Usiminas Results 2Q13 Apresentação Usiminas 2T11 - APIMEC Information Classification: Public
2 Agenda Company Clique para Profile editar o and texto Market mestre Data Usiminas and its Business Units Operational Improvement and Financial Results
Time Line and Shareholder Composition 1956 Foundation of Usiminas 1962- Operation Start Up 1991 Privatization Usiminas:1991 Cosipa: 1993 2005 Listing on Latibex 2008 Aquisition of J. Mendes iron ore mines Aquisition of Zamprogna * Conditioned to CADE s approval (CADE is the Brazilian Antitrust Regulator) 2009 Foundation of Soluções Usiminas due to the consolidation of the companies Rio Negro, Dufer, Fasal and Zamprogna, Usial and Usicort Single CNPJ: Cosipa is incorporated by Usiminas 2010 Creation of Mineração Usiminas Partnership with Codeme and Metform 2011 Entrance of Ternium/ Selling of Tenaris Ternium into Usiminas shares Control Group Joint Mining and Cooperation Agreements with MBL and Ferrous Commercial Agreements with MMX to explore Pau de Vinho and to use the Southest Port Negociation with J. Mendes concluded 2012 New shareholders agreement signed among Nippon Group, Ternium / Tenaris and Usiminas Pension Fund until 2031 2013 Sale of Automotiva Usiminas * 3
4 Strategically Located Mining Steel Steel processing Capital Goods
UPSTREAM DOWNSTREAM 5 Complete Solution of Products and Services Steel Processing Capital Goods Steel Mining Soluções Usiminas Metform and Codeme stake Usiminas Mecânica Ipatinga Cubatão Mineração Usiminas Unigal Usiminas
World Crude Steel Production in 2012 Million tons China 708.8 Japan 107.2 USA 88.6 India 76.7 Russia 70.6 South Korea 69.3 Germany Turkey Brazil Ukraine 42.7 35.9 34.7 32.9 Capacity 2,090 Excess of Capacity 542 Production 1,548 Excess of Production 139 Consumption 1,409 Source: World Steel Association 6
Flat Steel Brazilian Market Million tons Production Apparent Consumption 3.8 3.9 3.9 3.9 3.6 3.7 3.5 3.5 3.6 3.4 3.4 3.7 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 Inventories in the Distribution Network Imports (thousand tons) Million tons Monthly basis 2 1 0 9 8 7 2.8 2.8 2.7 2.6 2.8 3.1 1.1 1.0 1.0 1.0 1.0 0.9 3.0 2.0 1.0 0.0-1.0-2.0 519 413 512 335 319 323 6 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13-3.0 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 Source: IABR / INDA / Usiminas 7
8 Agenda Company Profile and Market Data Usiminas and its Business Units Operational Improvement and Financial Results
9 Steel Business Unit Flat steel production Installed Nominal Capacity : 9.5 million tons / year Galvanized Slab Caster Slabs Heavy Plates Hot Coils Cold Coils EG HDG Ipatinga Plant 5,000,000tons 1,000,000tons 3,600,000tons 2,500,000tons 360,000tons 1,050,000tons Cubatão Plant 4,500,000tons 1,000,000tons 4,400,000tons 1,200,000tons - - Nominal Capacity 9,500,000tons 2,000,000tons 8,000,000tons 3,700,000tons 360,000tons 1,050,000tons Optimized Rolling Capacity - 1,900,000tons 3,200,000tons 1,950,000tons 350,000tons 1,020,000tons
10 Steel Business Unit Everyday steel application Auto Industries Autoparts Agricultural Machines Household Appliances Cold Rolled and Galvanized (EG and HDG) Hot Rolled Heavy Plates and Hot Rolled Cold Rolled and Galvanized (EG and HDG) Civil Construction Ship-Building Pipelines Pressure Vessels Heavy Plates, Hot and Cold Rolled and Galvanized (EG and HDG) Heavy Plates Heavy Plates and Hot Rolled Heavy Plates
11 Steel Business Unit Crude steel production Thousand tons 1,783 1,858 1,549 1,509 1,672 1,845 1,837 1,804 1,662 1,749 Ipatinga Cubatão 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
12 Steel Business Unit Sales Thousand tons Sales Breakdown by Segments 2Q13 561 487 522 266 365 1,246 1,327 1,262 1,209 1,226 144 1,428 35% 31% 18% 6% 9% Auto Industry Industry Household Appliances Civil Construction Distribution 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 Domestic Market Exports
Adjusted EBITDA/ Adjusted EBITDA Margin Steel Business - R$ Million Steel business Adjusted EBITDA is back to 2 digits 10% 7% 7% 7% 4% 189 3% 3% 4% 201 2% 1% 178 289 117 83 74 100 57 20 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 Adjusted EBITDA Adjusted EBITDA Margin 13
14 Steel Business Unit Concluded investments Hot Strip Mill II - Cubatão Higher product performance and efficiency Exclusive coils dimensions in Brazil Higher productivity for customers High level of automation Lower electric energy consumption High-strength steels Galvanizing Line II - Ipatinga Higher production capacity Products portfolio increase Deep drawing steel Products Inovation High-strength steels Excellent flatness Main Applications Production capacity of 2.3 million tons per year Production capacity of 550 thousand tons per year
Mining - Mineração Usiminas Located in Serra Azul/MG 4 mining sites, acquired from J. Mendes Group in February 2008 Reserves of 2.6 billion tons of iron ore Life time until 2045 MRS: 20% of voting shares, being part of the Control Group Retroarea in Itaguaí Port Igarapé São Joaquim De Bicas 70.0% MUSA Central Minerita MUSA Leste MMX MUSA Pau de Vinho 30.0% MUSA Oeste Arcelor Mittal Ferrous (Santanense) Com isa Emicon Ferrous MBL Itatiaiuçu Mineração Usiminas 15
Mining - Mineração Usiminas Thousand tons Production: 1,854 1,517 1,785 1,496 1,649 1,621 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 Sales: 1,730 1,497 1,142 1,747 1,346 1,366 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 16
17 Mining - Mineração Usiminas Investment Plan Iron Ore Production Capacity million tons by the end of the year Friable Project: ongoing Estimated Capex of R$800 million Compact Project: under detailing phase
18 Retroarea in Itaguaí Port
Steel Processing Soluções Usiminas and Automotiva Usiminas Soluções Usiminas 10 industrial units in MG, SP, RS, ES, BA and PE Processing capacity of 2 million tons/year Net Revenue of R$998 million in the 1H13 Automotiva Usiminas In the 2Q13, Usiminas entered into an Agreement with Aethra Sistemas Automotivos S.A., for the amount of R$210 million (enterprise value) to transfer 100% of its shares. The transaction conclusion is conditioned to the approval of CADE (Brazilian Antitrust Regulator) and is aligned with the Company s strategy to focus on its core business, in order to maximize its competitive positioning Automotiva Campo Limpo Paulista Soluções Usiminas Santa Luzia Betim Porto Alegre Camaçari Serra Recife Taubaté Guarulhos São Roque Guarulhos Bonsucesso 19
Capital Goods Usiminas Mecânica Located in Ipatinga/MG, it is one of the largest capital goods companies in Brazil Brasília 3rd Bridge Market Segments: Steel Structures, Shipbuilding and Offshore, Oil and Gas, Industrial Equipment, Industrial Assembly, Foundry and Railcars Net Revenue of R$524 million in the 1H13 Platform Ship Panel 20
21 Agenda Company Profile and Market Data Usiminas and its Business Units Operational Improvement and Financial Results
22 Increasing Coke Production Coke Plant #3 (Ipatinga) Thousand tons Average 2011: 61.6 +10.1% Average 2012/2013: 67.8 60.3 61.9 64.1 67.3 67.5 63.7 63.5 58.8 59.0 63.1 66.2 62.2 65.3 68.5 65.8 67.0 68.8 68.0 69.2 66.5 66.1 68.1 69.0 69.8 69.3 67.2 67.1 61.5 55.3 54.6
23 Improving Continuous Casting Productivity Increasing slabs production Thousand tons Slab Production +4.7% 583 557 8 CCs 6 CCs First Quarter 1Q12 2012 Last two 2Q13 months 2012
24 Adjusted EBITDA - Consolidated R$ million 500 450 400 350 11% 12% 12% 8% 7% 7% 4% 7% 10% +41% 14% 15% 10% 5% 300 250 200 150 100 441 337 365 343 313 218 232 190 226 150 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 0% -5% -10% Adjusted EBITDA Adjusted EBITDA Margin
Working Capital Consolidated / Steel Business R$2.6 billion Reduction 4.8 2.6 2.7 2.2 Dec/11 Dec/12 Mar/13 Jun/13 1,512 Reduction of 596 thousand tons in inventories 1,031 903 916 102 54 51 52 Inventory days 4Q11 4Q12 1Q13 2Q13 25
26 Capex Performance Consolidated Strict CAPEX control - R$ million 3,192 81 41 3,070-22% 2,490 276 365 1,849-34% 1,652 112 555 985 175 17 112 45 261 15 104 142 2010 2011 2012 Steel Mining Others Total 1Q13 2Q13
27 Debt Profile and Cash Position - Consolidated R$ million 4,736 1,932 1,498 1,359 2,804 1,288 1,296 1,409 411 386 765 265 1,108 674 466 3 948 902 1,031 272 733 671 194 301 Cash 2013 2014 2015 2016 2017 2018 2019 2020 on Local Currency Foreign Currency 27 2 25
Net Debt - Consolidated R$ Million 9% net debt reduction, even with a 10% Real devaluation in the 2Q13 3,410 3,611-9% 3,280 2012 1Q13 2Q13 Net debt 28
Quarterly Results Accounted Per Business Unit Income Statement per Business Units - Non Audited R$ million Mining Steel* Steel Processing Capital Goods Adjustment Consolidated 2Q13 1Q13 2Q13 1Q13 2Q13 1Q13 2Q13 1Q13 2Q13 1Q13 2Q13 1Q13 Net Revenue 223 248 2,898 2,666 639 546 265 259 (780) (524) 3,244 3,195 Domestic Market 191 207 2,683 2,223 634 538 265 259 (780) (524) 2,992 2,703 Exports 33 41 215 442 5 8 0 0 0 0 252 491 COGS (90) (86) (2,707) (2,590) (570) (495) (249) (249) 749 433 (2,868) (2,988) Gross Profit 133 162 190 75 68 51 16 10 (31) (91) 376 207 Operating Income (Expenses) (24) (29) (141) (134) (49) (48) (22) (14) 1 1 (234) (224) EBIT 109 133 50 (58) 19 3 (6) (4) (30) (90) 142 (16) Adjusted EBITDA 120 144 289 178 33 16 1 2 (1) (27) 441 313 Adj.EBITDA Margin 54% 58% 10% 7% 5% 3% 0% 1% - - 14% 10% * Unigal 70% Note: All transactions among the business units are made at market price. 29
Results Accounted in the Semester Per Business Unit Income Statement per Business Units - Non Audited R$ million Mining Steel* Steel Processing Capital Goods Adjustment Consolidated 1H13 1H12 1H13 1H12 1H13 1H12 1H13 1H12 1H13 1H12 1H13 1H12 Net Revenue 471 452 5,563 5,670 1,185 1,029 524 456 (1,305) (1,494) 6,439 6,114 Domestic Market 397 361 4,906 4,582 1,172 1,012 524 454 (1,305) (1,462) 5,696 4,946 Export Market 74 92 657 1,088 13 17 0 2 0 (32) 743 1,168 COGS (176) (173) (5,297) (5,631) (1,066) (943) (499) (483) 1,182 1,387 (5,856) (5,843) Gross Profit 295 279 266 39 119 87 26 (27) (122) (107) 583 271 Operating Income (Expenses) (53) (85) (274) (143) (97) (101) (36) (40) 2 4 (458) (365) EBIT 242 195 (8) (104) 22 (15) (10) (66) (120) (104) 126 (94) EBITDA 263 211 467 301 49 11 3 (54) (27) (46) 755 422 EBITDA Margin 56% 47% 8% 5% 4% 1% 1% -12% - - 12% 7% * Unigal 70% Note: All transactions among the business units are made at market price. 30
31 Results achieved in the 2Q13 Recovery of Consolidated EBITDA margin Recovery of margins in the Steel Business Unit Higher steel sales volume in the domestic market Company financial improvement, with net debt reduction
32 Final Message Fase I Control Costs CAPEX Working Capital Continuous Process Fase II Improvement Productivity Increase Industrial Engineering Benchmarking Operational Efficiency Domestic Sales Increase Leverage Reduction Company s Profitability Recovery
ADR Level I Cristina Morgan C. Drumond Head of IR cristina.drumond@usiminas.com Phone: 55-31-3499.8772 Fax: 55-31-3499.9357 Leonardo Karam Rosa leonardo.rosa@usiminas.com Phone: 55-31-3499.8550 Diogo Dias Gonçalves diogo.goncalves@usiminas.com Phone: 55-31-3499.8710 Luciana Valadares dos Santos luciana.santos@usiminas.com Phone: 55-31-3499.8619 www.usiminas.com/ri 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.