Ssab Ab Class A · OMXSTO:SSAB_A
Ssab Ab Class A — Investor Day (October 2012)
30 slides from Ssab Ab Class A's investor day presentation, Oct 4, 2012
Slide 1: Financial update
Financial update Marco Wirén, CFO Capital Markets Day October 4, 2012
Slide 2: Following decent start of 2012, markets have weakened
Following decent start of 2012, markets have weakened EBIT for Jan - June 2012 amounted to SEK 1.2bn (2.0) Rolling 12 months cash flow of SEK 4.8bn as of June 30 Gradually ramping up new quenching capacity EMEA shows the weakest development, but also Americas and APAC show a slowdown The S
Slide 3: Volumes weaker than forecast in Q2-12
Volumes weaker than forecast in Q2-12 Utilization rates in the strip operations ~60%, in addition to planned outages Plate market is more stable Significant under-absorption of fixed costs, due to low utilization rates EBIT loss of approx. SEK 700m expected for Q3, with continued positive ca
Slide 4: Under absorption of fixed costs – Example
Under absorption of fixed costs – Example Normal production level 75% of normal production Output: 3.2 Mton Output: 2.4 Mton Fixed costs: SEK 7bn Fixed costs: SEK 7bn Fixed costs/ton: SEK 2,200 Fixed costs/ton: SEK 2,900 Fixed Cost per ton 8,000 Variance: 6,000 ~SEK 1.8bn in unabsorbed c
Slide 5: Prioritized targets
Prioritized targets Accelerate implementation of cost efficiency program within EMEA, target to break even at 70% utilization Top line growth through launching of new quenched steel products Further increase flexibility throughout the operations Asset optimization in the production system
Slide 6: Strategic investment programs finalized
Strategic investment programs finalized MSEK 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2006 2007 2008 2009 2010 2011 2012E Maintenance investments Strategic investments 2012 capex level SEK 1.5 – 2bn CMD, October 4, 2012 6
Slide 7: Plan for depreciation and amortization of surplus values
Plan for depreciation and amortization of surplus values 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 0 -20 -40 MUSD -60 -80 -100 -120 -140 CMD, October 4, 2012 7
Slide 8: Sales by Business Area & Region, 2011
Sales by Business Area & Region, 2011 Sales by Business Area Sales by Region SSAB APAC Tibnor 6% USA 13% Other SSAB EMEA 31% 47% 34% SSAB Sweden Finland Americas 21% 4% 34% Canada 5% Germany 5% CMD, October 4, 2012 8
Slide 9: SSAB customer segments
SSAB customer segments QT AHSS Standard Construction machinery Automotive Industrial applications and other Heavy transport Heavy transport Industrial applications and other Energy Energy Material handling Industrial applications and other Construction machinery Construction machinery Automotive Hea
Slide 10: Contract structures
Contract structures Semi- Annual & annual Semi- 10% Quarterly annual Short term 25% 3% 40% Order based 60% Quarterly Order 90% based 72% SSAB EMEA SSAB Americas SSAB APAC CMD, October 4, 2012 10
Slide 11: Balance sheet & Capex
Balance sheet & Capex CMD, October 4, 2012 11
Slide 12: Positive development of the financial position
Positive development of the financial position The net gearing has continued to decrease since year-end 2011 and was 56% by end of Q2-12 Net debt decreased to SEK 17.4bn, from SEK 18.4bn year-end 2011 Liquidity preparedness as percentage of annual sales (rolling 12 mths) was 24% (incl. commerc
Slide 13: Undemanding maturity profile
Undemanding maturity profile Capital market debt accounts for ~55% SEK m 12,000 10,000 8,000 6,000 4,000 2,000 0 2012 2013 2014 2015 2016 2017- Cash and Credit facilities Debt maturities 2012 maturities consist mainly of Commercial papers CMD, October 4, 2012 13
Slide 14: Net gearing has decreased
Net gearing has decreased % 70 60 50 40 30 20 10 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2009 2010 2011 2012 CMD, October 4, 2012 14
Slide 15: Competitive debt cost
Competitive debt cost % Yrs 6 6 Avg duration (rhs) Avg interest rate 5 5 4 4 3 3 2 2 1 1 0 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2008 2009 2010 2011 2012 CMD, October 4, 2012 15
Slide 16: Currency flows, 2011
Currency flows, 2011 20,000 15,000 10,000 5,000 0 -5,000 MSEK -10,000 -15,000 -20,000 -25,000 -30,000 USD EUR CAD GBP DKK NOK Other While there is some overshooting EUR/SEK exposure, the dominating FX exposure is towards the EUR/USD rate SSAB’s policy states that all purchase contracts with long
Slide 17: Healthy Operating cash flow
Healthy Operating cash flow SEK millions July - 11 2011 H1-12 H1-11 June -12 Full year SSAB EMEA 1,619 945 1,935 1,261 SSAB Americas 1,272 54 2,514 1,296 SSAB APAC -124 -153 53 24 Tibnor 193 67 482 356 Other -125 -74 -167 -116 Operating cash flow 2,835 839 4,817 2,821 Net cash flow 1,141 -1,566 1,89
Slide 18: Performance vs. peers
Performance vs. peers H1 2012 H1 2012 SSAB 11 Nucor 33 Voestalpine 101 SSAB 56 Steel Dynamics 9 ThyssenKrupp 58 EBITDA Nucor 8 Net gearing Voestalpine 61 percent percent US Steel 7 Salzgitter 67 ThyssenKrupp 6 Ruukki 72 AK Steel 5 Steel Dynamics 82 Ruukki 3 US Steel 93 Salzgitter 3 AK Steel N/A2 1 I
Slide 19: Balance sheet in summary
Balance sheet in summary Liquidity preparedness remains strong Net gearing has decreased, with the target to use cash generated to further strengthen the balance sheet The structure of the debt profile is sound and interest costs are, relative peers, very competitive No covenants on the debt
Slide 20: Raw materials & cost structure
Raw materials & cost structure CMD, October 4, 2012 20
Slide 21: Benefits from proximity and integrated logistical solutions
Benefits from proximity Malmtransporter and integrated logistical solutions Narvik Kiruna/Svapavaara Malmberget SSAB is LKAB’s largest customer and Luleå accounts for 20% of their shipments LKAB’s “green” pellets provide reduced CO2 emissions Borlänge Close collaboration provide unique opportu
Slide 22: Iron ore prices increased 2% in SEK in Q2-12
Iron ore prices increased 2% in SEK in Q2-12 In Q3, steel stocks at mills increased, which created a significant price drop for LKAB ref price FOB Narvik iron ore in the spot market to China – USD/t almost 3 year low 200.0 180.0 The price is below the contract threshold 160.0 price and the SSAB
Slide 23: Substantial price falls in coking coal
Substantial price falls in coking coal 60% of volumes are sourced from Australia on monthly contracts, 40% Market price, Benchmark BMA Coal FOB Aus are sourced from the U.S. on yearly USD/t prices 350 300 Prices for the US annual contracts 2012 vs. 2011 was down 30% in USD 250 (25% in SEK) 200 1
Slide 24: Scrap prices volatility expected to continue
Scrap prices volatility expected to continue USD/l.ton Scrap spot price 500 450 400 350 300 Scrap / Shredded / N.America domestic Del. Mill $/l.ton July saw limited exports and a steep decline in domestic utilization - market was oversupplied and scrap prices fell In August, inventories were abn
Slide 25: Input materials 47% of 2011 costs
Input materials 47% of 2011 costs Net Cost Structure Input Materials Other Depreciations Purchased 5% 5% products & Alloys Iron Ore services 13% 26% 15% Energy Input 6% Materials 47% Coal 22% Personnel costs 13% Scrap 34% Other costs 14% MSEK 42,128 MSEK 19,898 CMD, October 4, 2012 25
Slide 26: Steel industry challenges
Steel industry challenges An example of European steel Adapt production to changing market production cost breakdown conditions – There is substantial overcapacity in 100% 11% 9% 14% Other the European steel market Manufacturing – In recent years, steel producers have 38% 32% 24% costs suffered fr
Slide 27: European emission rights market
European emission rights market Current phase II lasts between 2008-2012 – any excess phase II rights are possible to use for compliance in phase III (2013-2020) With one of the two blast furnaces in Oxelösund idled, SSAB is accumulating a surplus of emission rights Annual allowance of emissio
Slide 28: Summary
Summary 28 CMD, October 4, 2012
Slide 29: Summary
Summary The product mix will move towards a higher share of quenched steels, showing higher resilience to market volatility Ongoing efficiency program will lead to a reduced cost base and higher flexibility in operations, mainly related to EMEA The fall in spot prices of iron ore and coking co
Slide 30: Let's shape tomorrow
LET'S SHAPE TOMORROW CMD, October 4, 2012 30 SSAB