Conference Call Second Quarter 2008 Earnings

Transcription

1 Conference Call Second Quarter 2008 Earnings Paulo Penido Pinto Marques CFO and Investor Relations Director August 14,

2 Disclaimer 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, Brazil s economic situation, the industry and international markets, and are therefore subject to change. 2

3 Macro Economic Analisys The world is undergoing a new phase with sustainable growth and inflation under control Global GDP Growth - average last 4 years = 4.8% Inflation - average last 4 years = 3.9% With positive effects for the steel industry Global Steel Production Growth - China responds to 40% of global production Strong Raw materials price increases Coal / Iron Ore/ Scrap/ Other Raw materials The country outlook is similar Global GDP Growth - average last 5 years = 4.5% Inflation - average last 4 years = 5.2% 3

4 Global Steel Industry Steel Production 12% % % % % 600 2% % '03 '04 '05 '06 '07 '08 (e) '09 (e) '10 (e) '11 (e) 0 Source: IISI Global Production Global Chg. % China Production 4

5 Brazilian Steel Industry The country outlook is similar Flat Steel Demand (million tons) % % (e) Source: IBS e Metal Bulletin

6 Steel Industry Steel prices follow raw materials prices Prices in US$/ton in the US (spot market) - HRC 1,250 1,174 1, Jun 08 Source: CRU Monitor - Steel 6

7 Outlook Steel Demand The outlook is for continued growth Consumption and Demand Global Apparent Steel Consumption Million Tons 800 USA, Japan & EU-15 China 600 Rest of world Brazilian Demand (Flat Steel) Million Tons E 2015E Source: WSD Source: IBS April

8 Usiminas Accelerating New Slab Plant (Santana do Paraíso) Production capacity 5 million tons/yr Start of works 1 st Half 2009 Start up 2.5 million t/yr in million t/yr in 2012 Coke plant 2.0 million t/yr Power plant 250 MW TOTAL Investments: : US$ 5.7 billion * * Does not include investment in thermoelectric powerplant of approximately US$ 400 million 8

9 Usiminas Accelerating Ipatinga and Cubatão Plant Investments LINE UNIGAL II (Galvanized) VOLUME thsd tons START UP FORECAST PROJECT AMOUNT st Half 2011 US$ 460 million Heavy Plates nd Half 2010 US$ 500 million Hot Rolled Coils st Half 2011 US$ 130 million Ipatinga Plant Other Technology updating, cost savings and environmental control, with highlight for Coke Plant 3 (+750kt/yr) and thermolectric powerplant (60 MW) in 2008 US$ 1.0 billion Total Investments US$ 2.1 billion LINE VOLUME thsd tons START UP FORECAST PROJECT VALUE Hot Strip Mill 2,300 / 4,800 1 st Half 2011 US$ 1.0 billion Cubatão Plant BF1 Revamping 3.5 thsd/day => 4.5 thsd/day Concluded US$ 170 million Continuous Casting Machine +350 / ano Concluded US$ 140 million Other Technology updating, cost savings and environmental control US$ 1.1 billion Total Investments US$ 2.4 billion 9

10 Usiminas Accelerating Mining Assets Increase on Production - million tons Pellet Feed Sinter Feed Lump Aiming to add value to iron ore, Usiminas will build a PELLET PLANT Budget of US$ 750 million and start up on 2013 Source: Usiminas TOTAL investments in mining: : US$ 3.5 billion 10

11 Usiminas Accelerating Logistics Assets Usiminas acquired land in Sepetiba Bay where it will build a maritime terminal Price R$ 72 million Land 850 thousand m² Start of operations 2012 Shipping capacity 25 million tons of Iron Ore, in addition to other products Area will be a benchmark from the environmental point of view Amount estimated for environmental recovery - up to R$ 40 million 11

12 Usiminas Investment Program Estimated Capex for the Investment Program fits into the capital structure considered adequate for the company Total Investments = US$ 14.1 billion US$ million STEELMAKING MINING TOTAL , , ,550 1,060 3, , , , , TOTAL 10,630 3,470 14,100 12

13 Usiminas 2Q08 and 1H08 Results CONSOLIDATED RESULTS R$ million 2Q Q Q 2008 Chg. 2Q08/2Q07 1H H 2007 Chg. 1H08 / 1H07 Total Sales Volume (000 t) % % Net Revenues % % Gross Profit % % Operating Result (EBIT) (a) % % Financial Result (30) 228% % Net Income % % EBITDA (b) % % EBITDA MARGIM 36,7% 36,5% 35,3% +0,2 p.p. 36,0% 35,9% +0,1 p.p. EBITDA (R$/t) % % Total Assets % % Net Debt 552 (104) (104) Stockholders' Equity % % (a) Earnings before interest, tax and participations. (b) Earnings before interest, taxes, depreciation, amortization and participations. Highlights 13

14 Usiminas Consolidated Sales (thsd( 72% thsd.. tont on) 2,170 1,910 1,971 2,011 2,095 1,981 2,028 1,954 1,9711,9921,936 1,980 1,980 1,886 1,917 1,829 1,768 1,770 13% 28% 27% 29% 29% 22% 30% 31% 46% 38% 31% 32% 33% 28% 24% 23% 19% 19% 72% 73% 71% 71% 78% 70% 69% 54% 62% 69% 68% 67% 72% 76% 77% 81% 81% 87% 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 Domestic Market Export Market 2Q08: MMt, down 3% from 2Q07 Domestic sales: up 10% from 2Q07 Exports: down 46% from 2Q07 Market share leadership of 50% in 2Q08. 14

15 Usiminas Domestic Sales and Exports Heavy Plates 27% Domestic Market Sales 2Q08 Electro- Galvanized 4% Slabs 4% Hot Rolled 32% Argentina 21% Exports 1H08 South Korea 7% Germany 6% Taiwan 5% Vietnan 5% Indonesia 2% Others 9% Processed Products 3% Cold Rolled 24% Hot Dip Galvanized 6% Chile 11% Mexico 6% Spain 14% USA 14% 15

16 Usiminas Financial Highlights Over the last few years, Usiminas has prepared itself for this new phase EBITDA & EBITDA Margin 31% 31% 34% 39% 36% 35% 37% 38% 35% 35% 37% EBITDA totaled R$ 1.5 billion (US$ 881 million) in 2Q08, up 18% from 2Q EBITDA margin of 37% in 2Q08 in line with 2Q07 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 EBITDA (US$ million) EBITDA Margin 16

17 Usiminas Financial Highlights Over the last few years, Usiminas has prepared itself for this new phase Consolidated Net Debt / EBITDA Debt profile: % due in short term 83% due in long term 0,9 0,7 0,7 0,8 0,4 0,1-0,1-0,1-0,2 0,4 0,3 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 Debt by currency: Local: 35% Foreign: 65% CND (US$ bi) CND/EBITDA 17

18 2Q08 CONSOLIDATED CASH FLOW Brazilian GAAP - R$ million 1, ,458 3, ,523 Others Final Balance Usiminas Financial Highlights Initial B alance EBITDA New Financing Amortization of Financing Interest Working Capital Change Investments Dividends / Interest on Capital

19 Usiminas Stock Performance 180 USIM5 e USIM3 versus Ibovespa From (basis 100) 12/28/2007 to 06/30/2008 ADR Level I dez-07 jan-08 fev-08 mar-08 abr-08 mai-08 jun-08 IBOVESPA USIM5 USIM3 145,4 136,8 101,8 PNA and ON shares rose 20% and 10% in 2Q08, respectively, while the Bovespa Index appreciated 7% in the same period. PNA and ON shares rose 45.4% and 36.8% in 1H08, respectively, while the Bovespa Index appreciated 1.8% in the same period. PNA shares continues among the top six traded on the Bovespa. One of the most traded shares (by volume) on Latibex. 19

20 Usiminas Other Highlights Approval by the Board of Directors of Intermediate Interest on Equity Capital and Dividends in the amount of R$ million Usiminas receives awards: i Qualitas Awards - granted by Fiat i Global Supplier of the year - granted by General Motors i Wolkswagen Supply Awards - granted by Wolkswagen i Global Reporting Initiative - GRI i The best of Dinheiro granted by Isto É Dinheiro magazine 20

21 Declarations contained in this presentation in relation to the busines outlook of the Comapany, operational and financial projections and references to the growth potential of the Comapany constitute mere forecasts and were based on the expectations of the Management in relation to future performance. These expectations are highly dependent on market behavior, of the economic situation in Brazil, on industry and international markets, and are, therefore, subject to changes. ADR Level I Investor Relations: Bruno Seno Fusaro (Head of IR) Gilson Rodrigues Bentes Matheus Perdigão Rosa brunofusaro@usiminas.com.br gilson@cosipa.com.br mprosa@usiminas.com.br Tel.: Tel.: Tel.: Fax: Luciana Valadares dos Santos Diogo Dias Gonçalves lsantos@usiminas.com.br dgoncalves@usiminas.com.br Tel.: Tel.: