Sahaviriya Steel Industries PLC. Opportunity Day First Quarter 2014

Transcription

1 Sahaviriya Steel Industries PLC Opportunity Day First Quarter May 2014

2 Sahaviriya Steel Industries PLC Opportunity Day First Quarter May 2014

3 Disclaimer The information contained in this presentation is intended solely for your personal reference only. If you are not an intended recipient, you must not read, disclose, copy, circulate, retain, distribute or take any action in reliance upon this material. This presentation is not intended to substitute your own analysis and investigation, and should not be considered a recommendation to any recipient of this presentation. Some statements contained herein are forward-looking statements identified by the use of forward-looking terminology such as may, will, expect, anticipate, intend, estimate, continue, plan or other similar words, which are subject to various risks and uncertainties. These statements include statements with respect to Sahaviriya Steel Industries Public Company Limited (the Company or SSI ) s, Sahaviriya Steel Industries UK Limited ( SSI UK ) s and their subsidiaries (collectively referred to as SSI Group ) corporate plans, strategies and beliefs and other statements that are not historical facts. This presentation is prepared based on the assumptions and beliefs of SSI Group s management in light of the information currently available to the Company involving risks and uncertainties which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Nothing in this presentation is, or shall be relied on as promise or representation of the Company as to the future. 2

4 ASEAN s Largest Flat Steel Producer Long-term Strategies Integrate World Class Steel Business Innovate Premium Value Products Port Upstream Port Hot Rolled Coil Cold Rolled Coil Coated Steel Sheet 50% 100% 51% 3.7% 35.19% Engineering 99.99% Finished products out-bound Raw materials in-bound UK Thailand Legal entity Redcar Bulk Terminal Limited Sahaviriya Steel Industries UK Ltd. Prachuap Port Co., Ltd. Sahaviriya Steel Industries Plc. Thai Cold Rolled Steel Sheet Plc. Thai Coated Steel Sheet Co., Ltd. Product range Support: port Slab Support: port Hot-rolled coils (pickled and oiled) Cold-rolled steel Electro-galvanised Capacity 170,000 dwt 1), 12 mmt throughput 3.6 mtpa 2) 100,000 dwt 1), 14 mmt throughput HotCoil 4 mtpa 2) CleanStrip 1 mtpa 2) 1.2 mtpa 2) 0.24 mtpa 2) Domestic capacity share N/A N/A N/A 55% 63% 43% 100% SSI Ownership 50% 3) 100% 51% Parent company 35% 4% Total Revenues in ) 27 MUSD 1,473 MUSD 13 MUSD 2,165 MUSD 385 MUSD 78 MUSD 1) dwt = Deadweight ton 2) mtpa = million tons per annum 3) 50% ownership via SSI UK 4) Exchange rate used for translation = 30.7 THB/USD and 1.6 USD/GBP 3

5 Thailand Flat Steel Demand: the biggest and most sophisticated in ASEAN Upstream (Iron & Steel Making) Midstream & Downstream Application Slab Hot Rolling HRC P/O Cold Rolling CRC Coating Coated 2013 Domestic 11.4 MT Flat Steel Demand Local (MT) Import (MT) Total Flat Products (excl.plate) 5.8 MT MT MT Thailand Flat Steel Consumption: largest and most sophisticated in ASEAN, approximately net 6.8 mtpa or 60% is served by import ASEAN steel consumption has grown to 58.8 million tons in 2012; with 6.2% CAGR during Apparent Steel Consumption High-grade Checkered Flat Steel Products Consumption High growth, but served by import due to lack of raw material availability regionally consumption growth of 12% was fulfilled by imports which recorded an all-time high of 41 million tons or increase 20% YoY. Million Tons ASEAN s industrialisation and urbanisation has driven and will drive consistent high growth LONG: CAGR % % 46% 47% 54% Long Flat E FLAT: CAGR % Source : WSA, ISIT, SEASI, Federation of Thai Industry E 4

6 Thai Steel Market Apparent Finished Steel Consumption Flat Steel Consumption Unit: Million MT Unit: Million MT Flat Long HR Plate HR Sheet CR Sheet Coated Source : ISIT Q4/13 Q1/14F Source : ISIT Inner Chart = Q4/13 Outer Chart= Q1/14F (Thousand Units) 5,000 4,000 3,000 2,000 1,000 Car and HA/EA Production In Q1/2014, steel consumption grew by 10% QoQ despite the domestic political uncertainty mainly due to higher demand in long steel products and stock recovery after the orders holdback earlier. In Q1/2014, production of Car and Fridge fell 2% and 1% QoQ respectively due to ongoing political unrest since November 2013 causing domestic consumption slow down. However, A/C production rose 55% QoQ supported by high demand during summer season. - Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Cars Fridge A/C Source: ISIT and The Federation of Thai Industries 5

7 ASEAN Steel Market & Key Growth Drivers Steel Intensity Thailand Steel Consumption (k tons) 40,000 30,000 20,000 10,000-1 Construction & Infrastructure 2 Domestic Steel Demand in 2012 Automotive 16% Packaging 5% Appliance 12% Construction 54% Source: ISIT Machinery & Industrial 13% Construction sector accounted for 54% of domestic steel demand in Strong potential growth was supported by government's investment in infrastructure. AEC-Opportunities towards ASEAN Production Growth in ASEAN s Selective Sectors '02 '12 Car '02 '12 '02 '12 White goods Canned fruit & canned seafood Source : Thailand Automotive Institute, FTI, and ISIT Potential in capturing growth in automobiles, electrical appliances, and food packaging as a center of ASEAN production ASEAN Steel Consumption (k tons) 200, , ,000 50,000 - Above figures were calculated by SSI from (1) World Bank s forecasted population (2) 8.23% CAGR of ASEAN GDP s growth (forecasted by Economy Watch) and (3) WSA s relationship between GDP per Capita and ASU per Capita. 3 Rising GDP Driven by Middle-Income 4 Growth in GDP per Capita from % 9.2% 7.6% 6.5% 5.9% 8.5% 8.2% 1.9% 8.5% 8.4% Source : IMF Estimate 6.9% Growth in ASEAN s GDP driven by middleclass income, whose consumption is likely to fuel sales of HA/EA and automobiles. Opportunities in Thailand Urbanisation Expansion of Stores Regional Branches ( ) CAGR HomePro Siam Global Robinson House Makro = +18.0% +30.0% +14.6% +13.3% Thailand urban population increased from 26.4% in 1980 to 44.1% in 2010; whist number of stores regional branches increasingly expanded during

8 Agenda Highlights Recent Update and Ongoing Projects Q1/2014 Performance Results Q1/2014 Financial Results Outlook and Guidance Q & A Supplementary Appendix 7

9 Group CEO s Messages In Q1/14, we made 3 major achievements. Group EBITDA positive 75 million baht, finally turned around after 3 quarters of EBITDA losses. Highest Group Sales Volume 948 thousand tons. Highest Slab Sales Volume to 3rd Parties 486 thousand tons. Upstream Business more than halved its EBITDA loss from the previous quarter, as our various cost reduction efforts started to bear fruit. We achieved 36% higher Slab Spread, thanks to robust global slab market largely driven by the North American market demand, and the exacerbating raw material oversupply situation. Slab Sales Volume to 3rd Parties grew by 31%. HRC Business continued to be beset by Thai political situation, dropping our Sales Volume by 25% below normal. Despite that, from the last quarter we achieved 9% growth in Sales Volume, 4% improvement in HRC Spread, and 31% increase in EBITDA. innovate strength As I have previously said, we need to achieve operational excellence and scale up our production volume, to match our asset size which had doubled since the upstream integration. Better economy of scale, better efficiency, and lower cost is the consequence. That is happening now. Our next target is to breakthrough the 1,000,000 ton quarterly volume mark which we expect will again deliver much better financial result. We can confidently say that the business has passed its worst moment. Indeed, the transformation to become a fully-integrated steel producer had been painful, but we are turning around and will deliver better numbers going forward. For the outlook, we are cautious yet optimistic. Though Thai political situation remains unresolved and there are risks related to China economy and Ukraine situation, we see the global steel market continuing to improve and raw materials market continuing to stumble. This means that our HRC Business sales will remain low for the moment while Upstream Business sales will thrive, and overall metal spread relatively healthy. We will continue to pursue operational excellence and also focus on building the value creation pipeline through the AAA Projects, while gradually starting to realize near-term benefits from our early AAA Projects. 8

10 GROUP Upstream HRC Q1/2014 Highlights: Business Results Q1/14 Q4/13 %QoQ Q1/13 %YoY Group LTIFR % % Group Revenues (MB) 19,011 16, % 19,949-5% Group Sales Volume (k tons) % 944 0% Group EBITDA 1) (MB) 75 (1,464) +105% % Group Net Profit ( Loss) (MB) HRC Production (k tons) HRC Sales Volume (k tons) HRC Selling Price (USD/ton) (1,397) (2,907) +52% (778) -80% % % % % % % HRC Spread (USD/ton) % % HRC Rolling Margin 19.0% 18.4% % - HRC EBITDA 2) (USD/ton) Slab Production (k tons) Slab Sales Volume (k tons) Slab Sales Volume to 3 rd parties (k tons) Slab Selling Price (USD/ton) % % % % % % 486 (68%) 371 (52%) +31% 237 (35%) +105% % % Slab Spread (USD/ton) % % Slab Margin 27.5% 21.3% % - 1) Q1/2013 Group EBITDA included 363 MB gain on sales of TCRSS shares. 2) Q1/2013 HRC EBITDA included 225 MB gain on sales of TCRSS shares or equivalents to USD 10.7/ton 2,000 1,500 1, , Group Sales Volume and Revenues 15, , Highlights in Q1/ , , ,796 16,100 19, Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Slab Sale Volume to 3rd Pty (k tons) HRC Sale Volume (k tons) Coke Sale Volume (k tons) Group Revenues (million Baht) In Q1/2014, SSI made a quarterly group sales volume s record high of 948k tons, and the second highest sales revenue of 19,011 MB after Q1/2013. Average PCI Injection Rate ramped up to 115kg/thm, up from 113 kg/thm in Q4/2013. For the case of Safeguard Measure on HRC without other element added (thickness mm. and width 600 3,048 mm.) which DFT has announced an investigation in the Royal Gazette, a provisional measure is currently being contemplated. For the case of Anti-dumping Measure on HRC whose origins are from 14 countries which SSI has filed the petition for Sunset Review, an announcement of public hearings is anticipated consequently. 20,000 15,000 10,000 5,000-9

11 Q1/2014 Highlights: Safety and Awards 3.49 SSI Group s LTIFR 3.96 Lost Time Injury Frequency Rate (LTIFR)* Q1 Q4 Q SSI TCRSS WCE Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 PPC SSI UK SSI Group Lost Time Injury Frequency Rate (LTIFR) worsened to 3.96 in Q1/14 from 2.79 in Q4/13. * LTIFR = Number of lost time injuries per 1,000,000 man hours worked (Number of LTI s x 1,000,000/Man hours worked) 10

12 Agenda Highlights Recent Update and Ongoing Projects Q1/2014 Performance Results Q1/2014 Financial Results Outlook and Guidance Q & A Supplementary Appendix 11

13 PCI Injected in Kg/THM Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 USD/ton Upstream Business s PCI Project Target vs. Actual PCI Injection Rate Price of Coke vs PCI Coal Q4/13 Average 113 kg/thm Q1/14 Average 115 kg/thm Q3/13 Average 66 kg/thm 0 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Quartely Target Quarterly Average Injection Rate Blast Furnace Coke CFR Northern Europe PCI Coal FOB Australia Source: PCI Coal prices from Platts SBB Steel Market Daily; Coke prices from Coke Market Report Replacing partially expensive Coke with cheaper PCI Coal helps reduce cost of raw material. 12

14 Upstream Business s Growing Customer Base %Slab Vol Sold to 3rd Parties %Slab Vol Sold to SSI %Sales Volume by Geography 0% 19% 25% 35% 24% 46% 52% 68% 5% 59% 36% 32% N.America Asia/ Australia 100% 81% 75% 65% 76% 54% 48% 32% Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 36% 32% 2013 Q1/14 Europe 13

15 Innovate Premium Value Products Grow and Accelerate PVP PVP (%) 100% 90% 80% 70% 60% 50% 40% PVPs and Total Sales Total Sale Total Sales (k MT) 700 Commercial 600 Grade 66% PVPs 34% Focus 4 key growth products Automobile HRC for Re-rolled ,350kt 1,150kt 8.44% 1,330kt 13.14% At least 5 car models expected to be launched Hi-end applications expected to be launched 20% SSI 1,800kt 20% SSI 30% 20% 10% 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 SSI Q4 UK Q SSI UK Innovated Value Product (High-Grade) (LHS) High-Grade (LHS) Subtotal: Premium Value (LHS) SSI-UK Slab to High-Grade Market Accreditation 2012 (Actual) 2013 (Actual) 200 Commercial Grade % - SSI UK Innovated Value Product (LHS) Unique (LHS) 2014 (Actual as Q1) Total Sales (RHS) 2014 (Target) Total Hi-Grade 0.39 MMT 0.36 MMT 0.10 MMT 0.48 MMT SSI-UK 0.02 MMT 0.17 MMT 0.05 MMT 0.38 MMT 4% 46% 45% 80% PVPs 45% RHS: Right hand side LHS: Left hand side 245kt Thin Checker Gauge IVPs 283kt Important development in Q1/14 Auto, HA/EA application: 1 automaker approved 1 grade: 1 grade commercial supply started in Q1/14. Cold rolling application: Expand to AEC and export market Increase IVP to all segments 1 st trial step succeeded of steel grade for HA/EA application (A1A/ A2S) through cold -rolling. 360kt 520kt 14

16 Integrate World-class Steel Business - AAA Projects - Value Creation Pipeline Near-term Pipeline Long-term Pipeline Investment Annualised Benefit 9,081 (Unit: $k) 3,040 2,269 5,735 3,661 4, RCO Ammonia Tanks Rail Track Grease Grab Coke Crushing Screening VSD CC1, CC3 RCO Online Gas SBCO Booster New No 3 Boiler SBCO -Nalco 3D ECW Pumps-VSD RCO Benzole Stream Drawing Office Setup Slitter Upgrade RCO Battery RCO Nalco 3D Trasar No 2 Boiler SBCO Benzole Ladle lid weight Q1/14 Q2/14 Q3/14 Q4/14 15

17 AAA Project: Q1/2014 Result RCO-Nalco 3D Trasar Water Monitoring Financial Justification: Picture: The water treatment of the RCO primary cooler cooling water system is carried by the manual addition of chemicals, which leads to a variability of the chemical levels and increased costs. The installation of a 3D Trasar chemical injection management unit will provide continuous, accurate chemical dosing and a reduction of cleaning costs in several areas. Budget : Benefit : Total Investment = $40k Post Benefit = $240k p.a. Project Timeframe: Enquiry Target Quotation Target Supplier Comparison Award Supplier Target Start Date Completion Target Date Progress (%) Complete Complete Complete Complete Complete Complete 100% 16

18 AAA Project: Q1/2014 Result RCO Benzole Stream 2 Reinstatement Financial Justification: Picture: The Stream 2 element of the RCO Benzole Plant has been obsolete for a long period now. A project is to be undertaken to reinstate the plant in order to release the revenue that can be generated by an operational stream 2. Stream 2 reinstatement will release revenue of an estimated $50k-per-week based on a price of $600-per-tonne for Benzole and using Stream 1 s current output of, on average, 90Te-per-week ($2.8m-per year). Budget : Benefit : Total Investment = $50k Post Benefit = $2,800k p.a. Project Timeframe: Enquiry Target Quotation Target Supplier Comparison Award Supplier Target Start Date Completion Target Date Progress (%) Complete Complete Complete Complete Complete Complete 100% 17

19 AAA Project: To be delivered in Q2/2014 No.2 Boiler Statutory O/haul & Tube Replacement Greater Efficiency Financial Justification: Picture: The benefit illustrates lost generation during 2013 due to tube leaks and efficiency. Project deliverables where the refurbishment of the boiler to give reliability and increased power generation (Electricity). Budget : Benefit : Total Investment = $1,075k Post Benefit = $2,943k p.a. Project Timeframe: Enquiry Target Quotation Target Supplier Comparison Award Supplier Target Start Date Completion Target Date Progress (%) Complete Complete Complete Complete Complete Q2/ % 18

20 Agenda Highlights Recent Update and Ongoing Projects Q1/2014 Performance Results Q1/2014 Financial Results Outlook and Guidance Q & A Supplementary Appendix 19

21 Q1/2014 RESULT CONTINUAL ACTION Q1/2014 Performance Results Sales Cost Integration Premium Value Maximise sales Increase production to bring down average fixed cost per ton Reap further synergy with TCRSS, WCE, SSI UK Ongoing projects include SSI UK Restart Project to increase economy of scale and lower production cost Maximise PVPs (high-grade & unique & IVPs) Invest in technology, people and R&D to develop future high-grade products HRC HRC sales 462k tons, +9% QoQ Domestic market share at 30%, unchanged from Q4/13. Upstream Slab sales 717k tons; 486k or 68% tons sold to 3 rd parties. HRC Production 397k tons, from 408k tons in Q4/13 Productivity rate 239 ton/hr, down from 270 ton/hr in Q4/13 HSM utilisation rate 40%, down from 41% in Q4/13 HSM yield loss at 1.67%, compared to 1.60% in Q4/13 HRC conversion cost USD 72/ton, down from USD 80/ton in Q4/13 Sold 38k tons to TCRSS SSI UK slabs sold 231k tons to SSI TH. Sold 174k tons of PVPs in Q1/14; 38% of total sales volume Achieved 19.0% HRC Rolling Margin in Q1/14; improved from 18.4% in Q4/13 Achieved 27.5% Slab Margin in Q1/14; improved from 21.3% in Q4/13 Upstream Slab production 696k tons Utlisation rate 77%, down from 82% in Q4/13. Note: PVPs = Premium Value Products IVPs = Innovated Value Products 20

22 Thousands % 20.0% 15.0% 10.0% 5.0% 0.0% -5.0 % % % HRC Business Performance Sales Volume (k tons) Production (k tons) Productivity (tons/hr) Avg. Selling Prices HRC Rolling Margin % 18.7% % 18.4% 19.0% Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/ Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/ Conversion Cost (USD/ton) Utilisation Rate (%) Imported Slabs (k tons) Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/ Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 HSM Yield Loss 1.91% 2.23% 1.98% 1.97% 1.65% 1.63% 1.60% 1.67% Import Slab Cost HRC Sales Volume increased to 462k tons in Q1/14 (+9% QoQ) despite slight decrease in HRC Apparent Steel Supply. HRC Production Volume slightly decreased to 397k tons (-3% QoQ), but HRC Conversion Cost dropped to USD 72/ton (-10% QoQ). HRC Average Selling Prices slightly increased to USD 667/ton in Q1/14 (+1% QoQ) contributing to HRC Rolling Margin 19.0%. 21

23 HRC Domestic Market Share Volume ( 000 tons) 1,337 1, Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 As a percentage of total volume 72% 65% 15% 59% 59% 53% 19% 17% 19% 15% 21% 16% 17% 17% 16% 35% 40% 30% 35% 12% 30% 11% 30% 22% 6% 21% 23% 11% 22% 0% Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 SSI Other Local Supplies Import - Other (Alloy steel) Import - Carbon steels P&O Import - Carbon steels Due to ongoing political uncertainty, total HRC Apparent Steel Supply in Q1/14 slightly decreased by 0.1% QoQ to 1,421k tons from 1,423k tons in Q4/13 whereas SSI s market share in HRC market share is unchanged from Q4/13. Total steel import volume went up to 891k tons in Q1/14 from 837k tons in Q4/13, driven by import of HRC carbon steels due to increasing import of HRC whose width wider than 1,550 mm to avoid the prevailing Anti Dumping measure. However, Department of Foreign Trade has announced the investigation in the Royal Gazette, and a provisional measure is currently being contemplated. 22

24 Upstream Business Avg. Selling Prices Slab Margin Slab Production (k tons) Slab Sales Volume (k tons) Slab Sales Volume to 3rd Parties (k tons) % 7.4% 18.5% 23.1% 25.7% 19.8% 21.3% 27.5% 30.0% 20.0% 10.0% % -10.0% -20.0% Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/ Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/ % Slab Production decreased from 738k tons in Q4/13 to 696k tons in Q1/14, whilst Slab Sales Volume increased from 713k tons in Q4/13 to 717k tons in Q1/14, with 68% sold to external parties. Slab Margin improved from 21.3% in Q4/13 to 27.5% in Q1/14 following an increase in the average selling price and a decrease in raw material cost. 23

25 Agenda Highlights Recent Update and Ongoing Projects Q1/2014 Performance Results Q1/2014 Financial Results Outlook and Guidance Q & A Supplementary Appendix 24

26 NET PROFIT EBITDA REVENUE Consolidated Performance Unit: MB HRC Upstream Port Engineering % by Business unit in Q1/14 Port 0.2% Engineering 0.7% 15,742 11,469 15,794 17,599 19,949 12,542 16,796 16,100 19,011 Upstream 46% HRC 53% Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/ ,200 EBITDA HRC Upstream Q1/14 1,000 (1,879) (3,576) (3,130) (2,010) (887) (1,337) (1,464) Port Engineering Related transaction EBITDA Q1/ (2,841) (5,021) (4,799) (3,257) (778) (465) (2,902) (2,907) (1,397) Note: EBITDA = Net Profit + Tax Expense + Depreciation & Amortisation + Interest Expenses ,400-1,900 HRC Upstream ,701 Net Profit Q1/14 Net loss Q1/14 Noncontrolling Port Engineering Related interest -1,397 transaction

27 Net Profit in Q1/ ,0 00 Consolidated Unit: MB 14, , ,0 00 8, ,011-19,461 6,00 0 4,00 0 2, ,397-2,000-4,000 Revenues COGS SGA Onerous Contract Interests Others Net Profit 6,00 0 HRC Unit: MB 5,00 0 4,00 0 3,00 0 2,00 0 1, ,170-9, Revenues COGS SGA Onerous Contract Interests Others Net Profit 8,00 0 6,00 0 Upstream Business Unit: MB 4,00 0 2, ,513-13, , ,701-4,000 Revenues COGS SGA Onerous Contract Interests Others Net Profit 26

28 - 40, , , , , , % 32 0% 27 0% 22 0% 17 0% 12 0% 70 % 20 % -3 0% -8 0% Revenues and EBITDA Margin by Business Unit HRC Revenues (MB) EBITDA Margin (%) Upstream Revenues (MB) EBITDA Margin (%) 50,000 45,000 10% 8% 9% 15% 10% 40,000 35,000 30,000 25,000-1% 2% 3% 2% 4% 5% 0% 7,424 12,425 11,030 10,819 11,822 11,174 11,443 12,513 20,000 15,000 10,000 9,853 13,087 13,946 15,626 8,705 12,272 8,995 10,170-5% -10% -15% Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 5,000 - Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14-20% -48% -28% -21% -9% -9% -18% -17% -7% Port Engineering Revenue (MB) EBITDA Margin (%) 1,000 Revenue (MB) EBITDA Margin (%) 25% % 79% 80% % 72% 95 73% 77% 81 66% % 90% 80% 70% 60% 50% 40% 30% 20% % 13% % 13% 10% 10% 9% % % 15% 10% 5% 10% 100 0% 0% Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 HRC Business generated revenues of 10,170 MB in Q1/14 (+13% QoQ, -35% YoY), whilst HRC EBITDA slightly improved to 9% Upstream Business generated revenues of 12,513 MB in Q1/14 (+9% QoQ, +16% YoY) with EBITDA margin of -7% Port Business generated revenues of 67 MB in Q1/14 (-17% QoQ, -42% YoY), with EBITDA margin of 66% Engineering Business generated revenues of 214 MB in Q1/14 (-7% QoQ, -4% YoY), with EBITDA margin of 5% 27

29 Consolidated Financial Position Total Assets and Liabilities (MB) Consolidated Working Capital (MB) Non Current Assets Current Assets Equities Total Liabilities S/T Loan Inventories 25,309 24,851 33,029 74,910 28,154 74,116 24,891 71,491 21,615 16,676 20,869 18,570 21,614 21,889 22,062 16,817 17,388 14,517 55,491 56,572 55,662 13,610 10,610 Dec-12 Dec-13 Mar-14 Current Ratio (x) 9,062 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-13 Interest-Bearing Debt/Equity (x) Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Current Ratio slightly dropped from 0.64x at year end 2013 to 0.59x resulted from a decrease in inventories, namely raw material and raw material-in-transit. In Q1/14, Interest-Bearing Debt/Equity increased to 5.73x compared to 4.89x at year end

30 Agenda Highlights Recent Update and Ongoing Projects Q1/2014 Performance Results Q1/2014 Financial Results Outlook and Guidance Q & A Supplementary Appendix 29

31 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 USD/ton USD/ton Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 USD/ton USD/ton Market Summary: HRC and Raw Materials HRC Slab HRC CFR East Asia Import Slab CFR East Asia Import Source: SBB website, last accessed on 23 Apr 14 Source: SBB website, last accessed on 23 Apr Iron Ore 400 Coking Coal Spot (IODEX 62% Fe North China) Benchmark Spot (Prem Low Vol FOB Australia) Benchmark Source: Spot prices from Platts Market Daily Report Source: Spot prices from from Platts Market Daily Report *Brazil ore (FOB) cent/dmtu convert to US$/ton, assuming Fe content 62% 30

32 (Millions Tons) Crude Steel Production by Geography Others Asia (Others) China Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 South America North America Europe Total Source: WSA Q1/14 Crude steel production increased 3.1% QoQ as Chinese and European production rose 6.8% and 4.1% QoQ, whilst North American production dropped 1.9%. 31

33 Thailand HRC Outlook HRC Apparent Steel Supply (in 000 tons) 7,000 6,000 5,000 Domestic Production Import Export Total Supply Original Forecast 5,848 5,136 6,642 6,984 6,588 5,952 2,000 1,500 1, ,880 1,559 1,547 1,547 1,314 1,423 1,421 1, ,000 1,500 1, ,000 3, Q2/13 Q3/13 Q4/13 Q1/14 Q2/14F - 2,000 1, , F Source: Iron and Steel Institution of Thailand for * Year 2014 is forecasted upon actual data and SSI s estimate Q3/13 Q4/13 Q1/14 Q2/14F F Domestic Production ,573 2,443 Import ,438 3,531 Export Total Supply 1,559 1,423 1,421 1,437 6,983 5,952 Source: Iron and Steel Institution of Thailand and SSI s estimate HRC apparent steel supply is expected to increase to approx MT in Q2/14, or +1.1% QoQ. HRC apparent steel supply in 2014 is forecasted to contract by 15% YoY to approx MT from 6.98 MT in 2013, caused by prolonged political uncertainty. 32

34 Upstream HRC Outlook and Guidance for Q2/2014 Guidance for Q1/14 Actual in Q1/14 Guidance for Q2/14 HRC Sales Volume Up 5-10% QoQ 462k tons +9% QoQ Decrease 15-20% QoQ HRC Average Selling Price and Slab Cost HRC price slightly up; Slab cost slightly down USD 667/ton +1% QoQ COGS -1% QoQ HRC price slightly up; Slab cost moderately up HRC Rolling Margin 18-20% 19.0% 16-18% Guidance for Q1/14 Actual in Q1/14 Guidance for Q2/14 Slab Production Volume Decrease QoQ on annual maintenance 696k tons -6% QoQ Decrease 5-7% QoQ Slab Sales Volume Unchanged QoQ 717k tons +0.5% QoQ Decrease 7-10% QoQ 3 rd Parties Sales Volume >50% 68% >80% Slab Average Selling Price Increase 3-4% QoQ USD 522/ton +5% QoQ Raw Material Costs Decrease from higher PCI injection rate Slightly decrease QoQ -3% QoQ Decrease 5-10% QoQ Slab Margin 23-25% 27.5% 28-30% 33

35 Agenda Highlights Recent Update and Ongoing Projects Q1/2014 Performance Results Q1/2014 Financial Results Outlook and Guidance Q & A Supplementary Appendix 34

36 SSI at a Glance Basic Information Company: SAHAVIRIYA STEEL INDUSTRIES Plc. Stock Symbol SSI Foundation: 13 March st Day Trading: 8 September 1994 Website: Group Employees: 4,231 (at the end of 2013) Group CEO: Mr. Win Viriyaprapaikit Group Business Thailand Business Hot-Rolled Coils Business Cold-Rolled Coils Business Coated Steel Sheet Business Engineering Business Port Business UK Business Upstream Business Port Business Shareholding Structure (as of 25 March 2014) Share Information Others 38% JFE 4% MISI 4% Vanomet Holding AG 20% SV Group 35% SV Group includes Sahaviriya Group, Sahaviriya Inter Steel Holdings, and Viriyaprapaikit Family Stock Code: SSI No. of Listed Shares: 32,166,258,124 Shares Registered Capital: THB 39,867,778,559 Paid-up Capital: THB 32,166,258,124 Par Value: THB 1.00 Foreign Limit: 49% Foreign available: 18.69% Dividend Policy: No less than 25% of the Company's net profit each year on a non-consolidated basis Market Cap: 10,936 MB or 336 MUSD* Free Float: 48.45% * As of 22 Apr 14 at exchange rate of 32.5 THB/USD 35

37 Mills Plate Mills SSI UK SSI TH SSI Group s Steel Products and Applications Products Products Sectors Applications Commercial grade General steel pipes General steel structure General steel cut-to-sheet Slab HRC HRC-P/O Unique grade Steel pipes Steel cut-to-sheet Floor plate steel High grade Re-rolling (Cold-rolled Steel) Gas cylinder & pressure vessels Automotive OEM & auto parts HA/EA parts Shipbuilding & high strength structure Atmospheric resistant steel & line pipe Machinery &industrial tools Steel Plates Shipbuilding Crude oil storage tanks Bridge construction Off-shore structures Billet* Bars & Rods Tube Round Threaded bars for construction Wire rods Springs Off-shore line pipes Oil & gas casing & tubing line pipes *Currently not in operation by SSI UK. 36

38 SSI s Premium Value Products (PVPs) Premium Value Products (PVPs) are steel products with premium value added resulted from our initiatives to innovate and develop higher-quality products and services to better serve customers need. Our PVPs consist of High-grade Products, Unique Products and Innovated Value Products (IVPs). High-grade Definitions Hot-rolled steel products with high quality through various quality control processes for specific qualifications i.e. chemical, mechanical, surface, etc. Hot-rolled steels for re-rolling. Roof Structure Applications Compressor Gas cylinder Chassis & Components Unique Hot-rolled steel products with specific qualities uniquely designed by SSI. For example, HRC Thin Gauge, specially thin flat steels with thickness less than 1.2 mm used for small diameter pipes, and Checkered Plate. Water Tube pipe Checkered Plate Small Diameter pipe IVPs Innovated steel products and services specially designed to offer higher-quality products and services beyond customers expectation and to provide value added to customers in other aspects in the same time. 37

39 Key Operational Performances Unit: USD/Ton %QoQ 2013 %YoY Q1 Q4 Q1 HRC Average Selling Price % % HRC Spread 1) % % HRC Rolling Margin (%) 2) 19.0% 18.4% % - HRC EBITDA 3) % 76-16% HRC Sales Volume (k tons) % % HRC Production Volume (k tons) % % HRC Utilisation Rate (%) % - Slab Average Selling Price % % Slab Spread 1) % % Slab Margin (%) 2) 27.5% 21.3% % - Slab Sales Volume (k tons) % % Portion Sold to 3 rd Parties (%) 68% 52% - 35% - Slab Production Volume (k tons) % % Slab Utilisation Rate (%) 77% 82% - 69% - 1) HRC Spread & Slab Spread excluded the provision for loss on decline in value of inventories or the reversal thereof. 2) HRC Rolling Margin = HRC Spread/Average Selling Price; Slab Margin = Slab Spread/Average Selling Price 3) Q1/2013 HRC EBITDA included gain on sales of investments TCRSS 225 MB, or equivalent to USD 10.7/ton. 38

40 P&L Snapshot: Consolidated Unit: MB %QoQ 2013 %YoY Q1 Q4 Q1 Sale and Service Revenue 19,011 16, % 19,949-5% COGS 19,461 17, % 20,394-5% Gross Profit (Loss) (450) (1,531) +71% (445) -1% SG&A % % Provision for loss under onerous contracts (reversal) Gain on sales of investments (TCRSS shares) (88) % (520) +83% % EBITDA 1) 75 (1,464) +105% % Interest Expenses % % Depreciation and Amortisation % 646-1% Income Tax Expense (reversal) 2 (17) +114% 6-61% Realised Gain (Loss) from FX 32 (1,091) +103% (179) +118% Unrealised Gain (Loss) from FX % % Net Profit (Loss) (1,397) (2,907) +52% (778) -80% EPS (Baht) (0.04) (0.09) +52% (0.03) -45% 1) Q1/2013 EBITDA included 363 MB gain on sales of TCRSS shares. 39

41 P&L Snapshot: SSI TH Unit: MB %QoQ 2013 %YoY Q1 Q4 Q1 Sale and Service Revenue 10,170 8, % 15,626-35% COGS 9,317 8, % 14,334-35% Gross Profit (Loss) % 1,292-34% SG&A % % Provision for loss under onerous contracts Gain on sales of investments (TCRSS shares) % EBITDA 1) % 1,593-40% Interest Expenses % 501-8% Depreciation and Amortisation % % Income Tax Expense % Realised Gain (Loss) from FX % (23) -327% Unrealised Gain (Loss) from FX 59 (176) +133% % Net Profit (Loss) % % EPS (Baht) % % 1) Q1/2013 EBITDA included 225 MB gain on sales of TCRSS shares. 40

42 P&L Snapshot: SSI UK Unit: MB %QoQ 2013 %YoY Q1 Q4 Q1 Sales Revenue 12,513 11,443 +9% 10, % Cost of Good Sold 13,876 13,595 +2% 12,685 +9% Gross Profit (Loss) (1,363) (2,152) +37% (1,866) +27% Admin Expenses % % Provision for loss under onerous contracts (reversal) (88) % (520) +83% EBITDA (883) (1,887) +53% (974) +9% Interest Expenses % % Depreciation % % Income Tax Gain (Loss) on FX (121) (402) +70% % Gain (Loss) on Investments (68) (311) +78% (12) -480% Net Profit (Loss) (1,701) (2,725) +38% (1,775) +4% 41