Presentation 4Q17 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 Total Capital 1,253,079,108 Voting Capital Preferred ON 56.28% 705,260,684 PN 43.72% 547,818,424 Nippon Group 11.31% Nippon Group 21.10% Control Group: 45.75% of Voting Capital Nippon Group 0.57% Ternium/Tenaris Group 1.79% Others 23.19% Usiminas Pension Fund 4.84% Ternium/Tenaris Group 19.76% Ternium/Tenaris Group 19.81% Others 97.64% Usiminas shares are traded on B3 (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$260 million, encouraging around 2,000 social projects São Francisco Xavier School First educational institution in Brazil to obtain ISO 9001 Márcio Cunha Hospital Reference center in healthcare all over Brazil Xerimbabo Usiminas Project Promotes protection and environmental education free of charge for more than 2 million young people
Shares Quotation on B3 R$/share - Up to 12/31/2017 11.62 10.55 12.30 10.83 10.12 10.52 8.26 9.10 5.05 4.02 4.10 1.55 2012 2013 2014 2015 2016 2017 USIM3 USIM5 Note: The prices are adjusted by removing the effects of events such as Bonus and Unfolding 9
10 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 11
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 12
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 13
Brazilian Flat Steel Market Million Tons 22% 7% 11% 14% 13% 12% 15% 15% 8% 13% 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 13.7 10.4 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Production Consumption Imports Source: Instituto Aço Brasil / Usiminas Excludes Slabs 14
Brazilian Flat Steel Apparent Consumption Evolution Quarterly - Thousand Tons 2,740 2,659 2,419 2,452 2,511 393 308 281 311 302 2,138 2,141 2,209 2,347 2,351 4Q16 1Q17 2Q17 3Q17 4Q17 Source: Usiminas Commercial Planning Sales of the Plants Imports Total 15
Brazilian Flat Steel Apparent Consumption Evolution Yearly - Thousand Tons 14,262 1,780 14,736 1,671 13,213 2,039 10,594 1,623 9,235 699 10,373 1,313 12,483 13,065 11,175 8,972 8,536 9,060 2012 2013 2014 2015 2016 2017 Source: Usiminas Commercial Planning Sales of the Plants Imports Total 16
17 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
18 Agenda Usiminas Profile Market Outlook Usiminas and its business units Financial Results
Theoretical nominal capacity * of production and sale Thousand Tons Crude steel capacity of 9.5 million tons, being 5 million tons in Ipatinga and 4.5 million in Cubatão, which had the operation of its primary areas temporarily suspended and currently processes acquired plates. Galvanized Heavy Plates Hot Rolled Cold Rolled Electrogalvanized HDG Total Total production capacity of products for sale 1,900 4,200 2,200 350 1,020 9,670 Generation of products for sale with the equipment in operation ** 900 2,070 2,200 350 900 6,620 * According to the theoretical mix of sales in the implementation of the line; ** Excluding the temporarily suspended capacities of Heavy Plates and Hot Strip Laminator #1 in Cubatão. 19
Sales Volume Steel Business Unit Quarterly - Thousand Tons 1,090 891 71 930 105 990 149 1,016 134 196 821 825 840 882 894 4Q16 1Q17 2Q17 3Q17 4Q17 Exports Domestic Market 20
Sales Volume Steel Business Unit Yearly - Thousand Tons 6,881 6,220 1,837 813 5,541 968 4,915 1,325 3,652 477 4,026 584 5,044 5,407 4,572 3,590 3,176 3,441 2012 2013 2014 2015 2016 2017 Source: Usiminas Commercial Planning Domestic Market Exports Total 21
Exports Main Markets Steel Business Unit 3Q17 Argentina 4Q17 5% 4% 6% 2% 4% 2% 1% 42% Germany United Kingdom Spain Belgium Portugal Mexico 4% 4% 2% 3% 1% 3% 3% 1% 29% 3% 1% China Poland 10% Chile 30% France Italy Switzerland 13% 28% USA Others 22
Exports Main Markets Steel Business Unit 2016 2017 Germany 1% 1% 3% 2% 13% 5% 13% 7% 3% 24% 28% Argentina United Kingdom Spain Mexico USA Portugal Belgium China Switzerland Poland Italy Colombia 4% 7% 2% 2% 2% 3% 4% 7% 1% 1% 2% 1% 2% 31% 32% France Others 23
24 Cost of Goods Sold - COGS Steel Business Unit 3Q17 4Q17 6% 9% 6% -1% 9% 3% 29% Other Raw Materials Labor (direct and indirect) Coal and Coke Energy and Fuels Iron Ore and Pellets Spare Parts Depreciation 5% 6% 8% -4% 3% 10% 35% 9% 14% 15% Structural Expenses Inventories Variation Others 9% 13% 15%
Adjusted EBITDA and EBITDA Margin Steel Business Unit Quarterly - R$ Million 342 488 465 494 498 448 438 397 405 224 1 1 18 10 7 4 (23) (71) (1) (14) (13) (7) (3) (34) (14) 4T16 1T17 2T17 3T17 4T17 25
Adjusted EBITDA and EBITDA Margin Steel Business Unit Yearly - R$ Million 35 1,193 1,827 1,546 1,017 1,151 741 615 30 323 42 286 282 99 72 12 (45) (13) (2) (15) (1) (71) (128) (50) (13) 2013 2014 2015 2016 2017 1,806 (19) 26
27 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)
28 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)
29 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
30 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
31 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 32
33 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 1,500 +66% 716 904 175 657 643 629 69 28 33 53 179 588 615 596 676 605 4Q16 1Q17 2Q17 3Q17 4Q17 Sales to 3rd parties - Domestic Market Exports Sales to Usiminas 34
Sales Volume Mining Business Unit Yearly - Thousand Tons 6,754 499 5,623 2,036 680 833 4,219 4,110 3,790-279 3,511 3,207 521 283 +15% 3,676 891 293 2,403 2,492 2013 2014 2015 2016 2017 Sales to 3rd parties - Domestic Market Exports 35
36 Iron Ore Price PLATTS (62% Fe CFR China) US$/ton 86 71 63 71 66 4Q16 1Q17 2Q17 3Q17 4Q17
Adjusted EBITDA and EBITDA Margin Mining Business Unit Quarterly - R$ million 253% 30% 48% 25 22% 20% 226 201 24 52 27 31 41 (4) 4T16 1T17 2T17 3T17 4T17
Adjusted EBITDA and EBITDA Margin Mining Business Unit Yearly - R$ million 582 582 148 221 56 277 24 (112) (89) (5) 50 46 1 201 345 (4) 2013 2014 2015 2016 2017 38
39 Description Soluções Usiminas - Steel Processing o o 6 industrial units in different Brazilian states: MG, SP, RS, ES and PE Processing capacity of 2 million tons of steel/year o Net Revenue of R$2.5 billion in 2017 Suape Santa Luzia Betim Taubaté Guarulhos Porto Alegre
Adjusted EBITDA and EBITDA Margin Steel Processing Quarterly - R$ million 7% 5% 3% 3% 2% 37 27 18 19 9 4Q16 1Q17 2Q17 3Q17 4Q17 Reported EBITDA Reported EBITDA Margin 40
Adjusted EBITDA and EBITDA Margin Steel Processing Yearly - R$ million 4% 4% 3% 90 101 49 0% (4) (17) -1% 2013 2014 2015 2016 2017 EBITDA Reportado Margem de EBITDA Reportado 41
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$288 million in 2017 Steel Structures Brasília 3rd Bridge 42
Adjusted EBITDA and EBITDA Margin Capital Goods - Quarterly - R$ million (7) (4) (2) (2) -2% (25) -7% -5% -4% -35% 4T16 1T17 2T17 3T17 4T17 43
Adjusted EBITDA and EBITDA Margin Capital Goods - Yearly - R$ million 10% 6% 1% 2% 87 50 6 12 (33) -12% 2013 2014 2015 2016 2017 EBITDA sem efeitos extraordinários Regularize EBITDA Reportado Margem de EBITDA Reportado 44
45 Agenda Usiminas Profile Market Data Usiminas and its business units Financial Results
Adjusted EBITDA and EBITDA Margin Consolidated Quarterly - R$ million 547 (12) 349 (71) 234 (33) 1 (23) 558 750 750 533 488 453 443 450 201 11 19 1 7 (40) 3 (4) (1) (16) (7) (3) 4T16 1T17 2T17 3T17 4T17 46
Adjusted EBITDA and EBITDA Margin Consolidated Yearly - R$ million 1,679 1,806 1,490 1,863 2,036 2,186 848 9 35 100 379 4 66 (17) (9) (57) 301 660 292 71 14 201 (133) (1) (18) (55) (24) (71) (40) 2013 2014 2015 2016 2017 47
48 Debt Profile (Principal) Consolidated - R$ Million 2,314 Duration: R$: 48 months US$: 37 months 1,487 965 754 1,085 1,082 1,082 1,082 645 407 143 207 207 207 207 827 320 92 77 15 76 331 610 877 875 875 874 134 26 108 Local Currency Foreign Currency
49 Cash Position and Indebtedness (with interest money) Consolidated - R$ Million Duration: R$: 48 months US$: 37 months 6,942 6,879 6,950 6,860 6,656 4,684 4,464 4,998 4,722 4,342 2,257 2,416 1,951 2,138 2,314 4Q16 1Q17 2Q17 3Q17 4Q17 Net Debt Cash Gross Debt
50 CAPEX Consolidated - R$ Million 981 64 1,110 52 94 317 784 50 112 964 600 622 225 216 13 34 19 21 179 176 2013 2014 2015 2016 2017 Others Mining Steel
G&A Evolution Consolidated - R$ million 4.3% 4.0% 3.8% 3.9% 3.5% +2% 91 93 97 106 109 4Q16 1Q17 2Q17 3Q17 4Q17 G&A G&A/Net Revenues 51
Working Capital Consolidated - R$ Billion 2.5 2.6 3.1 3.1 2.8 4Q16 1Q17 2Q17 3Q17 4Q17 52
53 Working Capital Steel Inventories Thousand tons Inventory turnover (days) 648 648 620 599 554 65 63 56 54 47 4Q16 1Q17 2Q17 3Q17 4Q17
Gross Profit, EBIT and Net Income - Quarterly Consolidated - R$ million 481 382 358 414 283 * 367 ** 259 185 108 176 107 76 *** 71 (45) (195) 4Q16 1Q17 2Q17 3Q17 4Q17 USD/BRL 3.246 3.259 3.308 3.164 3.308 End of period Gross Profit EBIT Net Income *Reversion of impairment in the Mining Unit of R$357.7 million ** Porto Sudeste Agreement of R$132 million *** Payment of R$ 39 million related to the Regularize Program 54
Gross Profit, EBIT and Net Income Consolidated - R$ million 1,635 1,037 487 729 523 208 173 (364) 315 (577) (3,685) (3,725) 2014 2015 2016 2017 USD/BRL 3.905 3.259 3.164 3.308 End of Period Gross Profit EBIT Net Income 55
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 4Q17 3Q17 4Q17 3Q17 4Q17 3Q17 4Q17 3Q17 4Q17 3Q17 4Q17 3Q17 Net Revenue 206 121 2,761 2,543 667 673 51 74 (608) (674) 3,077 2,737 Domestic Market 61 86 2,329 2,228 667 673 51 74 (608) (674) 2,500 2,386 Exports 145 35 432 315 0 - - - - - 577 351 COGS (154) (83) (2,371) (2,209) (629) (639) (54) (66) 545 618 (2,662) (2,379) Gross Profit (Loss) 52 38 390 334 38 35 (4) 7 (62) (56) 414 358 Operating Income (Expenses) (49) (50) (266) (142) (28) (24) (3) (36) 2 1 (344) (251) EBIT 3 (12) 124 192 11 10 (7) (28) (60) (55) 71 107 Adjusted EBITDA 41 27 405 438 19 18 (2) (25) (12) (5) 450 453 Adj.EBITDA Margin 20% 22% 15% 17% 3% 3% -4% -35% 2% 1% 15% 17% *Consolidated 70% of Unigal Note: All intercompany transactions are made at arm s length basis 56
Income Statement Per Business Unit R$ million 2017 Income Statement per Business Units - Non Audited - 2017 R$ million Mining Steel* Steel Processing Capital Goods Adjustment Consolidated 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 et Revenue 525 366 9,980 7,518 2,497 1,853 288 568 (2,556) (1,852) 10,734 8,454 Domestic Market 344 292 8,635 6,609 2,496 1,853 287 567 (2,556) (1,852) 9,207 7,469 Exports 180 74 1,346 909 1 1 1 1 - - 1,527 985 OGS (343) (296) (8,489) (7,080) (2,328) (1,731) (278) (529) 2,339 1,669 (9,099) (7,967) ross Profit (Loss) 182 71 1,492 438 169 123 9 39 (217) (184) 1,635 487 perating Income (Expenses) 10 182 (759) (877) (99) (103) (62) (59) 5 5 (906) (852) BIT 192 253 733 (439) 69 20 (53) (20) (212) (178) 729 (364) djusted EBITDA 345 46 1,806 615 101 49 (33) 12 (33) (60) 2,186 660 dj.ebitda Margin 66% 12% 18% 8% 4% 3% -12% 2% 1% 3% 20% 8% Consolidated 70% of Unigal Note: All intercompany transactions are made at arm s length basis 57
Highlights 4Q17 +17% +8% USIM5 USIM3 12MONTHS +122% +31% USIM5 USIM3 S&P CCC+ B+ Moody s Caa1 B2 Fitch CCC B 58
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.