Hindalco Industries Limited · NSE:HINDALCO
Hindalco Industries — Investor Presentation (September 2010)
46 slides from Hindalco Industries's investor presentation, September 2010
Slide 1: An Industry Leader in Aluminium & Copper
An Industry Leader in Aluminium & Copper Hindalco Industries Limited Investor Presentation September 2010
Slide 2: Disclaimer
Disclaimer This presentation may not be copied, published, distributed or transmitted. The information in this presentation is being provided by Hindalco Industries Limited (the “Company”). Any reference in this presentation to “Hindalco Industries Limited” shall mean, collectively, the Company and
Slide 3: Our Vision
Strategy – to build upstream Our Vision and buy downstream “To be a premium metals major, Global Towards a new Hindalco in size and reach, excelling in everything we do, and creating value for its stakeholders” ABG aspires to be in the Fortune 200 with a $65bn turnover by FY15 and Hindalco expected
Slide 4: Hindalco: A promise delivered through stellar performance
Hindalco : A promise delivered through stellar performance Paradigm shift in focus – from volume driven to EBITDA driven Higher premiums and permanent cost cuts From turnaround Well positioned in emerging markets with strong growth From turnaround to outperformer- Stronger to outperformer- Str
Slide 5: 1. Novelis: Successful Turnaround Story
1. Novelis : Successful Turnaround Story
Slide 6: Key themes
Key themes Industry: Improved aluminium Way forward for Novelis: sector fundamentals with a positive demand outlook On the threshold of robust growth I III II Novelis turnaround: Dual benefit of pricing power and cost cutting, coupled with strong liquidity Hindalco Industries Limited: Investor Prese
Slide 7: Global Economies: Showing on the road to recovery
Global Economies : Showing on the road to recovery I Global economic recovery continues … … with improved sector outlook YOY % GDP growth rate from Q2 2009 to Q2 2010 (%) (CY09-14) Can Sheet Automotive Industrial/ Overall demand Electronics 10.3 9.3 7.9 6.0 2.4 Asia 4-8% 8-10% >10% 8% 1.4 0% N. Amer
Slide 8: Novelis – Turnaround in operations
Novelis – Turnaround in operations II Uptick in volumes... 116 201 88 191 289 307 323 353 800 Shipm ents (kt) Adjusted EBITDA (US$m n) 300 263 750 Adjusted EBITDA/ton (US$) 250 231 200 199 700 200 650 127 124 150 756 746 600 693 716 100 88 632 605 650 649 550 53 50 500 0 Q2FY09 Q3FY09 Q4FY09 Q1FY10
Slide 9: Novelis – Convergence of Adj. EBITDA and EBITDA
Novelis – Convergence of Adj. EBITDA and EBITDA II Over time, Novelis has witnessed a gradual convergence between EBITDA and adjusted EBITDA EBITDA (US$mn) Adjusted EBITDA (US$mn) 500 214 413 434 263 264 231 127 200 88 124 213 53 199 164 0 Q2FY09 Q3FY09 Q4FY09 Q1FY10 Q2FY10 Q3FY10 Q4FY10 Q1FY11 (124
Slide 10: Novelis shipments – sustained improvement across markets
Novelis shipments – sustained improvement across markets II North America Europe Segment income (US$mn) Segment income (US$mn) 99 89 101 94 88 75 60 60 37 57 15 33 Automotive Automotive Q4 Q1 Q2 Q3 Q4 Q1 Q4 Q1 Q2 Q3 Q4 Q1 Industrial Industrial Shipments (kt) Shipments (kt) 274 278 Cans 227 232 Cans
Slide 11: Global Leader in Aluminium Recycling
Global Leader in Aluminium Recycling II Novelis is one of the world’s largest recyclers of aluminium − 9 plants on 4 continents Aluminium recycling only requires 5% of energy used to produce primary aluminium Aluminium recycling avoids 95% of GHG emissions of primary aluminium smelting Novel
Slide 12: Sustained turnaround with strong liquidity
Sustained turnaround with strong liquidity II Visibly sustained turnaround in Operating and Financial Performance Strong liquidity (Mn) 41 44 43 40 41 42 41 36 $1,051 Adjusted EBITDA (US$mn) $1,026 800 400 FRP Shipments (kt) 756 746 716 300 $634 700 693 650 649 263 $555 200 $446 632 231 605 200 199
Slide 13: Novelis today
Novelis today III Inventory control De-risked business model Significant reduction in Simple converter business inventory through effective (LME pass through) supply chain management 6 1 Cost initiatives High end products focus Relocation of facilities to Continues to build on its low-cost r
Slide 14: Novelis going forward
Novelis going forward III Drive Efficiencies and Strategic & “One Novelis” Reduce Costs Opportunistic Investments Expand and further consolidate Reduce overall cost base and Governed by operating leadership position improve manufacturing efficiency gains and IRR hurdle efficiency rates Build
Slide 15: Strong Outlook for FRP Products
Strong Outlook for FRP Products III FRP growth worldwide from 2010 to 2015 (kt) 24,000 Areas of focus 22,090 967 22,000 222 343 639 338 3,088 20,000 18,000 16,493 16,000 14,000 12,000 10,000 2010 Asia MENA West. Europe East. Europe S. America N. America 2015 Focusing capex on growing economies; Euro
Slide 16: Novelis continues to be strong player in global can business
Novelis continues to be strong player in global can business III Novelis – Dominant player in global can business Advantages of the Can Beverage can portfolio – Immune to economic downturn Cans have considerable advantages over bottles in ~58% can body stock all relevant areas for retail and ind
Slide 17: 2. Continued impressive performance of Indian operations
2. Continued impressive performance of Indian operations
Slide 18: Key themes
Key themes Copper business: Steady Industry : Improved Domestic margins despite decline in TcRc aluminium sector fundamentals II rates, with good by-product with a positive demand outlook realizations; situation I expected to improve III II Focused growth of Indian operations – All round improvement
Slide 19: Hindalco at the forefront of the explosive growth in India
Hindalco at the forefront of the explosive growth in India I India: Strong growth in end user industries Aluminium consumption (kt) Electrical & Electronics 435 Large scope for metal consumption to rise from current 390 Building & Construction levels End user segments FY10 Q1 FY11 Q1 have a Cons
Slide 20: Indian Al operations – robust growth prospects
Indian Al operations – robust growth prospects II Alumina (kt) Metal (kt) Wire rod (kt) FRP (kt) Extrusions (kt) 6% 1,307 6% % 92 % 8% 555 23 13 39 205 75 523 1,237 182 36 FY09 FY10 FY09 FY10 FY09 FY10 FY09 FY10 FY09 FY10 Higher alumina and metal production on he back of Brownfield expansions… incre
Slide 21: Hindalco: Low cost position
Hindalco: Low cost position II Hindalco Aluminium smelters are in the best quartile (25th percentile) Further set to benefit from Hirakud Cost Advantage on cost US$/ t 120 29.5 115 114 110 29.0 29.0 3,000 110 105 102 107 104 28.5 Site Operating Cash Cost Curve 28.5 2,500 100 100 102 99 28.0 95 28.0
Slide 22: VAP to drive margins
VAP to drive margins II VAP: Key driver for Hindalco’s downstream operations Healthier product-mix and geographic mix (kt) ; VAP sales: One of the key drivers for Hindalco’s sales in India ; Key brands commanding significant market share; has 521 6% 555 53% market share in domestic Rolled Products s
Slide 23: New initiatives undertaken by Hindalco
New initiatives undertaken by Hindalco II Al Railway Wagon in India Aluminisation in Automotives Development of Aluminium hoods & roof Al Roofing's for Construction Al Bicycle Frames Al. Swing Arm Al Boats Hindalco has pioneered new range of futuristic value added product range with a potential to
Slide 24: Hindalco: Long on Alumina
Hindalco: Long on Alumina II Global Alumina Third Party Market (mn tons) China increasingly dependent on ROW for its alumina requirement ROW China Rising Alumina cost further adds to Chinese 18 costs 2.3 Hindalco 2010: Integrated Hindalco 2012: Integrated Upstream Operations Global Upstream Oper
Slide 25: Steps taken by Hindalco to strengthen copper business
Steps taken by Hindalco to strengthen copper business III Key focus areas Drivers 9 Cost effective brown field expansion 1 Capital Efficiency 9 Strategic advantage through technology 9 Asset sweating Leadership in domestic market 9 Service level differentiation 2 offering better realisation 9 Qualit
Slide 26: Copper Operations - Good performance despite tough market conditions
Copper Operations - Good performance despite tough market conditions III Cathode (kt) Nifty production (tons) 56,450 7% 12% 4% 14% 999 1,043 49,600 298 333 170 182 FY09 FY10 DAP (kt) Cathode (kt) Sulfuric Acid (kt) Overall production down 19% to 57kt due to FY09 FY10 conscious idling of Mt. Gordon C
Slide 27: Strong financial performance (standalone)
Strong financial performance (standalone) 8% 21% 12% 14% 15% 17% 1,500 Sales (US$m n) EBITDA (US$m n) LME prices (US$) EBIDTA Margin (%) 2,500 2,199 1,300 2,122 2,037 1,175 1,836 1,155 1,126 2,000 1,100 1,069 1,530 900 820 847 1,401 1,500 700 1,000 500 300 181 182 196 163 500 132 68 100 Q4FY09 Q1FY1
Slide 28: 3. Expansion Projects
3. Expansion Projects : Aggressively focused on delivery with calibrated financial closure on course
Slide 29: Robust project pipeline – backbone to deliver growth
Robust project pipeline – backbone to deliver growth future growth Timing – Expected Project Project Cost (US$mn) Comments Completion 9 Basic Engg-94 % Complete, Detailed Engg-60% Complete 9 Major approvals in place Mahan Aluminium 9 Q2FY12 9 US$ 2,000 mn 9 Orders for all major, long delivery equipm
Slide 30: Update on Project: Greenfield
Update on Project : Greenfield Mahan aluminium, Madhya Aditya aluminium, Orissa Utkal alumina, Orissa Key Benefits Pradesh Nature 9 Smelter 9 Smelter 9 Refinery 9 359 ktpa smelter 9 359 ktpa smelter Well timed Scope 9 1,500 ktpa 9 900MW power plant 9 900MW power plant capacity increase Project Cost
Slide 31: Progress of Key Projects
Progress of Key Projects Bauxite Mine & Refinery Utkal 9 Basic Engineering – 100% and Detailed Mahan 9 Basic Engineering – 94% and Aditya 9 Detailed Engineering – 59% completed Alumina Engineering – 92% completed Aluminium Detailed Engineering – 60% Aluminium for smelter and 25% complete for CPP com
Slide 32: Update on Project: Brownfield
Update on Project : Brownfield HIRAKUD, ORISSA HIRAKUD, ORISSA PINDA, BRAZIL 9 Smelter Expansion - Capacity increase from 161 to 213 KTPA through addition of 80 Pots of 235 kA. The plan is to expand the capacity to 360 KT 9 Power Plant Expansion - Capacity to increase to 467.5 MW by addition of 100
Slide 33: Project Capital expenditure and financing need
Project Capital expenditure and financing need Project spending for key projects (US$mn) 6,000 5,000 2,000 4,000 70% 3,652 3,000 5,217 2,000 2,000 391 Treasury 1,000 1,217 1,174 Already spent 0 Utkal Alumina Mahan Aluminium Aditya Aluminium Total Project Finance Equity contribution Post the successf
Slide 34: Impressive financial performance with upward momentum in profitability
Impressive financial performance with upward momentum in profitability
Slide 35: Strong financial performance (consolidated)
Strong financial performance (consolidated*) 4.4% 10.9% 10.2% 11.1% 11.5% 12.5% 6,000 Sales (US$m n) EBITDA (US$m n) LME prices (US$) EBIDTA Margin (%) 2,500 2,199 2,122 2,037 5,000 1,836 2,000 4,000 1,530 3,659 3,595 1,401 1,500 3,250 3,267 3,000 2,759 2,807 1,000 2,000 500 1,000 362 413 459 305 33
Slide 36: Debt Position (Consolidated)
Debt Position (Consolidated) Novelis Repayment schedule 3,000 2,631 2,414 US$ in mn • Over 90% of debt back-ended 2,000 1,000 145 16 16 16 24 0 Debt (30 June 2010) Within 1 yr 2 years 3 years 4 years 5 years After 5 years Hindalco 3,000 Repayment schedule* • Repayment of Novelis loan commences in FY
Slide 37: Favourable Market Outlook
Favourable Market Outlook ADITYA BIRLA
Slide 38: Robust world consumption for Al post rebound in 2010
Robust world consumption for Al post rebound in 2010 Sustained robust demand for Aluminium over the next few years Projected primary aluminium consumption by region (in MMT) Rest of World 2009 Actual Russia 2% 7% 0.4% 2010 Forecast Rest of World India 2011E Latin America 8% Russia 2009 Global demand
Slide 39: Robust world consumption for Al post rebound in 2010
Robust world consumption for Al post rebound in 2010 Positive Outlook for Aluminium to continue with China and India aluminium demand consumption to outpace production China India Production Consumption 25,000 Production Consumption 23,148 1,712 1,755 1,798 21,434 1,563 1,5031,636 1,550 1,588 1,597
Slide 40: Drivers for consumption growth in India in place
Drivers for consumption growth in India in place Robust growth outlook… …to continue to drive Aluminium consumption 8.4 8.2 11.6 8.5 2.8 10.4 9.4 2.07 1.85 12 1.68 9.4 9.9 9.0 8.4 1.45 7.5 6.7 7.2 1.21 1.28 8 1.08 0.86 0.96 4 0 FY05 FY06 FY07 FY08 FY09 FY10 FY11 2010E 2011E 2012E 2013E 2014E 2004 20
Slide 41: Favorable Demand outlook: Reflected in Al forward prices
Favorable Demand outlook: Reflected in Al forward prices Aluminium forward price curve (US$/t) – Steadily rising 5 year forward curve price change (Sept 2010- Nov 2015) 2,300 12.0% Last Price 2,250 1.6% 2,200 2,150 -0.9% 2,100 2,050 -13.0% -13.6% 2,000 Sep-10 Dec-11 Mar-13 Jun-14 Sep-15 Aluminium Co
Slide 42: Re-rating due to visibility of growth and focused strategy in place
Re-rating due to visibility of growth and focused strategy in place
Slide 43: Well defined Growth drivers for Hindalco
Well defined Growth drivers for Hindalco Hindalco Today Hindalco Tomorrow Revenue (FY10) USD ABG aspires to be a $65bn 12.9bn turnover by FY15 and Hindalco expected to be the torchbearer.. EBITDA (FY10) USD 1.4bn Alumina Greenfield Projects Value Added Products 9 Long on Alumina - from 1.5 mtpa 9 Gr
Slide 44: Towards Sustainable Leadership
Towards Sustainable Leadership Domestic operations Expansion Projects Novelis User industries of aluminum have a Financial closure on track for key Improving product mix to drive bullish outlook Greenfield projects margins and growth Robust sector fundamentals Greenfield projects expected
Slide 45: Thank You
“y EAS, aie WAY SAN aN ad | | Thank You
Slide 46: Hindalco's Copper Operations - Focused Value Extraction in Copper
Hindalco’s Copper Operations - Focused Value Extraction in Copper Cu Conc. Cu Anodes Cu Cathodes Smelter Refinery Sulphuric Acid Anode Slime Rock Phosphate Phosphoric Acid Plant Precious Metals Refinery Ammonia Phosphoric Acid Di-Ammonium Gold Silver Phosphate (15 ktpa) (150 ktpa) (400 ktpa) Captive
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