Tata Steel Limited · NSE:TATASTEEL
Tata Steel — Q1 FY11 Earnings Presentation
40 slides from Tata Steel's earnings presentation, Aug 13, 2010
Slide 1: Consolidated Financial Results Quarter Ended 30th June 2010
Consolidated Financial Results Quarter Ended 30th June 2010 Analyst Meet – Mumbai August 13 , 2010 A Corporate Citizen 1 A global player A product pioneer
Slide 2: Agenda
Agenda Introduction and Consolidated Highlights Global Business Environment Performance of European Operations Performance of Indian and South East Asian Operations Group Financial Performance Financing Portfolio and Capital Raising Business Outlook 2
Slide 3: Agenda
Agenda Introduction and Consolidated Highlights Global Business Environment Performance of European Operations Performance of Indian and South East Asian Operations Group Financial Performance Financing Portfolio and Capital Raising Business Outlook 3
Slide 4: Tata Steel Group – Safety Performance
Tata Steel Group – Safety Performance Lost Time Injury Frequency (LTIF) 3.5 Lost time injury frequency rate was 0.65, 3.06 3 a 22% improvement over average FY10 2.5 2.35 2.1 On track to achieve our vision target of 0.4 2 In the June’10 quarter, 1 tragic fatality 1.5 1.31 occurred at Scunthorpe in UK
Slide 5: Group Financial Highlights – Quarter Ended 30th June'10
Group Financial Highlights – Quarter Ended 30th June’10 Deliveries Mn T 7,000 Turnover US$ Mn 5,856 7.00 6,000 6.05 5,016 6.00 5.35 5,000 5.00 4,000 4.00 3,000 3.00 2,000 2.00 1.00 1,000 0.00 - Jun'09 Jun'10 Jun'09 Jun'10 EBITDA US$ Mn PAT * US$ Mn 1,200 500 393 975 400 1,000 300 800 200 100 600 - -
Slide 6: Agenda
Agenda Introduction and Consolidated Highlights Global Business Environment Performance of European Operations Performance of Indian and South East Asian Operations Group Financial Performance Financing Portfolio and Capital Raising Business Outlook 6
Slide 7: Global steel market has returned to pre-crisis levels – due to China
Global steel market has returned to pre- crisis levels – due to China Macro economy Global Crude Steel Consumption & Capacity Utilisation Mt 2010-11 Per cent Global recovery has continued, but 130 2007-08 2008-09 2009-10 100 Capacity Utilisation (RHS) signs of slowdown in China 120 95 90 Recovery in
Slide 8: Global steel prices have declined in recent months
Global steel prices have declined in recent months HRC price, US$/tonne 1,400 India (Mumbai) Price developments Chinese domestic (incl VAT) 1,200 USA domestic (FOB Gulf) Russia export (FOB Black Sea) Steel spot prices have eased in 1,000 Germany domestic 800 recent months 600 Reflects signs of a slo
Slide 9: Raw material contract prices higher in September quarter but spot prices lower
Raw material contract prices higher in September quarter but spot prices lower Iron ore fines price (US cents/tonne)^ Raw material developments 250 Indian spot CIF China Australia contract CIF China Quarterly iron ore contracts rose in 200 Australia contract FOB June quarter and further in 150 Septe
Slide 10: Agenda
Agenda Introduction and Consolidated Highlights Global Business Environment Performance of European Operations Performance of Indian and South East Asian Operations Group Financial Performance Financing Portfolio and Capital Raising Business Outlook 10
Slide 11: European economic environment remains uncertain
European economic environment remains uncertain Economic Update European GDP (quarterly, Y/Y % change) Mt 6 Recovery is continuing but has been 4 tentative so far 2 0 Southern Europe lagging Northern -2 Europe -4 UK Spain -6 Germany Eurozone Recovery so far has benefited from -8 Mar-06 Sep-06 Mar-07
Slide 12: European steel consuming sectors are recovering but from a low base
European steel consuming sectors are recovering but from a low base Purchasing Managers Index – EU sectors 70 Above 50 = Expansion End-use sectors recovering, but from a low base 60 UK auto production is forecast to grow 50 by 24% in 2010 40 Engineering Automotive 30 EU industrial engineering contin
Slide 13: European steel market stronger in the June quarter, but has softened in September quarter
European steel market stronger in the June quarter, but has softened in September quarter European Steel Service Centre Physical Strip Product Stocks Mt Months supply Market update 2.6 3.4 Stock levels 3.2 2.4 European steel consumption was up 3.0 Months 2.2 supply 33% YoY in June quarter 2.8 2.0 2.
Slide 14: Turnaround Story – Tata Steel Europe
Turnaround Story – Tata Steel Europe Production Mn T Deliveries Mn T 4.00 3.74 4.00 3.71 3.50 3.50 3.11 3.00 2.84 3.00 19% 32% 2.50 2.50 2.00 2.00 1.50 1.50 1.00 1.00 0.50 0.50 0.00 0.00 Jun'09 Jun'10 Jun'09 Jun'10 Turnover US$ Mn EBITDA US$ Mn 4,500 400 3,814 293 4,000 300 3,500 3,279 US$ US$ 200 3
Slide 15: Operating Performance Trend – Tata Steel Europe
Operating Performance Trend – Tata Steel Europe Production, Deliveries & Turnover 7.0 6.4 7,049 5.6 8,000 7,096 6.0 5.2 5,623 7,000 4.9 4.3 6,000 5.0 4.2 3,825 4.0 3.8 3.7 3.8 3.7 3.7 4.0 3.4 3.6 3.7 5,000 2.8 3.1 4,000 3.0 2.7 3,279 3,611 3,608 3,680 3,814 3,000 2.0 2,000 1.0 1,000 0.0 - Jun'08 Sep
Slide 16: Quarterly Trend in Tata Steel Europe
Quarterly Trend in Tata Steel Europe Average Selling Prices US$ / T Raw Materials Costs Per Tonne 400 US$ / T 356 1,200 1,008 350 319 1,000 924 300 9% 12% 800 250 200 600 150 400 100 200 50 - 0 Mar'10 Jun'10 Mar'10 Jun'10 Deliveries Mn T EBITDA US$ Mn 4.0 3.8 3.7 3.5 400 354 3.0 2% 350 17% 293 2.5 3
Slide 17: Operating Performance – Tata Steel Europe
Operating Performance – Tata Steel Europe Strip Products Long Products Distribution &Building Deliveries (MnT) 1.2 Deliveries Exc TCP(MnT) TCP Sales Deliveries (MnT) 2 1.0 1.2 1.8 1.0 0.9 1.0 1.1 1.8 1.6 0.2 1 1.0 1.6 0.8 0.1 0.9 1.4 1.2 1.2 0.8 0.6 1 0.6 0.8 0.4 1.0 0.6 0.8 0.8 0.4 0.4 0.2 0.2 0.2
Slide 18: Positioning for the future: “One Company” - Tata Steel Europe
Positioning for the future: “One Company”- Tata Steel Europe Customer First Customers & markets Group Marketing function established Marketing sales and distribution teams aligned directly with key market sectors Sales &marketing sector teams Supply Chain Project Pan-European integrated supply chain
Slide 19: Outlook for Tata Steel Europe
Outlook for Tata Steel Europe Long-term recovery in most steel using sectors is continuing, particularly engineering and automotive. Outlook for construction remains weak in the near term However, some softness currently being experienced in European apparent demand and steel prices due to summer pe
Slide 20: Agenda
Agenda Introduction and Consolidated Highlights Global Business Environment Performance of European Operations Performance of Indian and South East Asian Operations Group Financial Performance Financing Portfolio and Capital Raising Business Outlook 20
Slide 21: Indian & South East Asian Steel Market
Indian & South East Asian Steel Market Indian Steel Consumption Vs Production Indian Market update Million tonnes per quarter Up 16.6 per cent Y/Y 16 Up 7.2 per cent Y/Y Up 4 per cent Q/Q Indian steel using sectors remain strong 14 Down 5.2 per cent Q/Q World Steel forecasts Indian apparent 12 10 fi
Slide 22: Operating Performance – Tata Steel India
Operating Performance – Tata Steel India Mn T Production Mn T Deliveries 1.80 1.54 1.69 1.59 1.80 1.70 1.60 1.60 1.42 1.40 1.40 1.40 1.20 1.20 1.00 1.00 0.80 0.80 0.60 0.60 0.40 0.40 0.20 0.20 0.00 0.00 Jun'09 Mar'10 Jun'10 Jun'09 Mar'10 Jun'10 Turnover US$ Mn EBITDA & EBITDA/T* US$ Mn /US$ 900 1,80
Slide 23: Steel Division – Tata Steel India
Steel Division – Tata Steel India Flat Products Long Products 1000 946 800 753 900 848 700 671 733 785 803 622 800 601 614 637 600 570 700 500 600 500 400 400 300 300 200 200 100 100 0 0 Jun'09 Mar'10 Jun'10 Jun'09 Mar'10 Jun'10 Sales Tonnage ('000 T) Net Realisation (US$/T) Sales Tonnage ('000 T) N
Slide 24: Ferro Alloys & Minerals Division – Tata Steel India
Ferro Alloys & Minerals Division – Tata Steel India 1600 50 1,437 45 Capacity Utilization rates of Stainless Steel mills & 1400 44 1,152 40 1200 1,091 1,094 Fe Cr production has increased YoY and QoQ. 35 1000 847 30 30 However, due to seasonal production cuts and 800 25 25 restricted demand in China
Slide 25: Key Events & Awards
Key Events & Awards CSR Excellence Award 2010 by ASSOCHAM (Associated Chambers of Commerce & Industry of India) FE- EVI Green Business Leadership Award in the iron & Steel category for the year 2009-10 Five HR awards by ‘Asia’s Best Employer Brand Awards 2010’ for Talent Management, Best HR Strategy
Slide 26: Operating Highlights – South East Asia
Operating Highlights – South East Asia Deliveries Nat Steel EBITDA US$ Mn Mn T 25 20 0.70 0.61 20 0.60 0.54 0.57 0.50 15 0.40 9 10 10 0.30 0.20 5 0.10 - - Jun'09 Mar'10 Jun'10 Jun'09 Mar'10 Jun'10 Tata Steel Thailand Deliveries EBITDA 0.40 Mn T US$ Mn 0.34 13 12 0.35 12 0.30 11 0.30 0.26 10 0.25 9 8
Slide 27: Outlook – Tata Steel India & S.E. Asia
Outlook – Tata Steel India & S.E. Asia Tata Steel India Company’s ambitious 3 Mtpa Brownfield expansion at Jamshedpur is on schedule Domestic steel demand shows strong momentum driven by strong recovery in steel intensive sectors such as auto, construction and infrastructure. Indian steel market rem
Slide 28: Agenda
Agenda Introduction and Consolidated Highlights Global Business Environment Performance of European Operations Performance of Indian and South East Asian Operations Group Financial Performance Financing Portfolio and Capital Raising Business Outlook 28
Slide 29: Group Financial Performance – Q1 FY11
Group Financial Performance – Q1 FY11 Figures in US $ Mn unless specified Tata Steel TS NSH* TSTH Tata Steel Europe Group(**) Deliveries (Mnt ) 1.399 3.710 0.609 0.297 6.049 Turnover 1,411 3,814 375 188 5,856 EBITDA 638 293 20 12 975 EBITDA margin (%) 45.2 7.7 5.3 6.4 16.6 EBITDA / tonne (US$) 456 7
Slide 30: Group EBITDA Trend
Group EBITDA Trend US $ Mn 44 87 732 1,148 975 1,200 1,000 800 600 1,024 971 400 646 200 40 79 4 4 87 125 - 8 Jun'09 Sep'09 Dec'09 Mar'10 Jun'10 Profit on Sale Of Investments(US$ Mn) Operational EBITDA (US$ Mn) Reported EBITDA 30 Conversion Rate : USDINR - 46.44
Slide 31: EBITDA Trend – Tata Steel India
EBITDA Trend – Tata Steel India US $ Mn 385 430 521 775 638 900 800 700 600 500 400 662 634 300 503 200 381 430 100 113 4 - 4 18 Jun'09 Sep'09 Dec'09 Mar'10 Jun'10 Profit on Sale Of Investments(US$ Mn) Operational EBITDA (US$ Mn) Reported EBITDA 31 Conversion Rate : USDINR - 46.44
Slide 32: EBITDA Analysis – Tata Steel Europe
EBITDA Analysis – Tata Steel Europe Figures in US $ Mn unless specified Q4 FY10 Q1 FY11 Reported EBITDA 354 293 Add/(Less): Translation impact Q-o-Q on account of - 42 depreciation of £` ` Add: Impact on account of fire at IJmuiden in Jun’10 - 15 quarter (Increased Maintenance) Add/(Less): Loss/(Gai
Slide 33: Group Debt Position
Group Debt Position US $ Mn Gross Debt Net Debt 11,434 11,804 9,551 9,843 12,000 14,000 12,000 10,000 774 935 522 644 10,000 8,000 8,000 5,225 5,126 4,661 4,477 6,000 6,000 Increase in Gross Debt primarily on 4,000 4,000 account of working capital financing 5,435 5,743 4,722 2,000 2,000 4,368 - - Ma
Slide 34: Gross Debt Movement & Net Debt Position
Gross Debt Movement & Net Debt Position 34 Cash & Cash Equivalents include current investments
Slide 35: Pensions - Tata Steel Europe
Pensions- Tata Steel Europe Surplus Pension Funds – BSPS & SPH US$ Mn 800 681 646 700 636 600 500 388 400 300 268 200 100 Asset Mix in BSPS 0 120% Jun'09 Sep'09 Dec'09 Mar'10 Jun'10 100% 2% 3% 2% 3% 2% 80% 66% 64% 64% 64% 65% 60% 40% Aggregate size of BSPS as on Jun’10 4% 4% 4% 5% 6% 20% quarter : £
Slide 36: Agenda
Agenda Introduction and Consolidated Highlights Global Business Environment Performance of European Operations Performance of Indian and South East Asian Operations Group Financial Performance Financing Portfolio and Capital Raising Business Outlook 36
Slide 37: Financing Portfolio & Capital Raising
Financing Portfolio & Capital Raising Raised `1,069.20 Crs (US$ 230 Mn) through preferential allotment issue of Equity Raising shares and warrants to Tata Sons in July’10 Debt Tata Steel Europe prepaid £112.5 Mn in May’10 Pre/Repayment Repaid `1,020 Crs (US$ 220 Mn) in Q1 FY11 Contracted US$ 350 Mn
Slide 38: Agenda
Agenda Introduction and Consolidated Highlights Global Business Environment Performance of European Operations Performance of Indian and South East Asian Operations Group Financial Performance Financing Portfolio and Capital Raising Business Outlook 38
Slide 39: Business Outlook
Business Outlook Steel market fundamentals to remain cautious in 2H depending on Chinese consumption. Modest recovery in steel pricing in end 2010 into 2011 as Chinese demand is expected to improve due to reversal in policies and new investments made US still in recovery mode and signs of regional w
Slide 40: Thank You
Thank You 40