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Transcript of 2Q18 Presentation - v4-usiminas.infoinvest.com.brv4-usiminas.infoinvest.com.br/enu/5792/Apresentao...
Company Profile
3
Complete solution for products and services
Steel company with the largest number of patents rights in Latin America
Largest Research Center in the steel sector in Latin America
First Brazilian steel company to have its quality system certified by ISO 9001 in 1992
First Brazilian steel company and second in the world to achieve the ISO 14001 environmental
management certificate in 1996
Founded of the most enduring environmental education project of the private sector since 1984
4
Operation
Start Up
Cosipa
privatization
Launch of
ADR I program
on the OTC
Market (New
York)
•Acquisition
of iron ore
mines
•Acquisition
of
Zamprogna
•Creation of Soluções Usiminas
•One CNPJ: Usiminas
incorporates Cosipa
•Creation of Mineração Usiminas
•Acquisition of Codeme
and Metform stake
Automotiva
Usiminas
Divestment
•Selling of
Ternium stake
•Joint Mining
Agreements
with MBL e
Ferrous
Entrance of
Ternium /
Tenaris into
Usiminas
Control Group
(New
shareholders
agreement)
•Usiminas
privatization
•Listing on
BOVESPA
1993
Listing on
LATIBEX
stock
exchange
section
2011
2012 1962
2005
1994
2013
1991
2008
2010
2009
2014
Friables Project
conclusion on Mining
2015
Temporary
shutdown
of the
primary
areas in
Cubatão
2016
•R$ 1 billion
capital
increase
•Debt
Renegotiation
2017
R$ 1 billion
Mineração
Usiminas’
capital
reduction
2018
BF #1 Relight in Ipatinga (Shutted
down in Jun. 2015)
Timeline
Control Group:
68,57% of Voting Capital
Total Capital
1,253,079,108
Voting Capital Preferred
ON 56.28% 705,260,684 PN 43.72% 547,818,424
Shareholding Composition
5
Usiminas shares are traded on B3 (São Paulo), on the OTC Market (New York) and on a LATIBEX exchange
section (Madrid).
Nippon Group
0.57%
Others
97.64%
Ternium/Tenaris Group 1.79%
Controllers Agreement
Nippon Group
31.45%
Usiminas Pension
Fund
4.84%
Others
23.19%
Nippon Group
0.95%
Ternium/Tenaris Group 7,29%
Ternium/Tenaris
Group
32,28%
6
Complete Solution for Products and Services
Business Units
Mineração Usiminas
Mining
Steel
Ipatinga Plant
Cubatão Plant
Unigal Usiminas
Steel Processing
Soluções Usiminas
Capital Goods
Usiminas Mecânica
DOWNSTREAM UPSTREAM
Social and Environmental Initiatives
8
Usiminas Cultural Institute
Usiminas invested over R$260 million,
encouraging around 2,000 social projects First educational institution in Brazil
to obtain ISO 9001
São Francisco Xavier School
Márcio Cunha Hospital
Reference center in healthcare all over Brazil
Xerimbabo Usiminas Project Promotes protection and environmental education
free of charge for more than 2 million young people
Note: The prices are adjusted by removing the effects of events such as Bonus and Unfolding
9
Shares’ Quotation on B3 R$/share - Up to 06/30/2018
11.62
10.55
12.30
4.02
8.26
10.83 11.23
10.12 10.52
5.05
1.55
4.10
9.10
7.32
2012 2013 2014 2015 2016 2017 2Q18
USIM3 USIM5
24.1
34.4
37.5
43.3
71.1
71.3
81.6
101.4
104.7
831.7
Italy
Brazil
Turkey
Germany
South Korea
Russia
USA
India
Japan
China
World Crude Steel Market in 2017
Million Tons
Source: World Steel Association/OECD
11
Nominal
Capacity
2,351
Production
1,690
Excess of Capacity 661
36%
22%
16%
10%
4%
2% 1%
9%
China
Asia and Oceania
European Union
North America
South America
Europe (others)
Africa
Others
49%
22%
10%
7%
3% 3%
1% 6%
World Crude Steel Production
1,348 million tons 1,690 million tons
12 Source: World Steel Association
2017 2007
*Except China
+25%
Brazilian Flat Steel Market
13
Million Tons
Source: Instituto Aço Brasil / Usiminas – Excludes Slabs
14.3
11.9
15.2 14.3
14.9 15.0 14.2
13.4
12.3
13.7 13.1
10.2
14.5 13.7
14.3 14.7
13.2
10.6
9.3
10.4
7%
11%
22%
14% 13% 12%
15% 15%
8%
13%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Production Consumption Imports
Auto Industry
and Autoparts Oil and Gas Pipelines
Agricultural and
Road Machinery
Heavy Plates and
Hot Rolled
Civil
Construction
Household
Appliances
Cold Rolled and
Galvanized
14
Flat Steel Consumption Markets
Hot Rolled,
Cold Rolled and
Galvanized
Heavy Plates,
Hot Rolled,
Cold Rolled and
Galvanized
Heavy Plates and
Hot Rolled
Heavy Plates and
Hot Rolled
840 882 894
919
834
150 134
196 170
143
990 1,016
1,090 1,089
977
2Q17 3Q17 4Q17 1Q18 2Q18
Exports Domestic Market
16
Vendas de Aço – Siderurgia - Trimestral SALES VOLUME- STEEL Thousand tons- Quarterly
-9%
-10%
34%
25%
11%
10%
4%
4%
4% 3%
2%
1%
1% 1%
2Q18
37%
27%
1%
6%
5%
2%
5%
3%
4%
4% 6%
1Q18
Argentina
Germany
Spain
Belgium
United Kingdom
Portugal
Vietnam
Mexico
Colombia
Italy
France
Switzerland
Others
17
Europe: 56% Europe: 49%
EXPORTS – MAIN MARKETS
%
38%
13% 11%
8%
7%
6%
5%
3%
0% 9%
1Q18
Other Raw Materials
Coal and Coke
Labor (direct and indirect)
Energy and Fuels
Iron Ore and Pellets
Spare Parts
Depreciation
Structural Expenses
Inventories Variation
Others
45%
15%
12%
9%
9%
7%
6%
3%
-15%
9%
2Q18
Steel Business Unit
18
COST OF GOODS SOLD - COGS
Note: New consolidation methodology from 1Q18.
19
EBITDA AND EBITDA MARGIN Steel Business Unit – Quarterly - R$ Million
498 438
405
569
471
(62)
533
20%
17%
15%
19%
16%
18%
2Q17 3Q17 4Q17 1Q18 2Q18
Reported EBITDA RS government tax provision
Reported EBITDA Margin EBITDA and EBITDA Margin excluding provision
Capacity increase to generate finished products
7.2 million t 9.7 million t
(2010) (2014)
Investments
20
Steel Business Unit
Slabs
Heavy Plates
Hot Rolled Cold Rolled
Hot dip galvanized Electrogalvanized
Total Hot Rolled Cold Rolled Heavy Plates Electrogalvanized HDG
2,200 Total production capacity of
products for sale 4,200 1,900 1,020 350
Galvanized
Theoretical nominal capacity * of production and sale
21
* According to the theoretical mix of sales in the implementation of the line;
** Excluding the temporarily suspended capacities of Heavy Plates and Hot Strip Laminator #1 in Cubatão.
2,200 2,070 900 900 350 Generation of products for sale
with the equipment in operation **
9,670
6,620
Crude steel capacity of 9.5 million tons, being 5 million tons in Ipatinga and 4.5 million in Cubatão, which had the operation of its
primary areas temporarily suspended and currently processes acquired plates.
Thousand Tons
Start up in 2010
Meets the requirements of
Petrobras, focused on pre-
salt, besides the
shipbuilding sector
CLC Technology (Accelerated Cooling Process for Heavy Plates)
Galvanizing Line
Start up in 2011
Double the capacity to 1
million tons /year
Higher expertise in ultra-
resistant steel production
(dual phase)
22
Investments Steel Business Unit
Start up in 2012
Capacity to process 2.3 million
tons / year
Improving products’ portfolio
(beams, ultra resistant wheels,
higher grades API’s)
Hot Strip Mill
Start up in 2013
Capacity to process 1.7 million
tons / year
Better thickness tolerance,
flatness and surface controls
of materials for wheels, beams
and compressors
Pickling Line
23
Investments Steel Business Unit
o Met coke with adequate specifications for pig iron production in the blast furnace process
o Started up on May 2015
24
Coke Plant Revamp - Ipatinga
o Reduction of particle emissions, gases and volatile substances
o Coke gas to be used in the operational
facilities of Ipating Mill and electric energy
production
o Coke plant total capacity of 1,1 million
tons/year
Mainly Investment Concluded in 2015 Steel Business Unit
o Located in Serra Azul/Minas Gerais state
o 4 mining sites, acquired from J. Mendes in February, 2008
o Reserves of 2.6 billion tons of iron ore
o It has 20% of voting shares of MRS Logistica, being part of the Control Group
o Retroarea in Itaguaí Port
Description
25
Mining Business Unit
Production Capacity
Lump 2 million
Sinter Feed
4 million
Pellet Feed
6 million
70%
30%
Shareholder Composition
MBL
Arcelor Mittal
Ferrous (Santanense)
Comisa Emicon
MMX
Ferrous
MUSA Pau de Vinho
MUSA Leste
Minerita
MUSA Central
MUSA Oeste
Itatiaiuçu
Igarapé São Joaquim De Bicas
Mineração Usiminas
Location
Mining Business Unit
26
Increased capacity from 8 million to 12 million tons / year of iron ore
Iron ore with better quality, higher concentration of iron content and
lower impurity level
Two iron ore processing plants
Friables Project
27
Investments
Mining Business Unit
596 676
605 555 569
33
53 179 167 136
175
716
1,084
681
629
904
1,500
1,806
1,386
2Q17 3Q17 4Q17 1Q18 2Q18
Sales to Usiminas Sales to 3rd parties - Domestic Market Exports Total
28
-23%
IRON ORE SALES - MINING
Thousand tons- Quarterly
63 71
66
74
65
2Q17 3Q17 4Q17 1Q18 2Q18
Iron Ore Price - US$/t CFR China
29
IRON ORE PRICE – PLATTS (62% FE CFR CHINA)
US$/ton
226
27 41 49
33
253%
22% 20% 19% 16%
2Q17 3Q17 4Q17 1Q18 2Q18
Reported EBITDA Reported EBITDA Margin
EBITDA AND EBITDA MARGIN
30
Mining Business Unit – Quarterly - R$ Million
*Extraordinary effect of R$ 201 million from Porto Sudeste’s agreement
*
o 6 industrial units in different Brazilian states:
MG, SP, RS, ES and PE
o Processing capacity of 2 million tons of
steel/year
o Net Revenue of R$1.5 billion in 1H18
Description Soluções Usiminas - Steel Processing
31
Porto Alegre
Guarulhos
Taubaté
Suape
Betim
Santa Luzia
32
EBITDA AND EBITDA MARGIN
Steel Transformation - Soluções USIMINAS – Quarterly - R$ Million
27
18 19
29
37
5%
3% 3%
4%
5%
2Q17 3Q17 4Q17 1Q18 2Q18
Reported EBITDA Reported EBITDA Margin
o Facilities in Ipatinga/Minas Gerais state, Congonhas/Minas Gerais state and in
Cubatão/São Paulo state
o Market Segments: Steel Structures, Shipbuilding and Offshore, Oil and Gas, Industrial
Assembly and Equipment, Foundry and Railcars
o Net Revenue of R$215 million in 1H18
Usiminas Mecânica - Capital Goods
Description
Brasília 3rd Bridge
33
Steel Structures
(2)
(25)
(2)
33
(20) -2%
-35%
-4%
29%
-20%
2Q17 3Q17 4Q17 1Q18 2Q18
Reported EBITDA Reported EBITDA Margin
34
EBITDA AND EBITDA MARGIN
Capital Goods – USIMINAS Mecânica – Quarterly - R$ Million
*
*Extraordinary effect of R$ 22 million negative, related to Regularize Program adherence.
36
EBITDA AND EBITDA MARGIN
Consolidated – Quarterly - R$ Million
* **
*Extraordinary effect of R$ 201 million from Porto Sudeste’s agreement
**Extraordinary effect of R$ 40 million negative, related to Regularize Program adherence.
750
453 450
641
519
(62)
581
29%
17%
15%
20% 18%
2Q17 3Q17 4Q17 1Q18 2Q18
Reported EBITDA Provisão ICMS RS
Reported EBITDA Margin EBITDA and EBITDA Margin excluding provision
16%
926
5 77
331
610
877 875 874 873
107
177
0 18
89
167
242 242 242 242
30
1,104
5 95
420
778
1,119 1,116 1,116 1,115
137
Cash 2018 2019 2020 2021 2022 2023 2024 2025 2026
Local Currency Foreign Currency
Duration: R$: 48 months US$: 54 months
37
Consolidated – R$ millions
DEBT PROFILE (PRINCIPAL)
1,951 2,138 2,314
1,563 1,104
4,998 4,722 4,342
4,117 4,739
6,949 6,860 6,656
5,680 5,843
2Q17 3Q17 4Q17 1Q18 2Q18
Net Debt Cash Gross Debt
CASH POSTION AND INDEBTEDNESS (WITH INTEREST)
Duration : R$: 48 months US$: 54 months
38
Consolidated – R$ millions
39
CAPEX Consolidated – R$ millions
25
43
90
56 57 2
1
4
1 1
2
3
4
4 3
5
5
9
4 6
34
52
107
65 67
2Q17 3Q17 4Q17 1Q18 2Q18
Steel Capital Goods Steel Transformation Mining Total
40
G&A EVOLUTION - CONSOLIDATED
R$ million
97
106 109
103
113
3.8% 3.9% 3.5%
3.2% 3.5%
2Q17 3Q17 4Q17 1Q18 2Q18
G&A G&A/Net Revenues
181
254
195
208
190
271
620 599
554 566
733
2Q17 3Q17 4Q17 1Q18 2Q18
Slabs (In progress and finished) Products in progress Finished Products
Inventory turnover (days)
56 54 47 47 68
42
WORKING CAPITAL: STEEL INVENTORIES
Thousand tons
+43%
+7%
+40%
382 358
414
612
583
367
107
71
324
209
176
76
(45)
157
(19)
2Q17 3Q17 4Q17 1Q18 2Q18
Gross Profit EBIT Net Income43
USD/BRL 3.308 3.168 3.308 3.324 3.856 END OF PERIOD
GROSS PROFIT, EBIT AND NET INCOME
Consolidated - R$ million
INCOME STATEMENT
Per Business Unit – R$ million - Quarterly
Note: All intercompany transactions are made at arm´s length basis
44
R$ million
2Q18 1Q18 2Q18 1Q18 2Q18 1Q18 2Q18 1Q18 2Q18 1Q18 2Q18 1Q18
Net Revenue 202.1 251.9 2,923.6 3,003.4 770.6 702.8 101.6 113.3 (793.8) (827.2) 3,204.1 3,244.2
Domestic Market 79.3 77.1 2,498.9 2,580.3 770.3 702.8 101.6 113.2 (793.8) (827.2) 2,656.3 2,646.2
Exports 122.8 174.8 424.7 423.0 0.3 0.1 - 0.1 - - 547.8 598.1
COGS (140.2) (178.6) (2,389.8) (2,460.1) (721.1) (656.0) (111.0) (73.8) 740.9 736.4 (2,621.3) (2,632.1)
Gross Profit (Loss) 61.9 73.2 533.8 543.3 49.5 46.8 (9.5) 39.6 (52.9) (90.8) 582.8 612.1
Operating Income (Expenses) (58.4) (56.4) (285.5) (195.5) (20.0) (26.1) (15.2) (11.6) 5.4 1.1 (373.7) (288.5)
Selling (19.1) (25.3) (39.0) (36.7) (11.2) (9.8) (3.2) (3.2) (1.1) (1.2) (73.7) (76.1)
General and Administrative (7.0) (6.3) (85.1) (77.7) (14.7) (13.3) (9.5) (8.8) 3.4 3.3 (112.9) (102.8)
Others, Net (32.4) (24.8) (161.4) (81.1) 5.9 (3.0) (2.5) 0.3 3.2 (1.1) (187.2) (109.6)
EBIT 3.4 16.9 248.2 347.8 29.5 20.7 (24.7) 27.9 (47.4) (89.7) 209.1 323.6
Adjusted EBITDA 33.3 49.0 470.6 568.6 37.3 28.5 (19.9) 32.7 (2.4) (37.7) 518.8 641.2
Adj.EBITDA Margin 16.5% 19.5% 16.1% 18.9% 4.8% 4.1% -19.6% 28.9% 0.3% 4.6% 16.2% 19.8%
*Consolidated 70% of Unigal
Consolidated
Income Statement per Business Units - Non Audited - Quarterly
Mining Steel*Steel
ProcessingCapital Goods Adjustment
INCOME STATEMENT
Per Business Unit – R$ million – Semi-annually
Note: All intercompany transactions are made at arm´s length basis
45
R$ million
2H18 2H17 2H18 2H17 2H18 2H17 2H18 2H17 2H18 2H17 2H18 2H17
Net Revenue 454.0 197.5 5,926.9 4,676.3 1,473.4 1,156.7 214.9 163.1 (1,621.0) (1,273.3) 6,448.3 4,920.3
Domestic Market 156.3 197.5 5,079.2 4,078.5 1,473.1 1,156.3 214.8 162.4 (1,621.0) (1,273.3) 5,302.4 4,321.3
Exports 297.6 - 847.7 597.8 0.4 - 0.1 0.7 - - 1,145.8 599.0
COGS (318.9) (106.2) (4,849.8) (3,908.7) (1,377.1) (1,060.6) (184.8) (157.3) 1,477.3 1,175.4 (5,253.4) (4,057.4)
Gross Profit (Loss) 135.1 91.3 1,077.1 767.6 96.3 96.1 30.1 5.8 (143.7) (97.8) 1,194.9 863.0
Operating Income (Expenses) (114.8) 108.5 (481.0) (350.6) (46.1) (47.9) (26.8) (23.7) 6.5 2.1 (662.2) (311.6)
Selling (44.4) (6.1) (75.7) (79.0) (21.1) (24.3) (6.4) (6.1) (2.3) (2.3) (149.8) (117.8)
General and Administrative (13.3) (10.6) (162.8) (143.6) (28.0) (26.1) (18.3) (15.7) 6.7 6.2 (215.7) (189.8)
Others, Net 20.3 199.8 596.1 417.0 50.2 48.2 3.3 (17.9) (137.2) (95.8) 532.7 551.3
EBIT 20.3 199.8 596.1 417.0 50.2 48.2 3.3 (17.9) (137.2) (95.8) 532.7 551.3
Adjusted EBITDA 82.3 277.4 1,039.2 962.9 65.8 64.2 12.8 (5.7) (40.1) (16.1) 1,160.0 1,282.6
Adj.EBITDA Margin 18.1% 140.4% 17.5% 20.6% 4.5% 5.6% 6.0% -3.5% 2.5% 1.3% 18.0% 26.1%
*Consolidated 70% of Unigal
AdjustmentMining Steel* Steel Processing Capital Goods
Income Statement per Business Units - Non Audited - Semi-annually
Consolidated
Declarations relative to business perspectives of the Company, operating and
financial results and projections, and references to the growth of the Company,
constitute mere forecasts and were based on Management’s expectations in
relation to future performance. These expectations are highly dependent on
market behavior, on Brazil’s economic situation, on the industry and on
international markets, and are therefore subject to change.
www.usiminas.com/ri
ADR
Nível I
Leonardo Karam Rosa IR Manager
[email protected] Tel: 55 31 3499-8550
Danielle Ap. Maia IR Analyst
[email protected] Tel: 55 31 3499-8550