Presentation 1Q17 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 Approval of 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 30.2 24.2 Nominal Capacity 2,351 Excess of Capacity 741 Production 1,610 Source: World Steel Association/OECD 10
World Crude Steel Production 2005 2016 21% 17% 2% 12% European Union Europe (others) Others North America South America Africa 21% 10% 2% 6% 7% 2% 1% 31% 11% China Asia and Oceania * 4% 2% 50% +40% 1,149 million tons 1,610 million tons *Except China Source: World Steel Association 11
Crude Steel Consumption per Capita Kg per habitant 1980 2000 2015 China 34 98 489 South Korea 160 818 1.113 Japan 611 601 497 United States 376 425 297 Germany 469 475 484 Spain 202 435 275 Brazil 101 93 103 Mexico 120 142 191 World Average 152 133 208 Source: World Steel Association 12
Brazilian Flat Steel Apparent Consumption Evolution Quarterly - Thousand Tons 2,434 2,419 2,452 2,147 118 2,250 138 162 281 311 1,263 1,351 1,467 1,317 1,316 766 761 805 821 825 1Q16 2Q16 3Q16 4Q16 1Q17 Source: Usiminas Commercial Planning Usiminas Other Companies Imports Total 13
14 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
15 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 16
Sales Volume Steel Business Unit Quarterly - Thousand Tons 903 899 145 115 959 145 891 71 930 105 758 784 814 821 825 1Q16 2Q16 3Q16 4Q16 1Q17 Exports Domestic Market 17
Exports Main Markets Steel Business Unit 4Q16 1Q17 0% 13% 1% 4% 1% 0% 8% 0% 6% 0% 20% Germany Argentina United Kingdom Mexico Switzerland China USA Spain Portugal Belgium Canada 8% 5% 4% 2% 0% 3% 3% 1% 0% 3% 36% 46% Others 35% 18
19 Cost of Goods Sold - COGS Steel Business Unit 4Q16 1Q17-13% 4% 11% 33% Other Raw Materials Labor (direct and indirect) Coal and Coke Iron Ore and Pellets 4% 7% -11% 7% 31% 7% 8% 10% 11% 12% 17% Structural Expenses Energy and Fuels Depreciation Spare Parts Inventories Variation Others 7% 10% 12% 16% 17%
Adjusted EBITDA and EBITDA Margin Steel Business Unit Quarterly - R$ Million 21% 14% 11% 488 3% 3% 332 342 295 224 25 72 46 93 50 1 (2) 1 1 (37) (42) (35) (14) (23) (14) (2) (34) (1) (71) 465 1T16 2T16 3T16 4T16 1T17 20
21 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)
22 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)
23 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
24 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
25 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 26
27 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 974 344 786 789-16 171 23 181 657 643-28 69 614 592 608 588 615 1Q16 2Q16 3Q16 4Q16 1Q17 Sales to Usiminas Sales to 3rd parties - Domestic Market Exports Total 28
29 Iron Ore Price PLATTS (62% Fe CFR China) US$/ton 86 48 56 59 71 1Q16 2Q16 3Q16 4Q16 1Q17
Adjusted EBITDA and EBITDA Margin Mining Business Unit Quarterly - R$ million 48% 30% 21% 21 16% 13 24 52 (4) (12) -11% (3) (1) 2 0 1Q16 2Q16 3Q16 4Q16 1Q17 Sale of Energy Reported EBITDA Reported EBITDA Margin 30
31 Description Soluções Usiminas - Steel Processing o 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 Net Revenue of R$1.3 billion in 9M16 Recife Santa Luzia Betim Serra Taubaté Guarulhos São Paulo Porto Alegre
Adjusted EBITDA and EBITDA Margin Steel Processing Quarterly - R$ million 7% 1% 3% 4% 2% 37 22 3 14 9 1Q16 2Q16 3Q16 4Q16 1Q17 Reported EBITDA Reported EBITDA Margin 32
Description Usiminas Mecânica - Capital Goods o 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 Net Revenue of R$462 million in 9M16 Steel Structures Brasília 3rd Bridge 33
Adjusted EBITDA and EBITDA Margin Capital Goods - Quarterly - R$ million 5% 6% 1% 8 10 1 (7) (4) -5% -7% 1Q16 2Q16 3Q16 4Q16 1Q17 Reported EBITDA Reported EBITDA Margin 34
35 Agenda Usiminas Profile Market Data Usiminas and its business units Financial Results
Adjusted EBITDA and EBITDA Margin Consolidated Quarterly - R$ million 23% 14% 11% 3% 3% 559 344 307 350 234 37 117 72 52 68 1 (2) 0 1 (41) (44) (36) (12) (23) (17) (6) (33) (4) (71) 533 1T16 2T16 3T16 4T16 1T17 36
Comparing Adjusted and CVM 527 EBITDA Consolidated R$ Thousand Consolidated (R$ thousand) 1Q17 4Q16 1Q16 Net (Loss) Income 108,318 (194,971) (151,377) Income Tax / Social Contribution 58,855 418,323 (15,360) Financial Result 54,581 87,053 (101,553) Depreciation, Amortization 306,341 273,502 318,086 EBITDA - Instruction CVM - 527 528,095 583,907 49,796 Equity in the Results of Associate and Subsidiary Companies (37,080) (27,314) (51,845) Joint Subsidiary Companies proportional EBITDA 27,973 27,973 45,597 Impairment of Assets - (350,449) 8,030 Adjusted EBITDA 532,769 234,117 51,578 37
38 Debt Profile (Principal) Consolidated - R$ Million 2,416 239 Duration: R$: 51 months US$: 51 months 1,073 1,074 1,074 1,073 2,177 745 199 199 199 199 796 564 406 137 149 73 875 875 875 875 93 608 647 14 548 15 333 0 14 16 78 Cash 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Local Currency Foreing Currency
39 Cash Position and Indebtedness (with interest money) Consolidated - R$ Million 7,428 7,238 6,948 6,942 6,879 5,692 4,525 4,609 4,684 4,464 1,736 2,713 2,340 2,257 2,416 1Q16 2Q16 3Q16 4Q16 1Q17 Net Debt Cash Gross Debt
CAPEX Consolidated - R$ million 70 2 4 67 5 64 50 3 6 42 37 2 10 25 14 48 3 23 18 3 1Q16 2Q16 3Q16 4Q16 1Q17 Others Mining Steel 40
41 G&A Evolution Consolidated - R$ million 4.4% 4.2% 4.3% 3.9% 4.0% 90 86 87 91 93 1Q16 2Q16 3Q16 4Q16 1Q17 G&A G&A/Net Revenues
42 Working Capital Consolidated R$ billion 2.2 2.1 2.4 2.5 2.6 1Q16 2Q16 3Q16 4Q16 1Q17
43 Working Capital Steel Inventories Thousand Tons Inventory turnover (days) 648 648 484 439 443 48 44 42 65 63 1Q16 2Q16 3Q16 4Q16 1Q17
Gross Profit, EBIT and Net Income - Quarterly Consolidated - R$ million 481 266 259 283 * 185 (41) 3 108 (34) (151) (123) (107) (195) (320) (293) 1Q16 2Q16 3Q16 4Q16 1Q17 USD/BRL 3,904 3.558 3.210 3.246 3.259 End of period *Reversion of impairment in the Mining Unit of R$357.7 million, Gross Profit EBIT Net Income 44
Income Statement Per Business Unit R$ million - Quarterly Income Statement per Business Units - Non Audited - Quarterly R$ million Mining Steel* Steel Processing Capital Goods Adjustment Consolidated 1Q17 4Q16 1Q17 4Q16 1Q17 4Q16 1Q17 4Q16 1Q17 4Q16 1Q17 4Q16 Net Revenue 108 79 2,219 1,959 567 480 83 106 (626) (504) 2,351 2,120 Domestic Market 108 79 1,978 1,797 567 480 82 105 (626) (504) 2,110 1,958 Exports - - 240 161 0 0 1 1 - - 241 162 COGS (53) (47) (1,798) (1,725) (512) (453) (82) (103) 575 467 (1,870) (1,861) Gross Profit (Loss) 55 31 421 233 55 27 1 4 (51) (36) 481 259 Operating Income (Expenses) (42) 319 (218) (246) (26) (26) (11) (25) 1 2 (296) 24 EBIT 13 350 203 (13) 29 2 (10) (21) (50) (35) 185 283 Adjusted EBITDA 52 24 465 224 37 9 (4) (7) (16) (15) 533 234 Adj.EBITDA Margin 48% 30% 21% 11% 7% 2% -5% -7% 3% 3% 23% 11% Note: All intercompany transactions are made at arm s length basis 45
Cristina Morgan C. Drumond Head of IR cristina.drumond@usiminas.com Phone: 55-31-3499-8772 Fax: 55-31-3499-9357 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.