Tata Steel Limited · NSE:TATASTEEL
Tata Steel — Q2 FY2017 Earnings Presentation
38 slides from Tata Steel's earnings presentation, Nov 11, 2016
Slide 1: Results Presentation
Results Presentation Financial Quarter ended 30th September 2016 November 11, 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 free 0.9 Being the Benchmark in H&S in our industry 0.8 Achievements: Significant progress in fatality free amb
Slide 4: Focused on engaging with communities and improving quality of life
Focused on engaging with communities and improving quality of life Primary health care services to nearly CSR Spend -India (Rs. Crs) Nearly 1,200 students mainstreamed to 2,32,000 people through static and regular schools mobile clinics 212 204 171 More than 600 meritorious SC/ST Promoted sa
Slide 5: Awards & recognitions conferred in various categories
Awards & recognitions conferred in various categories World Steel Association recognised Tata Steel for setting highest standards of health and safety at workplace. Tata Steel conferred with ‘Sustainable Manufacturing of Make in India’ Award at the Make in India Awards 2016 Kalinganagar conferred wi
Slide 6: Agenda
Agenda I Group Financial Performance II India & SE Asia performance III Europe performance IV Transition to Ind AS V Appendix 6
Slide 7: Global steel | Sustained rally in steel prices
Global steel | Sustained rally in steel prices Demand estimates & revision Steel demand after contracting by 3% in 2015 is likely to increase World EU-28 India China by 0.2% this year and by 0.5% in 2017, better than the earlier - 0..3% forecasts Steel production contracted for the first nine mo
Slide 8: China Steel | Exports from China continue to decline
China Steel | Exports from China continue to decline PMI China Steel PMI Government stimulus helped demand in China which coupled with 65 production restrictions and consolidation helped the demand- 60 55 supply balance 50 45 Exports from China witnessed the third straight month-on-month 40 decl
Slide 9: Highlights for the quarter
Highlights for the quarter Group revenues of Rs. 27,471 crores, up 4% q/q and flat y/y India deliveries grew 23% q/q and 13% y/y Europe deliveries impacted by strategic volume reduction at UK Group EBITDA of Rs. 2,992 crores, up 66% y/y India EBITDA/t at Rs. 7,620/t impacted by drop in rea
Slide 10: Strategic Developments
Strategic Developments Europe DSO De-risking of DSO project by securing equity and debt Continue to pursue the European consolidation strategy investments of CAD 175m from Government of Quebec including talks with thyssenkrupp AG about a potential joint (GoQ). Dilution in Tata Steel shareholding
Slide 11: Quarterly Financial Performance as per Ind-AS 1
Quarterly Financial Performance as per Ind-AS1 Rs Crores Group India Q2 FY17 Q1 FY17 Q2 FY16 Q2 FY17 Q1 FY17 Q2 FY16 Deliveries(MT) 5.65 5.41 5.84 2.62 2.14 2.33 Turnover 27,471 26,406 27,456 11,718 10,323 10,641 Raw material cost2 9,407 8,184 10,671 3,016 1,476 2,927 EBITDA 2,992 3,270 1,800 2,000
Slide 12: Quarterly Financial Performance as per Ind-AS 1
Quarterly Financial Performance as per Ind-AS1 Rs Crores Europe SEA Others & Eliminations Q2 FY17 Q1 FY17 Q2 FY16 Q2 FY17 Q1 FY17 Q2 FY16 Q2 FY17 Q1 FY17 Q2 FY16 Deliveries(MT) 2.30 2.53 2.76 0.65 0.65 0.69 - - - Turnover 12,358 13,100 14,314 1,966 2,020 2,001 1,429 963 500 Raw material cost2 4,040
Slide 13: Group EBITDA Bridge – Q1FY17 vs Q2FY17
Group EBITDA Bridge – Q1FY17 vs Q2FY17 Rs Crores Non-Controllable - (₹ 908 crs) Controllable - ₹ 733 crs 3,280 3,104 375 145 927 2371 988 197 230 20 146 1,379 Q1 FY'17 Revenue -Price Cost -Change Production Actuarial Others Adjusted Revenue - Cost -Volume Cost Central & Q2 FY'17 Effect Effect Volume
Slide 14: Group Debt Bridge – half year ended 30th September'16
Group Debt Bridge – half year ended 30th September’16 Rs Crores 86,204 775 310 (232) 85,475 (324) 2,634 (834) 84,316 (8,753) (4,217) 81,987 75,563 Gross Debt IND AS Impact Gross Debt Loans Finance lease Forex impact Disposal of UK Gross Debt Loans Forex impact & Gross Debt Cash, Bank & Net Debt Sep'
Slide 15: Group Cash Flow Bridge for H1 FY2017
Group Cash Flow Bridge for H1 FY2017 7,128 2,198 Rs Crores 656 3,908 2,080 2,345 6,021 1,060 287 950 380 3445 Opening cash and Operating Cash Changes in Direct taxes paid Capex Monetisation & Net purchases of Net Debts Interest paid Dividend Others Closing cash and cash equivalent flow before WC Wor
Slide 16: Agenda
Agenda I Group Financial Performance II India & SE Asia performance III Europe performance IV Transition to Ind AS V Appendix 16
Slide 17: India Steel | Seasonal slowdown accentuated by lacklustre economy
India Steel | Seasonal slowdown accentuated by lacklustre economy PMI IIP & Manufacturing PMI % IIP witnessed worst contraction in manufacturing sector in the 56 12 10 recent past. Growth increasingly reliant on government spending 54 8 52 6 Bank credit growth to infrastructure continue to decli
Slide 18: India Steel | Shifting focus to domestic demand-supply equilibrium
India Steel | Shifting focus to domestic demand-supply equilibrium Rebar HRC – Rebar Price HRC Finished steel demand in India increased by ~7% y/y in the Jul- Sep’16 quarter Trade measures on Chinese imports has increased export opportunities for India. Net steel imports fell by c. 76% q/q, as I
Slide 19: Tata steel continues to focus on increasing enriched product mix
Tata steel continues to focus on increasing enriched product mix Volumes in KT 352 366 399 846 779 736 1154 907 737 279 274 272 Q2FY16 Q1FY17 Q2FY17 Transfers IPPE BPRS Auto Achieved 13% y/y domestic sales growth against demand growth of 7% Branded sales increased by ~9% y/y and by 15% q/q prima
Slide 20: Portfolio of strong brands across verticals
Portfolio of strong brands across verticals TMT rebar for Housing, Commercial & Downstream Cut & Bend service that TMT rebar retail brand Prefabricated rebar ready to fix Stirrups made of high strength Infrastructure Projects aims at providing customized rebar kits ribbed TMT reinforcement bar shape
Slide 21: Continued focus on operational efficiencies
Continued focus on operational efficiencies* 475 443 Coke rate (kg/thm) Specific Energy Consumption (Gcal/tcs) 6.10 450 408 6.00 425 6.01 5.90 5.83 400 375 372 372 367 5.78 5.75 5.75 5.75 359 375 5.80 5.71 350 5.70 325 5.60 300 5.50 FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 FY15 Q1FY16 Q2FY16 Q
Slide 22: India EBITDA Bridge – Q1FY17 vs Q2FY17
India EBITDA Bridge – Q1FY17 vs Q2FY17 Rs Crores 2,236 540 28 2,000 639 363 Q1 FY17 Revenue Cost Vol/Mix Others Q2 FY17 Seasonally weak quarter and strong monsoons affected demand and realisations, especially for Longs Kalinganagar being in the ramp-up phase impacted realisations and costs adver
Slide 23: South East Asia business environment
South East Asia business environment 15 Singapore IIP & Thailand Manufacturing Index Business continues to be impacted by influx of low priced 10 imports from China and volatile spreads 5 Average spreads recovered during the quarter in line with 0 international steel prices, after the sharp fall
Slide 24: South East Asia Business Update
South East Asia Business Update Nat Steel Holdings Business continued to be adversely impacted by sluggish construction market and continued China dumping Margins impacted due to decline in downstream spreads in Singapore and fall in international wire prices Continue to focus on downstream pr
Slide 25: Business Outlook-India & South East Asia
Business Outlook-India & South East Asia Stronger demand in China and continued focus on environment commitments by the Chinese government is I expected to ease global demand-supply imbalances Pick-up in consumer discretionary spend on the back of good monsoons and Pay Commission hike to support Ind
Slide 26: Agenda
Agenda I Group Financial Performance II India & SE Asia performance III Europe performance IV Transition to Ind AS IV Appendix 26
Slide 27: European market context
European market context EU market supply (Mt, import share %) The Eurozone and UK economies improved in the first half of 20 20% 2016, but the main driver of growth continued to be services. 18 16 15% Growth of the European steel-using sectors remained mixed. The 14 construction and machinery se
Slide 28: Improving offering to customers
Improving offering to customers Customer-focused developments: European strategy continues to be focused on developing differentiated products and services which help make its customers more competitive Sales of differentiated products 14% higher and their value-add more than a third higher than
Slide 29: Europe EBITDA Bridge – Q1FY17 vs Q2FY17
Europe EBITDA Bridge – Q1FY17 vs Q2FY17 £ millions £112m £(66)m £(22)m £40m £92m £4m £116m £(2)m £90m Q1FY17 Selling result Cost changes Production volume Manufacturing Central & Others Q2FY17 EBITDA higher than the prior quarter by £26m Selling result improved following favourable market condit
Slide 30: Business Outlook
Business Outlook EU economy expected to grow gradually. UK’s growth revised downwards after referendum result though I weaker pound benefiting UK exporters II European steel demand expected to increase by 2.2% in 2016 in line with modest economic growth III European steel mills expected to continue
Slide 31: Agenda
Agenda I Group Financial Performance II India & SE Asia performance III Europe performance IV Transition to Ind AS IV Appendix 31
Slide 32: Ind-AS Impact Summary: Standalone Balance Sheet
Ind-AS Impact Summary: Standalone Balance Sheet As at 31 March 2016 As at 30 Key Impact Areas Key Reasons IGAAP IND-AS Sep 2016 • Fair value of investments in Tata Steel Holdings treated as deemed cost on transition • Fair valuation of quoted non-current investments • Fair valuation of property, pla
Slide 33: Ind-AS Impact Summary: Consolidated Balance Sheet
Ind-AS Impact Summary: Consolidated Balance Sheet As at 31 March 2016 As at 30 Key Impact Areas Key Reasons IGAAP IND-AS Sep 2016 • Fair valuation of property plant and equipment of Tata Steel India • Assets and liabilities on erstwhile Corus acquisition restated at fair value on the date of acquisi
Slide 34: Ind-AS Impact Summary: Consolidated Balance Sheet--Contd
Ind-AS Impact Summary: Consolidated Balance Sheet--Contd Other changes: • Joint Ventures now accounted as per ‘equity method’ of accounting, instead of line by line accounting, which has resulted in changes in almost all items of the Balance Sheet and the P&L. • JCAPCPL, TMILL, TM Mining, which were
Slide 35: Agenda
Agenda I Group Financial Performance II India & SE Asia performance III Europe performance IV Transition to Ind AS IV Appendix 35
Slide 36: Standalone Results – QoQ Variations
Standalone Results – QoQ Variations Rs Crores Q2 FY17 Q1 FY17 Key Reasons Gross sales 11,639 10,261 Higher deliveries partly offset by lower realisations Other operating income 79 62 Insurance claim received Changes in inventories 159 (1,097) Replenishment of inventory in previous quarter Purchases
Slide 37: Consolidated Results – QoQ Variations
Consolidated Results – QoQ Variations Rs Crores Q2 FY17 Q1 FY17 Key Reasons Gross sales 27,392 26,332 Higher India sales offset by lower Europe sales on account of exchange impact on translation Other operating income 79 74 No material movement Changes in inventories (999) (1,776) Increase at TSE in
Slide 38: 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/ +