Tata Steel Limited · NSE:TATASTEEL
Tata Steel — H1 FY2012 Earnings Presentation
30 slides from Tata Steel's earnings presentation, Nov 10, 2011
Slide 1: Consolidated Financial Results Half Year Ended 30th September 2011
10th November, 2011 Consolidated Financial Results Half Year Ended 30th September 2011 Press Meet Presentation
Slide 2: Agenda
Agenda Introduction and consolidated highlights Global business environment Performance of Indian and SE Asian operations Performance of European operations Group financial performance Project updates Outlook 2
Slide 3: Tata Steel Group – Safety Performance
Tata Steel Group – Safety Performance Lost Time Injury Frequency (LTIF) • Tata Steel‟s health and safety 3.5 improvements recognised by 3.06 3 industry peers; Tata Steel Europe 2.5 2.35 and NatSteel were recipients of 2.1 worldsteel H&S recognition 2 awards 1.5 1.31 0.95 • Lost time injury frequency
Slide 4: Group Financial Highlights
Group Financial Highlights Deliveries Mn T Turnover US$ Mn 12.0 12.2 13,436 11,403 Q2 6.1 Q2 6.1 6,698 Q2 Q2 5,850 5.9 6.1 6,739 Q1 Q1 Q1 5,553 Q1 H1 FY11 H1 FY12 H1 FY11 H1 FY12 EBITDA US$ Mn PAT * US$ Mn 2,308 1,135 43 1,843 601 777 Q2 Q2 Q2 Q2 918 404 1,092 1,707 Q1 924 Q1 Q1 373 Q1 H1 FY11 H1 FY
Slide 5: Agenda
Agenda Introduction and consolidated highlights Global business environment Performance of Indian and SE Asian operations Performance of European operations Group financial performance Project updates Outlook 5
Slide 6: Global steel market environment
Global steel market environment Apparent Steel Demand (crude steel) – World ex China Apparent Steel Demand (crude steel) – China 80 55% 80 60% 45% 50% 70 70 35% 40% 60 60 25% 30% 15% 50 50 20% 5% 40 10% 40 -5% 0% 30 -15% 30 -10% -25% Apparent Consumption [LHS] 20 Y/Y % change [RHS] 20 -35% -20% Appa
Slide 7: Raw material prices declining
Raw material prices declining Iron ore fines, US$/tonne 200 180 • Slowdown in steel demand has 160 weakened the raw material spot prices 140 • Iron ore prices have declined sharply 120 Spot CIF China (63.5% Fe) Contract FOB Brazil compared to coking coal prices 100 Jan-11 Mar-11 May-11 Jul-11 Sep-11
Slide 8: Agenda
Agenda Introduction and consolidated highlights Global business environment Performance of Indian and SE Asian operations Performance of European operations Group financial performance Project updates Outlook 8
Slide 9: Indian steel market
Indian steel market Indian total fixed investment (billion 2004-05 Rupees, Y/Y % change) Billon 2004-05 rupees 5,600 2008-09 2009-10 2010-11 FORECAST 25% 5,100 2011-12 20% 4,600 Y/Y % chg (RHS) • Indian steel using sectors affected 4,100 15% 3,600 3,100 10% 2,600 2,100 5% by moderation of economic a
Slide 10: Performance – Tata Steel India
Performance – Tata Steel India Production Mn T Deliveries Mn T 1.75 1.66 1.71 1.65 1.61 1.59 Q2 FY11 Q1 FY12 Q2 FY12 Q2 FY11 Q1 FY12 Q2 FY12 Turnover US$ mn Steel Net Realisaton/t US$ 1,677 766 760 1,605 1,451 650 Q2 FY11 Q1 FY12 Q2 FY12 Q2 FY11 Q1 FY12 Q2 FY12 10 Conversion Rate INR/USD – 48.97
Slide 11: Operating performance – Tata Steel India
Operating performance – Tata Steel India Flat product deliveries (kt) • Highest skin panel and galvannealed sales to the automotive sector • Increase in dealer base from 2,750 to 3,200 during the last half year in the long products segment leading to 46% y-o-y Long products retail sales (kt) increas
Slide 12: Product development – Tata Steel India
Product development – Tata Steel India Flat products Deep drawn and high tensile galvannealed and bake hardened products for car components with higher corrosion resistance and improved dent resistance Benefits: • Lower thickness leads to higher fuel efficiency of cars • Import substitution – lead
Slide 13: Ferro Alloys & Minerals Division – Tata Steel India
Ferro Alloys & Minerals Division – Tata Steel India Deliveries (kt)* 668 574 Reduced capacity utilization of Q2 366 Q2 268 Japanese stainless steel Industry resulting 50% drop in Q1 302 Q1 306 premium segment demand H1 FY11 H1 FY12 Prices deteriorated materially Year on year movement in H1 – exp
Slide 14: Continuous improvements – Tata Steel India
Continuous improvements – Tata Steel India Figures in US$mn Savings on improvement initiatives Initiative wise break up Improvement initiatives : • “Kar Vijay Har Shikhar” initiatives in the raw materials divisions generated a savings of US$31mn. Substitution of imported coal with coal procured from
Slide 15: Performance – South East Asia
Performance – South East Asia Production Mn T Deliveries Mn T 0.74 0.73 0.79 0.79 0.73 0.78 Q2 FY11 Q1 FY12 Q2 FY12 Q2 FY11 Q1 FY12 Q2 FY12 Turnover US$ mn Average selling prices/t US$ 773 680 765 637 549 698 Q2 FY11 Q1 FY12 Q2 FY12 Q2 FY11 Q1 FY12 Q2 FY12 15 Conversion Rate INR/USD – 48.97
Slide 16: Agenda
Agenda Introduction and consolidated highlights Global business environment Performance of Indian and SE Asian operations Performance of European operations Group financial performance Project updates Outlook 16
Slide 17: European Steel Market – Output in steel using industries still recovering strongly, except construction
European Steel Market – Output in steel using industries still recovering strongly, except construction Steel using sector output (index 2005 = 100) European Steel Service Centre Stocks (mt, Months supply 130 Mt 2.6 months of supply) 3.4 Stock levels 120 3.2 2.4 3.0 110 2.2 Months supply 2.8 100 2.0
Slide 18: Performance – Tata Steel Europe
Performance – Tata Steel Europe Deliveries Mn T Average selling prices/t * US$ 1,176 3.50 3.48 -28/t 1,148 Q1 FY12 Q2 FY12 Q1 FY12 Q2 FY12 Raw material cost US$ / T EBITDA^ US$ mn 512 389 +23/t 489 103 Q1 FY12 Q2 FY12 Q1 FY12 Q2 FY12 18 Conversion Rate: INR/USD – 48.97, USD/GBP – 1.558. *excludes JV
Slide 19: Restructuring initiatives and improvement programmes
Long Products Consultation completed after May announcement. Two furnace operation in place to match market demand. Bloom & Billet Mill and Caster 750 closed Restructuring Programme started to capture IJmuiden‟s world class potential including focus on maintenance, product quality, cost reductio
Slide 20: Enabling our customers to perform in their markets
Enabling our customers to perform in their markets Despite short term market volatility we are delivering sector wins Picture of Lifting & Picture of Palfinger Excavating sector InBusiness Rail sector Other sectors Sector investments Hayange 108m rail mill UK Ministry of Defence Energy eff
Slide 21: Agenda
Agenda Introduction and consolidated highlights Global business environment Performance of Indian and SE Asian operations Performance of European operations Group financial performance Project updates Outlook 21
Slide 22: Group financial performance – Q2 FY12
Group financial performance – Q2 FY12 Figures in US $ mn unless specified Q2 FY12 Q2 FY11 Tata Steel Tata Steel South East Tata Steel Tata Steel India Europe Asia Group (*) Group (*) Deliveries (Mn T) 1.65 3.48 0.78 6.11 6.06 Turnover 1,677 4,321 637 6,698 5,850 EBITDA 570 103 5 601 918 EBITDA Margi
Slide 23: Net debt movement and liquidity position
Net debt movement and liquidity position 11,000 Net debt movement (US$ mn) 611 1,327 10,000 225 572 9,201 789 784 9,000 8,337 8,412 8,000 7,000 Net debt on Decr. in Decr. in curr. New debts Repayments Exchange adj. Net debt on Fwd cover Underlying 30-6-11 Cash&Equiv. Invest. 30-9-11 net debt Liquidi
Slide 24: Pensions Management – European Operations
Pensions Management – European Operations Figures in £ mn Sep-10 Mar-11 Jun-11 Sep-11 Total Scheme Retirement Benefit Assets 16,214 16,090 16,401 16,164 Total Scheme Retirement Benefit Liabilities (16,055) (15,743) (16,051) (16,058) Net Pension Surplus (BSPS &SPH) 159 347 350 106 Pension Asset Compo
Slide 25: Agenda
Agenda Introduction and consolidated highlights Global business environment Performance of Indian and SE Asian operations Performance of European operations Group financial performance Project updates Outlook 25
Slide 26: Odisha project
Odisha project Civil works in progress in dedusting stack Casting of a single foundation of 5500 m3 Civil work in progress in substation building in Piling work in SMS area in progress sinter plant 26
Slide 27: Raw material project: Benga, Mozambique
Raw material project: Benga, Mozambique Majority held by Rio Tinto (65%) CHPP plant Main consumer substation: switch room Main Consumer Substation: Switch gear Berth reconstruction CHPP of TCC8 plantPort at Beira Conveyor Riversdale loco leaving Switch for 1st batch Room shipment 27
Slide 28: Agenda
Agenda Introduction and consolidated highlights Global business environment Performance of Indian and SE Asian operations Performance of European operations Group financial performance Project updates Outlook 28
Slide 29: Business outlook
Business outlook High inflation and resultant high interest rates are impacting steel demand in India in the near term. However, prices are stable and the long term growth fundamentals remain firmly in place European steel demand remains under pressure due to contraction of manufacturing output.
Slide 30: Thank You
TATA Thank You TATA STEEL