 Q4 FY16 Q1FY16 Deliveries(MT) 5.41 6.37 5.82 2.14 2.72 2.14 Turnover 26,406 27,558 28,025 10,323 11,736 10,175 Raw material Cost 6,923 6,363 7,764 2,308 2,159 2,330 EBITDA 3,270 1,982 2,693 2,236 2,240
Slide 10: Quarterly Financial Performance- As per Ind-AS
Quarterly Financial Performance- As per Ind-AS ` Crores Europe SEA Others & Eliminations Q1 FY17 Q4 FY16 Q1FY16 Q1 FY17 Q4 FY16 Q1FY16 Q1 FY17 Q4 FY16 Q1FY16 Deliveries(MT) 2.53 2.89 2.87 0.65 0.67 0.69 - - - Turnover 13,100 13,469 14,865 2,020 1,803 2,262 963 550 723 Raw material Cost 3,848 3,930 5
Slide 11: Group EBITDA Bridge Q1 FY 2016 Vs Q1 FY 2017
Group EBITDA Bridge Q1 FY 2016 Vs Q1 FY 2017 `Crores Non-Controllable - (`163 Crs) Controllable - `1,187 Crs 1,230 3,280 3,233 (138) 2,256 1,514 2,093 145 249 (977) 189 (51) (477) (1,639) Q1 FY'16 Ind AS Q1 FY'16 Ind Revenue - Cost -Change Production Actuarial Others Adjusted Revenue - Cost -Volume
Slide 12: Debt movement in quarter ended 30th June’16
Debt movement in quarter ended 30th June’16 `Crores 86,204 325 85,475 2,634 772 81,975 232 4,229 75,259 10,216 Gross Debt Ind AS Impact Gross Debt Loans Movt Finance lease Forex impact Disposal of UK Gross Debt Jun 16 Cash, Bank & Net Debt Jun 16 Mar'16-IGAAP Mar'16-Ind AS obligation Longs Business
Slide 13: Agenda
Agenda I Group Financial Performance II India & SE Asia performance III Europe performance IV Transition to Ind AS V Appendix 13
Slide 14: India business Environment continues to be subdued
India business Environment continues to be subdued % IIP & Manufacturing PMI 56 12 10 Subdued business conditions and slow pace of rate 54 8 transmission reflected in lower IIP and credit growth to 6 52 4 commercial sector. 2 50 0 Severe drought conditions in large parts of the country led 48 -2
Slide 15: India market realisations recover but bogged down by lacklustre demand
India market realisations recover but bogged down by lacklustre demand Finished steel demand (in MT) Apparent finished steel consumption for Q1FY17 dropped by 0.3% yoy Domestic realisations recovered at relatively lower rates on 74 77 81 71 73 subdued demand, increasing supply side pressures and
Slide 16: Tata steel continues to focus on increasing enriched product mix
Tata steel continues to focus on increasing enriched product mix Volumes in Kt 2,719 396 2,143 2,146 336 399 983 768 736 1,038 757 738 283 302 274 Q1 FY16 Q4 FY16 Q1 FY17 Transfers IPPE BPRS Auto Automotive witnessed 19% yoy growth and now accounts for 18.5% of overall sales Super brand TISCON r
Slide 17: Portfolio of strong brands across verticals
Portfolio of strong brands across verticals First branded Thermo Ready to use footings Downstream service presently offers the Flagship brand in the field of Best-in-class Hot Rolled Sheets & Mechanically Treated (TMT) Rebar Cut & Bend service that aims at Galvanized Corrugated Sheets Coils in the c
Slide 18: EBITDA Bridge - Q1FY16 vs Q1FY17
EBITDA Bridge - Q1FY16 vs Q1FY17 `Crores 2,411 136 2,236 231 130 (44) (68) 1,897 279 (514) (325) Q1 FY16 Ind AS Q1 FY16 Revenue Imported Bought Out Impr. Other Vol/Mix Others Q1 FY17 IGAAP Impact IND AS Coal Metaliks Savings Operational cost 18
Slide 19: Tata Steel Kalinganagar: driver for volume growth
Tata Steel Kalinganagar: driver for volume growth Key Highlights Targeted Segments Largest operating Blast Furnace & LD converter in India Oil & gas, Ship building, Defense, Heavy engineering, Lifting Higher operational efficiency & excavation, Boiler plates, Capital goods and high strength au
Slide 20: South East Asia business environment
South East Asia business environment 20 Singapore IIP & Thailand Manufacturing Index 15 Business continues to be impacted by influx of low priced imports from China and volatile spreads 10 5 Average spreads improved in line with international 0 steel prices during the quarter, however corrected
Slide 21: South East Asia Business Update
South East Asia Business Update Nat Steel Holdings Deliveries ex-China stable Focus on downstream products & solutions, exports driven strategy and increase in spreads aided better margins Wires business witnessing good traction with supportive pricing environment Tata Steel Thailand Deliver
Slide 22: Business Outlook-India & South East Asia
Business Outlook-India & South East Asia Global steel realisations are expected to remain supportive with supply side restructuring gaining pace in China I and inventory levels trending below the average levels before the start of peak construction period. Indian steel demand to get support from gov
Slide 23: Agenda
Agenda I Group Financial Performance II India & SE Asia performance III Europe performance IV Transition to Ind AS IV Appendix 23
Slide 24: European market context in Q1 FY17
European market context in Q1 FY17 GDP-Eurozone and UK(YoY%) EU Market supply(Mn Tonnes and Import share %) 4% 20 Import (LHS) 20% 2% 18 EU deliveries (LHS) 16 Import share (RHS) 15% 0% 14 -2%2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 12 10% -4% UK 10 8 5% -6% Eurozone 6 -8% 4 0% 2010 2011 20
Slide 25: Improving offering to customers
Improving offering to customers Customer-focused developments: Differentiation strategy creating more robustness and delivering more value to customers European operations sold 8% more differentiated products in European sale mix in Q1 and highest percentage of differentiated product sales in Ju
Slide 26: Strategic decisions towards creating a sustainable European operations
Strategic decisions towards creating a sustainable European operations Strategic efforts underway Strategic efforts progressed Parallel to the ongoing sale process for UK business, initiated discussions with strategic players including Completion of divestment of Long products Europe business Th
Slide 27: EBITDA Bridge–Q1FY16 vs Q1FY17
EBITDA Bridge–Q1FY16 vs Q1FY17 £ million 120 £154m £(63)m 100 £48m £90m £81m £(47)m £1m 80 60 £34m £(84)m 40 20 0 -20 -40 -60 3 Months to IND AS Impact 3 Months to Selling result Cost changes Production Manufacturing Central & 3 Months to June 2015 June 2015-Ind- volume Others June 2016 -IGAAP AS
Slide 28: Business Outlook
Business Outlook I EU economy expected to continue to grow gradually. UK’s stronger growth may slow following EU referendum result II EU steel demand expected to increase by 1.1% in 2016 in line with modest economic growth III European steel mills expected to continue to be under pressure from impor
Slide 29: Agenda
Agenda I Group Financial Performance II India & SE Asia performance III Europe performance IV Transition to Ind AS IV Appendix 29
Slide 30: Ind-AS Impact Summary: Standalone Profit & Loss Statement
Ind-AS Impact Summary: Standalone Profit & Loss Statement Key Impact Areas Key Reasons Total income from operations Grossed up for excise duty • Actuarial gains/losses now recognised in OCI Employee benefit expenses • Plan administration costs recognised in P&L rather than applied as increase to lia
Slide 31: Ind-AS Impact Summary: Consolidated Profit & Loss Statement
Ind-AS Impact Summary: Consolidated Profit & Loss Statement Key Impact Areas Key Reasons • Grossed up for excise duty Total Income from Operations • Change in methodology of Joint Venture’s accounting to ‘equity method’ Purchase of finished, semi finished & other • Change in methodology of Joint Ven
Slide 32: Ind-AS Impact Summary: Consolidated Profit & Loss Statement--Contd
Ind-AS Impact Summary: Consolidated Profit & Loss Statement--Contd Key Impact Areas Key Reasons • Fair value up lift of certain Plant property and equipment at India • Joint ventures consolidation based on equity method of accounting • Certain companies based on control definition now accounted as J
Slide 33: Ind-AS Impact Summary: Others
Ind-AS Impact Summary: Others Consolidation: JV’s and associates are now accounted using ‘equity method’ instead of proportionate line by line method. JCAPCPL, TM Mining, TMILL are now accounted as JV’s using equity method. Other comprehensive Income: Other long term quoted equity investments
Slide 34: Agenda
Agenda I Group Financial Performance II India & SE Asia performance III Europe performance IV Transition to Ind AS IV Appendix 34
Slide 35: Standalone-QoQ Variations
Standalone-QoQ Variations ` Crores Q1 FY17 Q4 FY16 Key Reasons Gross sales 10,261 11,583 Lower deliveries partly offset by higher realisations Other operating income 62 153 Sequential quarter includes credit related to insurance Changes in inventories (1,097) 663 Replenished inventories to normalize
Slide 36: Consolidated Results -QoQ Variations
Consolidated Results -QoQ Variations ` Crores Q1 FY17 Q4 FY16 Key Reasons Gross sales 26,332 27,386 Lower volumes partly offset by higher realisations Other operating income 74 172 Sequential quarter includes credit related to insurance Changes in inventories (1,890) 1,726 Increase at India. Increas
Slide 37: Contact
Contact Investor enquiries : Samita Shah Tel: +91 22 6665 7307 Email: samita.shah@tatasteel.com 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/ +