Presentation 2Q17 Apresentação Usiminas 2T11 - APIMEC Classification of the information: Public
2 Agenda Usiminas Profile Market Outlook Usiminas and its business units Financial Results
3 Company Profile 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 Timeline Operation Start Up Cosipa privatization Listing on LATIBEX stock exchange section Creation of Soluções Usiminas One CNPJ: Usiminas incorporates Cosipa Selling of Ternium stake Joint Mining Agreements with MBL e Ferrous Automotiva Usiminas Divestment Temporary shutdown of the primary areas in Cubatão R$ 1 billion Mineração Usiminas capital reduction 1962 1991 1993 1994 2005 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Usiminas privatization Listing on BOVESPA Launch of ADR I program on the OTC Market (New York) Acquisition of iron ore mines Acquisition of Zamprogna Creation of Mineração Usiminas Acquisition of Codeme and Metform stake Entrance of Ternium / Tenaris into Usiminas Control Group (New shareholders agreement) Friables Project conclusion on Mining (increasing the capacity to 12 million tons/year) R$ 1 billion capital increase Debt Renegotiation
Shareholding Composition Voting Capital Total Capital 1,253,079,108 Preferred 56.28% 705,260,684 43.72% 547,818,424 Others 23.19% Nippon Group 21.10% * * Grupo de Controle (63,86%) * Free Float: 54.25% Ternium / Tenaris Group 19.76% Ternium/ Tenaris * Group 19.81% Control Group: 45.75% Usiminas Pension Fund Nippon Group 4.84% 11.31% Usiminas shares are traded on BM&FBovespa (São Paulo), on the OTC Market (New York) and on a LATIBEX exchange section (Madrid). 5
6 Complete Solution for Products and Services Business Units Steel Processing Capital Goods Steel Soluções Usiminas Usiminas Mecânica Ipatinga Plant Mining Cubatão Plant Unigal Usiminas Mineração Usiminas UPSTREAM DOWNSTREAM
Strategically Located Mining Steel Steel Processing Capital Goods 7
8 Social and Environmental Initiatives Usiminas Cultural Institute Usiminas invested over R$260 million, encouraging around 2,000 social projects São Francisco Xavier School First educational institution in Brazil to obtain ISO 9001 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
9 Agenda Usiminas Profile Market Outlook Usiminas and its business units Financial Results
World Crude Steel Market in 2016 Million Tons China 808.4 Japan 104.8 India 95.6 USA 78.6 Russia 70.8 South Korea 68.6 Germany Turkey Brazil Ukraine 42.1 33.2 31.3 24.2 Nominal Capacity 2,351 Excess of Capacity 721 Production 1,630 Source: World Steel Association/OECD 10
World Crude Steel Production 2006 2016 3% 2% 7% 3% 2% 1% 6% 11% 4% 34% China Asia and Oceania* European Union North America South America 10% 7% 50% Europe (others) 16% Africa Others 23% 24% +31% 1,244 million tons 1,630 million tons *Except China Source: World Steel Association 11
Crude Steel Consumption per Capita Kg per habitant 1980 2000 2016 China 34 98 493 South Korea 160 818 1.130 Japan 611 601 493 United States 376 425 283 Germany 469 475 500 Spain 202 435 273 Brazil 101 93 87 Mexico 120 142 198 World Average 152 133 208 Source: World Steel Association 12
Brazilian Flat Steel Market Million Tons 22% 7% 11% 14% 13% 12% 15% 15% 8% 12% 14.3 13.1 11.9 10.2 15.2 14.5 14.3 13.7 14.9 15.014.7 14.3 14.2 13.2 13.4 10.6 12.3 9.3 5.5 5.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 Jan/May'17 Production Consumption Imports Source: Instituto Aço Brasil / Usiminas Excludes Slabs 13
Brazilian Flat Steel Apparent Consumption Evolution Quarterly - Thousand Tons 2,434 2,419 2,452 2,250 162 138 281 311 2,511 301 1,351 1,467 1,317 1,316 1,367 761 805 821 825 843 2Q16 3Q16 4Q16 1Q17 2Q17 Source: Usiminas Commercial Planning Usiminas Other Companies Imports Total 14
15 Flat Steel Consumption Markets Auto Industry and Autoparts Household Appliances Agricultural and Road Machinery Civil Construction Oil and Gas Pipelines Hot Rolled, Cold Rolled and Galvanized Cold Rolled and Galvanized Heavy Plates and Hot Rolled Heavy Plates, Hot Rolled, Cold Rolled and Galvanized Heavy Plates and Hot Rolled Heavy Plates and Hot Rolled
16 Agenda Usiminas Profile Market Outlook Usiminas and its business units Financial Results
Flat Steel Capacity of Production Thousand Tons Slab Caster Slabs Placas Heavy Plates Hot Coils Laminados a Cold Coils Quente EG Eletrogalvanizados Galvanized Ipatinga Plant 5,000 1,000 3,600 2,500 360 1,050 2,100 ** Cubatão Plant 4,500* 1,000** 1,200 - - 2.300 HDG Nominal Capacity 9,500* 2,000* 8,000 3,700 360 1,050 Optimized Rolling Capacity * Temporary shutdown of the primary areas of Cubatão ** Temporary shutdown of the rolling mills - 1,900 4,200 2,200 350 1,020 17
Sales Volume Steel Business Unit Quarterly - Thousand Tons 899 115 959 145 891 71 930 105 990 149 784 814 821 825 840 2Q16 3Q16 4Q16 1Q17 2Q17 Exports Domestic Market 18
Exports Main Markets Steel Business Unit 1Q17 2Q17 4% 3% 3% 2% 8% 1% 8% 36% Germany Argentina USA Spain Mexico United Kingdom Belgium Colombia 4% 5% 5% 9% 3% 2% 7% 35% Portugal 35% Others 11% 19% 19
20 Cost of Goods Sold - COGS Steel Business Unit 1Q17 2Q17-11% 4% 7% 7% 10% 8% 31% 16% Other Raw Materials Coal and Coke Labor (direct and indirect) Iron Ore and Pellets Energy and Fuels Spare Parts 6% 9% 6% 3% -2% 8% 27% 17% 12% 17% Depreciation 10% 16%
Adjusted EBITDA and EBITDA Margin Steel Business Unit Quarterly - R$ Million 1 488 465 332 342 295 224 93 50 1 1 (42) (2) (35) (14) (23) (2) (71) (34) (1) 494 18 (14) 498 2T16 3T16 4T16 1T17 2T17 Venda/baixa de Ativos Venda de Energia PDD EBITDA sem efeitos extraordinários Término de contrato EBITDA Reportado 21 21
22 Investments Steel Business Unit Heavy Plates Hot dip galvanized Electrogalvanized Slabs Hot Rolled Cold Rolled Capacity increase to generate finished products 7.2 million t 9.7 million t (2010) (2014)
23 Investments Steel Business Unit CLC Technology (Accelerated Cooling Process for Heavy Plates) Start up in 2010 Meets the requirements of Petrobras, focused on presalt, besides the shipbuilding sector Galvanizing Line Start up in 2011 Double the capacity to 1 million tons /year Higher expertise in ultraresistant steel production (dual phase)
24 Investments Steel Business Unit Hot Strip Mill Start up in 2012 Capacity to process 2.3 million tons / year Improving products portfolio (beams, ultra resistant wheels, higher grades API s) Pickling Line 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
25 Mainly Investment Concluded in 2015 Steel Business Unit Coke Plant Revamp - Ipatinga o Met coke with adequate specifications for pig iron production in the blast furnace process 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 o Started up on May 2015
26 Description Mining 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 Shareholder Composition Production Capacity 70% 30% Lump 2 million Sinter Feed 4 million Pellet Feed 6 million
Location Mining Business Unit Igarapé São Joaquim De Bicas Minerita MUSA Central MUSA Leste MMX MUSA Pau de Vinho MUSA Oeste Arcelor Mittal Ferrous (Santanense) Comisa Emicon Ferrous MBL Itatiaiuçu Mineração Usiminas 27
28 Investments Mining Business Unit Friables Project 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
Sales Volume Mining Business Unit Quarterly - Thousand Tons 786 789-171 23 181 657 643-629 - 69 28 33-592 608 588 615 596 2Q16 3Q16 4Q16 1Q17 2Q17 Sales to 3rd parties - Domestic Market Exports Total 29
30 Iron Ore Price PLATTS (62% Fe CFR China) US$/ton 56 59 71 86 63 2Q16 3Q16 4Q16 1Q17 2Q17
Adjusted EBITDA and EBITDA Margin Mining Business Unit Quarterly - R$ million 253% 226 21% 16% 30% 48% 52 201 21 13 24 2T16 3T16 4T16 1T17 2T17 Porto Sudeste Agreement Reported EBITDA Reported EBITDA Margin 31
32 Description Soluções Usiminas - Steel Processing o o 8 industrial units in different Brazilian states: MG, SP, RS, ES, BA and PE Processing capacity of 2 million tons of steel/year o Net Revenue of R$1.9 billion in 2016 Recife Santa Luzia Betim Serra Taubaté Guarulhos São Paulo Porto Alegre
Adjusted EBITDA and EBITDA Margin Steel Processing Quarterly - R$ million 7% 4% 5% 3% 2% 37 22 27 14 9 2Q16 3Q16 4Q16 1Q17 2Q17 Reported EBITDA Reported EBITDA Margin 33
Description Usiminas Mecânica - Capital Goods o o Facilities in Ipatinga/Minas Gerais state, Congonhas/Minas Gerais state and in Cubatão/São Paulo state Market Segments: Steel Structures, Shipbuilding and Offshore, Oil and Gas, Industrial Assembly and Equipment, Foundry and Railcars o Net Revenue of R$568 million in 2016 Steel Structures Brasília 3rd Bridge 34
Adjusted EBITDA and EBITDA Margin Capital Goods - Quarterly - R$ million 6% 1% 10 1 (7) -7% (4) (2) -5% -2% 2Q16 3Q16 4Q16 1Q17 2Q17 Reported EBITDA Reported EBITDA Margin 35
36 Agenda Usiminas Profile Market Data Usiminas and its business units Financial Results
Adjusted EBITDA and EBITDA Margin Consolidated Quarterly - R$ million 548 750 1 559 533 344 307 350 234 201 117 68 1 (44) (2) (36) (12) (23) 19 (6) (33) (4) (1) (16) (71) 2T16 3T16 4T16 1T17 2T17 Venda de Ativos Vendas de Energia PDD Acordo Porto Sudeste EBITDA sem efeitos extraordinários Término de contrato EBITDA Reportado 37
Comparing Adjusted and CVM 527 EBITDA Consolidated R$ Thousand Consolidated (R$ thousand) 2Q17 1Q17 2Q16 1H17 1H16 Net Income (Loss) 175,710 108,318 (123,357) 284,028 (274,734) Income Tax / Social Contribution 34,922 58,855 (18,675) 93,777 (34,035) Financial Result 171,294 54,581 (114,621) 225,875 (216,174) Depreciation, Amortization 328,601 306,341 317,273 634,942 635,359 EBITDA - Instruction CVM - 527 710,527 528,095 60,620 1,238,622 110,416 Equity in the Results of Associate and Subsidiary Companies (15,278) (37,080) (36,655) (52,358) (88,500) Joint Subsidiary Companies proportional EBITDA 54,603 41,754 44,212 96,357 89,809 Impairment of Assets - - (393) - 7,637 Adjusted EBITDA 749,852 532,769 67,784 1,282,621 119,362 38
39 Debt Profile (Principal) Consolidated - R$ Million Duration: R$: 53 months US$:48 months 1,951 204 1,082 1,082 1,082 1,082 207 751 207 207 207 804 1,747 588 143 156 409 76 874 875 875 874 94 608 648 6 572 15 333 0 6 16 78 Cash 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Local Currency Foreign Currency
40 Cash Position and Indebtedness (with interest money) Consolidated - R$ Million 7,238 Duration: R$: 53 months US$: 48 months 6,948 6,942 6,879 6,950 4,525 4,609 4,684 4,464 4,998 2,713 2,340 2,257 2,416 1,951 2Q16 3Q16 4Q16 1Q17 2Q17 Net Debt Cash Gross Debt
CAPEX Consolidated - R$ Million 981 64 1,110 52 94 317 784 50 112 964 600 622 225 13 34 179 57 7 43 7 2013 2014 2015 2016 1H17 Others Mining Steel 41
G&A Evolution Consolidated - R$ million 4.2% 3.9% 4.3% 4.0% 3.8% 86 87 91 93 97 2Q16 3Q16 4Q16 1Q17 2Q17 G&A G&A/Net Revenues 42
43 Working Capital Consolidated R$ billion 3.1 2.1 2.4 2.5 2.6 2Q16 3Q16 4Q16 1Q17 2Q17
44 Working Capital Steel Inventories Thousand Tons Inventory turnover (days) 648 648 620 439 443 44 42 65 63 56 2Q16 3Q16 4Q16 1Q17 2Q17
Gross Profit, EBIT and Net Income - Quarterly Consolidated - R$ million 481 382 266 259 * 283 185 367 3 (34) 108 176 (123) (107) (195) (293) 2Q16 3Q16 4Q16 1Q17 2Q17 USD/BRL 3.558 3.210 3.246 3.259 3.308 End of period *Reversion of impairment in the Mining Unit of R$357.7 million, Gross Profit EBIT Net Income 45
Income Statement Per Business Unit R$ million - Quarterly Income Statement per Business Units - Non Audited - Quarterly R$ million Mining Steel* Steel Processing Capital Goods Adjustment Consolidated 2Q17 1Q17 2Q17 1Q17 2Q17 1Q17 2Q17 1Q17 2Q17 1Q17 2Q17 1Q17 Net Revenue 89 108 2,458 2,219 590 567 80 83 (647) (626) 2,569 2,351 Domestic Market 89 108 2,100 1,978 589 567 80 82 (647) (626) 2,212 2,110 Exports - - 358 240 - - - 1 - - 358 241 COGS (53) (53) (2,111) (1,798) (548) (512) (75) (82) 600 575 (2,187) (1,870) Gross Profit (Loss) 36 55 347 421 41 55 5 1 (47) (51) 382 481 Operating Income (Expenses) 151 (42) (133) (218) (22) (26) (13) (11) 1 1 (16) (296) EBIT 187 13 214 203 19 29 (8) (10) (46) (50) 367 185 Adjusted EBITDA 226 52 498 465 27 37 (2) (4) 211 (16) 750 533 Adj.EBITDA Margin 253% 48% 20% 21% 5% 7% -2% -5% 0% 3% 29% 23% *Consolidated 70% of Unigal Note: All intercompany transactions are made at arm s length basis 46
Income Statement Per Business Unit R$ million - Semester Income Statement per Business Units - Non Audited - Semi-annually R$ million Mining Steel* Steel Processing Capital Goods Adjustment Consolidated 1H17 1H16 1H17 1H16 1H17 1H16 1H17 1H16 1H17 1H16 1H17 1H16 Net Revenue 197 207 4,676 3,517 1,157 863 163 325 (1,273) (843) 4,920 4,069 Domestic Market 197 133 4,078 3,046 1,156 862 162 325 (1,273) (843) 4,321 3,524 Exports - 74 598 471-1 1 - - - 599 546 COGS (106) (186) (3,909) (3,567) (1,061) (808) (157) (293) 1,175 746 (4,057) (4,107) Gross Profit (Loss) 91 22 768 (50) 96 55 6 32 (98) (97) 863 (38) Operating Income (Expenses) 109 (92) (351) (408) (48) (52) (24) (26) 2 3 (312) (576) EBIT 200 (70) 417 (458) 48 3 (18) 6 (96) (94) 551 (613) Adjusted EBITDA 277 9 963 96 64 17 (6) 18 (16) (21) 1,283 119 Adj.EBITDA Margin 140% 4% 21% 3% 6% 2% -4% 6% 1% 2% 26% 3% *Consolidated 70% of Unigal Note: All intercompany transactions are made at arm s length basis 47
Leonardo Karam Rosa IR Manager leonardo.rosa@usiminas.com Phone: 55-31-3499.8550 www.usiminas.com/ri ADR Level I Declarations relative to business and 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.