Tata Steel Limited · NSE:TATASTEEL
Tata Steel — Q3 FY2010 Earnings Presentation
41 slides from Tata Steel's earnings presentation, Feb 16, 2010
Slide 1: Consolidated Financial Results Quarter Ended December 2009
Construction at new gas holder at Port Talbot Tata Structura was used in Mumbai Airport, India Consolidated Financial Results Quarter Ended December 2009 Press Meet – Mumbai Kalzip Constant Force fall arrest system February 16 , 2010 Butterfly park , Bangalore , created with Tata Structura 1
Slide 2: Agenda
Agenda Introduction and Consolidated Highlights Global Environment Third Quarter Performance : Tata Steel Europe Third Quarter Performance : Tata Steel India & South East Asia Third Quarter Group Financial Performance Recent Corporate Developments Business Outlook Q&A 2
Slide 3: Agenda
Agenda Introduction and Consolidated Highlights Global Environment Third Quarter Performance : Tata Steel Europe Third Quarter Performance : Tata Steel India & South East Asia Third Quarter Group Financial Performance Recent Corporate Developments Business Outlook Q&A 3
Slide 4: Tata Steel Group – Safety Performance
Tata Steel Group – Safety Performance 4
Slide 5: Consolidated Highlights
Consolidated Highlights US$ Mn Deliveries (Mt) Turnover 7.0 6.2 6.2 6,000 5,686 5,459 5,632 5.9 5,007 6.0 5.3 5,000 5.0 4,000 4.0 3,000 3.0 2,000 2.0 1,000 1.0 - 0.0 Q4 FY09 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY09 Q1 FY10 Q2 FY10 Q3 FY10 EBITDA 400 PAT * 300 800 731 200 102 700 100 0 600 -100 Q4 FY09 Q1 FY1
Slide 6: Agenda
Agenda Introduction and Consolidated Highlights Global Environment Third Quarter Performance : Tata Steel Europe Third Quarter Performance : Tata Steel India & South East Asia Third Quarter Group Financial Performance Recent Corporate Developments Business Outlook Q&A 6
Slide 7: Global Macroeconomic Indicators
Global Macroeconomic Indicators GDP, Y/Y % chg Industrial Capacity Utilization, % 15% 90 10% 85 80 5% 75 0% 70 -5% China India 65 USA Eurozone USA Eurozone -10% 60 Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- 07 07 07 07 08 0
Slide 8: Global Steel Environment
Global Steel Environment • Global steel consumption fell by 8% y/y in China - Apparent Steel Consumption (mt, % chg y/y) 2009 mt Y/Y % chg 80 70% China and India hit new record levels in 70 60% 2009 (up 25% and 14% y/y respectively) 60 50% 40% Rest of world fell by 30% y/y 50 Y/Y % chg (RHS) 30% 40
Slide 9: Global Steel Demand
Global Steel Demand Global demand will return to pre-crisis levels in 2010 Forecast Finished steel demand, mtpa Steel demand (% chg) 1,500 25% China 8% 14% India 8% -30% ROW Russia 1,000 9% -22% Brazil EU27 9% -39% USA USA 19% Brazil 500 Russia India -35% EU27 15% China -27% ROW 22% -8% 0 World 13%
Slide 10: Key Theme – Gradual Improvement in Macro Factors
Key Theme – Gradual Improvement in Macro Factors Industrial Production (Y/Y % chg, monthly) Purchasing Managers Index - Manufacturing (Index) Above 50 = Expansion 25% USA EU27 60 20% India China 15% 55 10% 50 5% 0% 45 -5% USA 40 Eurozone -10% China -15% India 35 -20% Below 50 = Contraction -25% 30 J
Slide 11: Key Theme - Raw Material Cost Push possible in 2010
Key Theme - Raw Material Cost Push possible in 2010 Iron Ore – Contract Prices (cents/mtu, Y/Y % chg) Coking Coal – Contract Prices (US$/T, Y/Y % chg) 100 Carajas Fines FOB Brazil for Europe 80% 350 250% Goonyella Benchmark Grade FOB Australia 90 300 200% Y/Y % chg (RHS) 60% 80 250 150% 70 40% Fines
Slide 12: Key Theme – Two Speed Recovery
Key Theme – Two Speed Recovery World GDP (Y/Y % chg) & World PMI (Index) PMI – Developed & Emerging (Index) 65 65 6% Above 50 = Expansion Above 50 = Expansion (PMI) 60 60 4% 55 55 2% 50 50 0% 45 45 Developed Emerging -2% Global 40 World PMI (LHS) 40 World GDP (Y/Y % chg, RHS) Below 50 = Contraction
Slide 13: Agenda
Agenda Introduction and Consolidated Highlights Global Environment Third Quarter Performance : Tata Steel Europe Third Quarter Performance : Tata Steel India & South East Asia Third Quarter Group Financial Performance Recent Corporate Developments Business Outlook Q&A 13
Slide 14: European Steel Environment
European Steel Environment • EU27 market was 118mt in 2009 (35% y/y EU27 – Apparent Steel Consumption (mt) decline) 60 mt 55 • December quarter 2009 50 45 EU27 demand down 8% y/y, up 17% 40 on H1 2009 35 Stock adjustment coming to an end 30 25 • Stocks are now low at end users and 20 service centres
Slide 15: Performance Focus for Q3 operations – Tata Steel Europe
Performance Focus for Q3 operations – Tata Steel Europe • Increase utilization to meet customer expectations/demand • Minimise losses of TCP and Long Products operations • Continue to implement ‘Fit For Future’ programmes • Turnaround of financial performance compared to H1 FY10 - Volume - Product M
Slide 16: Operating Performance – Tata Steel Europe
Operating Performance – Tata Steel Europe Turnover (US$ Mn) EBITDA (US$ Mn) 200 4,500 142 3,819 4,000 3,605 3,602 100 3,500 3,274 3,000 0 2,500 Q4 FY09 Q1 FY10 Q2 FY10 Q3 FY10 -100 2,000 1,500 -200 1,000 500 -300 - -307 -400 Q4 FY09 Q1 FY10 Q2 FY10 Q3 FY10 -387 -398 Capacity Utilization* 90% 81% ~80
Slide 17: EBITDA Bridge: Q2 FY10 to Q3 FY10 – Tata Steel Europe
EBITDA Bridge: Q2 FY10 to Q3 FY10 – Tata Steel Europe US$ mn 50 142 105 104 131 138 (249) (387) Q2 FY10 Fin Inst etc Adjusted Selling prices Cost Vol/Mix Others Q3 FY10 Q2 FY10 17
Slide 18: Partial Mothballing Teesside Cast Products
Partial Mothballing Teesside Cast Products Redcar Blast Furnace and Lackenby steelmaking to be partially mothballed by the end of February 2010 In April 2009 international consortium prematurely and illegally terminated 10-year Off take Agreement. This is the sole reason for the TCP mothballing Tata
Slide 19: Response to market conditions and positioning for future
Response to market conditions and positioning for future Ongoing initiatives • Fit for Future headcount reduction will total around 5,600 by end of March Weathering the • Specialty Steel business now breakeven Storm YTD savings • Most Service Centre rationalisation complete And Fit for Future • Cons
Slide 20: Outlook for Tata Steel Europe
Outlook for Tata Steel Europe The group continues to work towards its 2012 LTIF target of 0.4. Has launched the “Zero Harm” campaign in Europe focussing on 6 hazard areas EBITDA improvement trend to continue into Q4 and FY 11 as more cost reduction benefits are realised Steel prices to increase as s
Slide 21: Agenda
Agenda Introduction and Consolidated Highlights Global Environment Third Quarter Performance : Tata Steel Europe Third Quarter Performance : Tata Steel India & South East Asia Third Quarter Group Financial Performance Recent Corporate Developments Business Outlook Q&A 21
Slide 22: Indian Economic Environment
Indian Economic Environment Strong GDP recovery in FY11 – 8.2% growth vs. 6.65% in FY10 Indian Monthly Auto Sales Government infrastructure investment %(GDP) – Indian monthly consumer durable sales are on an Acceleration in capex plans, especially infrastructure upward trend 22 Source: Goldman Sachs
Slide 23: Indian and S.E. Asian steel Environment 2010E
Indian and S.E. Asian steel Environment Indian Steel Consumption (mt) • Indian consumption was 58mt in 2009 70 (14% y/y gain) 60 50 • December quarter 2009, Indian 40 demand up 20% y/y 30 • Industrial activity accelerating and 20 10 construction robust; expected to 0 continue in 2010 2001 2002 2003
Slide 24: Operational Achievements – Tata Steel India
Operational Achievements – Tata Steel India Successful commissioning of Top Gas Recovery Turbine at ‘G’ Blast furnace Hot Metal production in December’09 was highest ever at 0.651 million tonnes (@ 7.81mtpa) Crude steel production in December’09 crossed the 0.600 million tonnes mark for the first (w
Slide 25: Operating Performance – Tata Steel India
Operating Performance – Tata Steel India Long Products Flat Products 700 0.80 800 1.08 1.20 0.70 600 0.71 674 680 0.66 564 0.70 700 636 600 1.00 554 0.57 600 0.89 552 0.60 576 0.85 0.79 500 0.80 0.50 500 400 400 0.60 0.40 300 300 0.30 0.40 200 200 0.20 0.20 100 100 0.10 - 0.00 - 0.00 Q4 FY09 Q1 FY10
Slide 26: Ferro Alloys & Minerals Division
Ferro Alloys & Minerals Division 30 1,112 1200 1,081 1,000 Low ferroalloys stock in Asia was the trigger for 25 25 1000 this price up turn from Q309 844 20 800 Higher Ferro Chrome demand on the back of improved stainless steel prospects coupled with 15 16 600 cost pressures from electricity tariff r
Slide 27: Operating Highlights – NatSteel Asia
Operating Highlights – NatSteel Asia Finished Steel Production (Mt) Deliveries (Mt) 0.5 0.46 0.8 0.45 0.45 0.68 0.7 0.64 0.4 0.38 0.33 0.6 0.35 0.5 0.3 0.5 0.4 0.25 0.4 0.2 0.3 0.15 0.2 0.1 0.05 0.1 0 0 Q4 FY09 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY09 Q1 FY10 Q2 FY10 Q3 FY10 EBITDA (US$Mn) Average Selling Pr
Slide 28: Operating Highlights – Tata Steel Thailand
Operating Highlights – Tata Steel Thailand Crude Steel Production (Mt) Deliveries (Mt) 0.35 0.35 0.31 0.3 0.3 0.28 0.3 0.3 0.3 0.26 0.25 0.25 0.19 0.2 0.2 0.2 0.15 0.15 0.1 0.1 0.05 0.05 0 0 Q4 FY09 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY09 Q1 FY10 Q2 FY10 Q3 FY10 EBITDA (US$ Mn) Average Selling Prices (US$/t
Slide 29: Outlook – India
Outlook – India Strong demand momentum in India likely to continue, driven by robust infrastructure and consumption expenditure Annual deliveries of around 6.2 Mn Tonnes Present monthly capacity utilization exceeds the rated capacity of 6.8 Mtpa of crude steel Pricing conditions remain firm Contract
Slide 30: Outlook – S.E. Asia
Outlook – S.E. Asia NatSteel Asia SEA apparent steel demand expected to grow by 10% in 2010 Expectation of positive construction growth in 2010 will lead to increased steel usage in Singapore, Australia , Malaysia and Vietnam Operational excellence program to improve efficiency and productivity and
Slide 31: Agenda
Agenda Introduction and Consolidated Highlights Global Environment Third Quarter Performance : Tata Steel Europe Third Quarter Performance : Tata Steel India & South East Asia Third Quarter Group Financial Performance Recent Corporate Developments Business Outlook Q&A 31
Slide 32: Group Financial Performance – Q3 FY10
Group Financial Performance – Q3 FY10 US $ Mn Tata TS NSH* TSTH Tata Steel Steel Europe Group** Deliveries (mt ) 1.6 3.8 0.6 0.3 6.2 Turnover 1,370 3,602 351 171 5,632 EBITDA – Reported 520 142 15 8 731 EBITDA margin (%) 38 4 4 5 13 PBT – Reported 375 (152) 4 (0) 268 PBT margin (%) 27 - 1 - 5 One of
Slide 33: Group EBITDA Bridge – Q2 FY10 to Q3 FY10
Group EBITDA Bridge – Q2 FY10 to Q3 FY10 India and South East Asia US$ mn Europe 39 731 188 105 104 131 9 6 128 86 (9) (54) (3) Q2 FY10 Prices Cost Vol/Mix Perf. Impr. Ferro Alloys Other Prices Cost Vol/Mix Other Others Q3 FY10 Reported Inc/Exps Inc/Exps Reported 33
Slide 34: Group Liquidity Position
Group Liquidity Position US $ Mn 2,957 3,618 3,678 2,854 4,000 3,500 3,000 1,320 1,377 2,500 1,012 1,005 2,000 1,500 2,299 2,301 1,000 1,945 1,849 500 - Mar'09 June'09 Sep'09 Dec'09 Cash & Cash Equivalents Undrawn lines (*) Excludes other JVs, Subsidiaries & share of profit of Associates of the Tata
Slide 35: Gross Debt Movement & Net Debt Position
Gross Debt Movement & Net Debt Position 35
Slide 36: Pensions- Tata Steel Europe
Pensions- Tata Steel Europe Combined Surplus of all TSUK Pension Funds US$ Mn 998 537 568 534 Mar'09 Jun'09 Sep'09 Dec'09 120% Asset Mix in BSPS 100% 2% 2% 3% 2% 80% Aggregate size of Tata Steel Europe’s 68% 66% 64% 64% 60% Pension Schemes : £ 10 Bn 40% 5% 4% 4% 4% 20% 25% 28% 29% 30% 0% Mar'09 Jun'
Slide 37: Agenda
Agenda Introduction and Consolidated Highlights Global Environment Third Quarter Performance : Tata Steel Europe Third Quarter Performance : Tata Steel India & South East Asia Third Quarter Group Financial Performance Recent Corporate Developments Business Outlook Q&A 37
Slide 38: Recent Developments
Recent Developments JV with Nippon Steel - Tata Steel Limited and Nippon Steel Corporation for the production and sales of automotive cold rolled flat products at Jamshedpur to address the localization needs of Indian automotive customers for high grade cold rolled steel sheet. TSL will hold 51% and
Slide 39: Agenda
Agenda Introduction and Consolidated Highlights Global Environment Third Quarter Performance : Tata Steel Europe Third Quarter Performance : Tata Steel India & South East Asia Third Quarter Group Financial Performance Recent Corporate Developments Business Outlook Q&A 39
Slide 40: Business Outlook
Business Outlook China likely to produce close to 600 mt in 2010 Raw material price increase in 2010 may have cost push impact on the industry Very strong demand from emerging economies. India , Brazil likely to reach their highest apparent steel consumption levels Europe’s GDP likely to grow by 1-2
Slide 41: Q&A
«I TATA TATA STEEL Q&A 41