Tata Steel Limited · NSE:TATASTEEL
Tata Steel — H1 FY2011 Earnings Presentation
44 slides from Tata Steel's earnings presentation, Nov 12, 2010
Slide 1: Half Yearly Financial Results: 30th September 2010 Analyst Meet Presentation
Mumbai, 12th Nov’10 Half Yearly Financial Results : 30th September 2010 Analyst Meet Presentation
Slide 2: Agenda
Agenda Key Highlights & Global Environment Performance of Indian and South East Asian Operations Performance of European Operations Group Financial Performance Projects Update Business Outlook 2
Slide 3: Agenda
Agenda Key Highlights & Global Environment Performance of Indian and South East Asian Operations Performance of European Operations Group Financial Performance Projects Update Business Outlook 3
Slide 4: Safety Performance – Tata Steel Group
Safety Performance – Tata Steel Group Lost time injury frequency rate was Lost Time Injury Frequency (LTIF) 0.77 in H1 FY11, a 20% improvement 3.5 over FY10 3.06 3 Key Safety initiatives : 2.5 2.35 Programmes to increase safety 2.1 observations and discussions initiated 2 to enhance positive safety
Slide 5: Group Financial Highlights – Half Year Ended 30th Sep'10
Group Financial Highlights – Half Year Ended 30th Sep’10 Deliveries Mn T Turnover US$ Mn 14.00 14,000 12,427 11.28 11.72 10,835 12.00 12,000 10.00 10,000 Q2 5.82 Q2 6,375 8.00 Q2 6.05 8,000 Q2 5,652 6.00 6,000 4,000 4.00 Q1 Q1 6,052 Q1 5.23 Q1 5.90 2,000 5,183 2.00 - 0.00 H1 FY10 H1 FY11 H1 FY10 H1
Slide 6: Global market environment
Global market environment Worldsteel apparent demand forecast – 2010 & 2011 (% Quarterly apparent steel use & capacity utilisation change) (October 2010) 2007-08 2008-09 2009-10 2010-11 400 100 40% 90 2010 2011 350 Global capacity utilisation 35% 35% 80 300 30% 70 26% 250 25% 24% 60 200 50 20% 19% W
Slide 7: Raw materials and steel prices
Raw materials and steel prices Iron Ore Fines, US$/tonne HRC spot price, US$/tonne 250 Spot CIF China Contract FOB 1,400 200 India (Mumbai) Chinese domestic (incl VAT) 150 1,200 USA domestic (FOB Gulf) Germany domestic 100 50 1,000 0 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 800 Hard c
Slide 8: Agenda
Agenda Key Highlights & Global Environment Performance of Indian and South East Asian Operations Performance of European Operations Group Financial Performance Projects Update Business Outlook 8
Slide 9: Indian & South East Asian market
Indian & South East Asian market Indian industrial production & car production (Y/Y % change) 140 Indian & South East Asian apparent steel consumption (mt) 120 Industrial production (Y/Y % chg) 100 80 Car production (Y/Y % chg) Forecast 80 60 68 70 40 20 60 0 60 55 -20 51 51 51 -40 50 46 46 47 Jan-0
Slide 10: Operating Performance – Indian Operations
Operating Performance – Indian Operations Production Mn T Deliveries Mn T 1.80 1.52 1.59 1.61 1.80 1.66 1.60 1.60 1.46 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 Q2 FY10 Q1 FY11 Q2 FY11 Q2 FY10 Q1 FY11 Q2 FY11 Turnover US$ Mn EBITDA & EBITDA /Tonne US$ Mn /
Slide 11: Steel Division – Indian Operations
Steel Division – Indian Operations Flat Products Long Products 1000 900 829 887 900 785 800 778 793 694 800 792 700 663 700 612 697 600 584 600 614 500 500 400 400 300 300 200 200 100 100 0 0 Q2 FY10 Q1 FY11 Q2 FY11 Q2 FY10 Q1 FY11 Q2 FY11 Sales Tonnage ('000 T) Net Realisation (US$/T) Sales Tonnage
Slide 12: Marketing initiatives – Indian Operations
Marketing initiatives – Indian Operations Flat Products Increased market share reach through “Steeliumzone” , an exclusive retail store of Tata Steelium CR Coils / Sheets Increased coverage of LINKS (Learning, Interaction, Networking & Knowledge Sharing) to maintain loyalty of key SME Customers In G
Slide 13: Tata Steel is committed to deliver value to the Indian Automotive industry
Tata Steel is committed to deliver value to the Indian Automotive industry Annually convened Knowledge Summit of Auto OEMs and Steel makers to share future trends & needs on Knowledge automotive steel Sharing Stabilisation of new platform / vehicles with Auto OEMs Cutting edge technology through “TS
Slide 14: Ferro Alloys & Minerals Division – Indian Operations
Ferro Alloys & Minerals Division – Indian Operations Operating Trends Sales Composition in Q2 FY11 K Tons 1600 1,486 50 36 45 38 1400 45 1,190 46 1,331 12 1,128 1,131 40 1200 35 45 1000 31 26 30 800 25 600 16 20 445 406 366 15 121 400 347 302 10 200 5 114 0 - Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Q2 FY11
Slide 15: Savings through Improvement Initiatives – Indian Operations
Savings through Improvement Initiatives – Indian Operations Savings by Improvement Initiatives Break up of Savings achieved in H1 FY11 US$ Mn US$ Mn 140 127 120 103 100 14 80 9 114 60 81 80 40 20 22 14 - H1 FY10 H1 FY11 Aspire / Synergy TOC Value Added Cost Cutting Marketing Initiatives 15 Conversio
Slide 16: Operating Performance – South East Asian Operations
Operating Performance – South East Asian Operations Production Mn T Deliveries Mn T 0.80 0.72 0.67 0.73 0.90 0.80 0.79 0.70 0.80 0.75 0.60 0.70 0.50 0.60 0.40 0.50 0.30 0.40 0.30 0.20 0.20 0.10 0.10 - 0.00 Q2 FY10 Q1 FY11 Q2 FY11 Q2 FY10 Q1 FY11 Q2 FY11 Turnover US$ Mn EBITDA US$ Mn 700 40 38 574 58
Slide 17: Outlook – Indian & South East Asian Operations
Outlook – Indian & South East Asian Operations India 10 Mtpa Brownfield expansion in Jamshedpur on track India’s finished steel demand to grow at 12% CAGR over FY10-13, led by strong demand growth from Autos, Consumer Durables and Engineering sectors Threat of Chinese imports delay price increases i
Slide 18: Agenda
Agenda Key Highlights & Global Environment Performance of Indian and South East Asian Operations Performance of European Operations Group Financial Performance Projects Update Business Outlook 18
Slide 19: European steel market
European steel market Steel using sector output (index 2005 = 100) European Steel Service Centre Stocks (mt, months of supply Months supply 130 2.6 Mt 3.4 Stock levels 120 3.2 2.4 3.0 110 2.2 Months supply 2.8 100 2.0 2.6 90 2.4 Germany - machinery & equipment 1.8 80 2.2 UK - machinery & equipment 1
Slide 20: Key Highlights – European Operations
Key Highlights – European Operations Production Mn T Deliveries Mn T 4.50 4.50 3.96 3.74 3.84 4.00 3.61 4.00 3.71 3.53 3.50 3.50 3.00 3.00 2.50 2.50 2.00 2.00 1.50 1.50 1.00 1.00 0.50 0.50 0.00 - Q2 FY10 Q1 FY11 Q2 FY11 Q2 FY10 Q1 FY11 Q2 FY11 Turnover US$ Mn EBITDA US$ Mn 5,000 400 303 4,500 3,941
Slide 21: Quarterly Trends – European Operations
Quarterly Trends – European Operations Average Selling Prices US$ / T Raw Materials Costs Per Tonne US$ / T 1,200 1,059 1,108 500 448 450 1,000 374 5% 400 20% 800 350 300 600 250 200 400 150 200 100 50 - 0 Q1 FY11 Q2 FY11 Q1 FY11 Q2 FY11 Deliveries Mn T EBITDA US$ Mn 4.00 3.71 3.53 350 3.50 303 5% 3
Slide 22: Operating Performance – European Operations
Operating Performance – European Operations Strip Products Long Products Distribution &Building 2.00 1.40 1.80 1.16 1.20 1.10 1.62 1.59 1.67 1.20 1.03 1.60 0.96 1.00 0.95 1.40 1.00 0.81 0.80 1.20 0.80 1.00 0.60 0.80 0.60 0.60 0.40 0.40 0.40 0.20 0.20 0.20 0.00 0.00 0.00 Q2 FY10 Q1 FY11 Q2 FY11 Q2 FY
Slide 23: Emerging from the crisis stronger – European Operations
Emerging from the crisis stronger – European Operations EBITDA (US$ Mn) 400 197 Emerged from financial crisis as a stronger business; fundamental 200 - recovery in operations; some flexible working patterns established -200 Q2 FY10 Q2 FY11 -400 Steel markets were always going to toughen and financia
Slide 24: Securing a sustainable future – Strip UK
Securing a sustainable future – Strip UK Port Talbot Steelworks nameplate capacity of 5mt Employs 4,900 people Turnaround Drivers Improved productivity implemented during functional review Minimised outbound logistic costs through lowest cost route and payloads Reduced energy consumption with variab
Slide 25: Securing a sustainable future – Speciality Steels
Securing a sustainable future – Speciality Steels Rotherham Steelworks nameplate capacity of 1.1mt Employs 1,074 people Offers wide variety of carbon, alloy & stainless steels Meets the needs of some of the worlds most demanding applications ranging from aerospace, oil & gas, power generation and in
Slide 26: Immediate outlook – European Operations
Immediate outlook – European Operations Peak cost raw materials still coming through product costing Raw materials Higher raw materials costs will depress margins and costs Q3 FY11 maintenance programme to support stable manufacturing Q3 market conditions will be affected by seasonal trends. Q4 expe
Slide 27: Summary – European Operations
Summary – European Operations Successful return to profitability in H1 FY11 Build a stable platform for the post-crisis industry – new brand, new organisation, structure and refinancing Fit For the Future programme has enabled turn around of under performing assets Develop strategies to become marke
Slide 28: Agenda
Agenda Key Highlights & Global Environment Performance of Indian and South East Asian Operations Performance of European Operations Group Financial Performance Projects Update Business Outlook 28
Slide 29: Tata Steel Group Profit & Loss Account – H1 FY11
Tata Steel Group Profit & Loss Account – H1 FY11 Figures in US $ Mn unless specified H1 FY11 H1 FY10 Deliveries (Mn Tonnes) 11.72 11.28 Turnover 12,427 10,835 EBITDA 2,008 135 EBITDA /Tonne (US$) 171 12 EBITDA Margin 16.2% 1.2% Net Finance Charges 281 356 Profit before Taxes 1,225 (981) PBT Margin (
Slide 30: Tata Steel Group Balance Sheet Account – H1 FY11
Tata Steel Group Balance Sheet Account – H1 FY11 Figures in US $ Mn unless specified H1 FY11 FY10 Share Capital 201 197 Reserve & Surplus , Share Warrants & Minority Interests 6,151 5,081 Loans 12,448 11,817 Deferred Tax Liability 467 401 Foreign Currency Monetary Items Trans. Diff 32 46 Provision f
Slide 31: Tata Steel Group Cash Flow Statement – H1 FY11
Tata Steel Group Cash Flow Statement – H1 FY11 Figures in US $ Mn unless specified H1 FY11 H1 FY10 Net Cash From Operating Activities 766 933 Net Cash from Investing Activities (678) (1,129) Net Cash from Financing Activities (15) 144 Cash & Cash Equivalents as at beginning of period 1,517 1,370 Cas
Slide 32: Tata Steel Group EBITDA Trend
Tata Steel Group EBITDA Trend Reported 757 1,187 1,007 1,001 45 90 EBITDA (US$ Mn) 1,200 1,000 800 600 1,058 839 1,003 400 667 200 41 82 90 4 161 129 - 4 8 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Q2 FY11 Profit on Sale Of Investments (US$ Mn) Operational EBITDA (US$ Mn) 32 Conversion Rate : USDINR –
Slide 33: Tata Steel Group Liquidity Management
Tata Steel Group Liquidity Management US$ Mn 3,756 2,919 3,015 2,913 2,668 4,000 3,500 3,000 1,377 2,500 1,005 1,217 1,118 2,000 1,231 1,500 2,379 1,000 1,914 1,798 1,795 1,437 500 - Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Q2 FY11 Cash & Cash Equivalents Undrawn lines 33 Conversion Rate : USDINR – 44.935 ;
Slide 34: Tata Steel Group Debt Position
Tata Steel Group Debt Position Gross Debt Net Debt US $ Mn 11,817 12,199 12,448 9,871 10,173 10,704 12,000 14,000 10,000 800 12,000 966 1,172 540 666 800 10,000 8,000 4,580 5,298 5,544 4,817 4,627 8,000 5,400 6,000 6,000 4,000 4,000 5,935 5,732 4,880 5,324 5,617 2,000 4,514 2,000 - - Q4 FY10 Q1 FY11
Slide 35: Tata Steel Group Gross Debt Movement & Net Debt Position
Tata Steel Group Gross Debt Movement & Net Debt Position US $ Mn 35 Cash & Cash Equivalents include current investments
Slide 36: Financing & Capital Raising Update
Financing & Capital Raising Update Refinancing of £3.53 Bn term loan and revolving credit facilities completed The new Senior Facilities Agreement was executed on 29th September 2010. The new loan was drawn on 7th October 2010 and the entire amount outstanding under the acquisition debt facilities w
Slide 37: Pensions Management – European Operations
Pensions Management – European Operations £ Mn Q2 FY11 Q1 FY11 Q2 FY10 Pension Assets 16,214 15,161 15,251 Pension Liabilities (16,055) (14,982) (14,796) Net Pension Surplus /(Deficit) of BSPS & SPH 159 179 455 Discount Rates - BSPS 4.95% 5.30% 5.45% Inflation - BSPS 3.10% 3.10% 3.00% Discount Rates
Slide 38: Tata Steel Group Financial Ratios
Tata Steel Group Financial Ratios Net Debt / EBITDA 25 70.6 20 15 10 32.5 4.82 3.79 5 2.74 2.93 2.74 2.63 1.73 1.62 2.09 2.54 2.66 0 -5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY08 FY08 FY08 FY08 FY09 FY09 FY09 FY09 FY10 FY10 FY10 FY10 FY11 FY11 -10 -51.4 -15 ROIC (%) 40.0% 34.3% 35.0% 31.4% 30.0%
Slide 39: Agenda
Agenda Key Highlights & Global Environment Performance of Indian and South East Asian Operations Performance of European Operations Group Financial Performance Projects Update Business Outlook 39
Slide 40: Projects Update
Projects Update Capex incurred till Sep’10 : Rs 5,732 Crs (US$ 1,276 Mn) 3 Mtpa Brownfield H2 FY11 Capex planned : Rs. 2,963 Crs (US$ 659 Mn) expansion at Project progression as per planned. Commissioning in H2 2011-12 Jamshedpur Product Mix – 2.54 Mtpa Hot Rolled Coil and 0.3 Mtpa Slabs 100% subsid
Slide 41: Projects Update
Projects Update Riversdale’s Stage 1 products will be exported from the existing Beira Port Mozambique Mozambique Gov is planning for a new Beira coal terminal with 18-24 Mtpa of capacity Project Sena Rail - Completed capacity ensures Stage 1 project requirements Tata Bluescope Steel Limited(TBSL) a
Slide 42: Agenda
Agenda Key Highlights & Global Environment Performance of Indian and South East Asian Operations Performance of European Operations Group Financial Performance Projects Update Business Outlook 42
Slide 43: Business Outlook
Business Outlook Quantitative easing expected to stimulate demand globally Economic recovery continues, amidst uncertainty Emerging markets like India, Taiwan and Korea remains robust, while most developed economies face long recovery Impact of the UK spending Review on Infrastructure & Construction
Slide 44: Thank You
qe TATA Thank You TATA STEEL