Presentation 4Q15 and 2015 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 ISSO 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 1962 1991 1993 1994 2005 2008 2009 2010 2011 2012 2013 2014 2015 Usiminas privatization Listing on BOVESPA Listing on ADR I 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 )
5 Shareholding Composition Total Capital 1,013,786,190 Voting Capital ON 49.84% 505,260,684 PN 50.16% 508,525,506 36.14% 29.45% Nippon Group Ternium / Tenaris Usiminas Pension Fund Control Group (63.86%) Free Float 6.75% 27.66% Usiminas shares are traded on BM&FBovespa (São Paulo), on the OTC Market (New York) and on a LATIBEX exchange section (Madrid).
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 2015 Million Tons China 803.8 Japan USA India South Korea Russia Germany Turkey Brazil Ukraine 105.2 78.9 89.6 69.7 71.1 42.7 31.5 33.2 22.9 Capacity Excess of Capacity 704 2,351 Production 1,647 Source: World Steel Association 10
World Crude Steel Production 2003 2014 24% 20% European Union Europe (Others) 18% 10% 2% 8% 23% 2% 12% Others North America South America Africa China Asia and Oceania * 7% 3% 1% 13% 50% 2% 4% 971 million tons 1,665 million tons *Except China Source: World Steel Association 11
Largest Producers in 2014 Thousand Tons World Crude Steel Producers Brazilian Flat Steel Producers 1 ArcelorMittal 2 Nippon Steel & Sumitomo Metal Corporation 3 Hebei Steel Group 4 Baosteel Group 5 Wuhan Steel Group 6 POSCO 7 Shagang Group 8 Ansteel Group 9 Shougang Group 10 JFE 62 Usiminas 6,054 5,368 4,456 745 34 Usiminas CSN ArcelorMittal Aperam Gerdau Source: World Steel Association/ Instituto Aço Brasil 12
Crude Steel Consumption per Capita Kg per habitant 1980 2000 2014 China 34 98 531 South Korea 160 818 1,166 Japan 611 601 573 United States 376 425 376 Germany 469 475 512 Spain 202 435 246 Brazil 101 93 140 Chile 56 97 178 Mexico 120 142 215 World Average 152 133 217 Source: World Steel Association 13
Brazilian Flat Steel Market Million Tons 22% 5% 7% 11% 14% 13% 12% 15% 15% 15.7 12.5 14.3 13.1 11.9 10.2 15.2 14.5 14.3 13.6 14.9 15.014.8 14 14.3 13.2 13.4 10.7 2007 2008 2009 2010 2011 2012 2013 2014 2015 Production Consumption Imports Source: Instituto Aço Brasil / Usiminas Excludes Slabs 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
18 Sales Volume Steel Business Unit Thousand Tons 1,247 1,256 1,275 19% 12% 33% 12% 15% 24% 1,179 36% 19% 1,205 27% 12% 81% 88% 88% 85% 67% 76% 64% 81% 73% 88% 4Q14 1Q15 2Q15 3Q15 4Q15 Exports Domestic Market
19 Sales Volume Steel Business Unit Thousand Tons 6,565 25% 25% 5,916 18% 18% 6,881 27% 27% 6,220 13% 13% 5,541 17% 17% 4,915 27% 75% 82% 73% 87% 75% 82% 73% 87% 83% 83% 27% 73% 73% 2010 2011 2012 2013 2014 2015 Exports Domestic Market
Exports Main Markets Steel Business Unit 4Q15 USA Argentina 2015 5% 5% 5% 8% 18% Turkey China Vietnam 2% 1% 4% 16% 25% 6% 16% Germany 4% 11% 13% 13% Italy Spain United Kingdon 7% 7% 15% 18% Others 20
Cost of Goods Sold - COGS Steel Business Unit 3Q15 4Q15 7.3% 5.6% 2.7% 19.0% 7.1% 5.3% 2.3% 18.8% 8.9% 7.8% 10.5% 13.6% 10.3% 14.8% 10.6% 10.7% 11.1% 10.0% 10.9% 12.7% Labor (direct and indirect) Iron Ore and Pellets Depreciation Inventories Variation Structural Expenses Coal and Coke Energy and Fuels Other Raw Materials Spare Parts Others 21
Adjusted EBITDA and EBITDA Margin Steel Business Unit R$ Million 11% 13% 9% 268 337 206-4% (82) (179) 4Q14 1Q15 2Q15 3Q15 4Q15-8% Adjusted EBITDA Adjusted EBITDA Margin 22
23 Adjusted EBITDA Steel Business Unit R$ Million Adjusted EBITDA 3Q15 Higher Operational Result EBITDA before Extraordinary Effects Steel Unit Reestructuring Result of the Asset Sale/Write-Off Adjusted EBITDA 4Q15 (33) (82) 49 (94) (179) (52)
24 Adjusted EBITDA and EBITDA Margin Steel Business Unit R$ Million 16% 14% 14% 9% 4% 5% 3% 1,819 1,806 1,546 912 463 697 282 2009 2010 2011 2012 2013 2014 2015 Adjusted EBITDA Adjusted EBITDA Margin
25 Adjusted EBITDA Steel Business Unit R$ Million Adjusted EBITDA 2014 Excluding the Sale of Surplus Electric Energy in 2014 Excluding the Result of the Assets Sale/Write-Off Adjusted EBITDA in 2014 without Sale of Electric Energy and the Assets Sale/Write-Off Lower Operational Result EBITDA before Extraordinary Effects Sale of Surplus Electric Energy Steel Unit Reestructuring Result of the Assets Sale/Write-Off Adjusted EBITDA 2015 (323) (30) 1,546 (813) 1,193 42 (94) (45) 380 282
26 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)
27 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)
28 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
29 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
30 Industrial Reconfiguration Outlook Flat steel consumption in the domestic market: fall of 12% in 2015 x 2014, with no expectation of recovery Excess of global production capacity: 704 million tons Continually decrease of international prices High tax burden Unfair competition with steel imports High energy costs FX Rate devaluation, increasing raw materials costs Low demand and low competitiveness require structural adjustments in scale and productivity USIMINAS STRATEGY Temporarily shutdown of the primary areas of Cubatão plant (Sinter and Coke plants, Blast Furnaces and Steelworks), remaining in operations its hot and cold rolling lines and port terminal Scale adjustment and increase on competitiveness
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
Logistics Mining Business Unit Mineração Usiminas 40 Km 60 Km MODAL Cargo Terminal TCS - Sarzedo Cargo Terminal IPATINGA Plant CUBATÃO Plant Sepetiba/Itaguaí Port Export 33
34 Retroarea in Itaguai Port Mining Business Unit
35 Sales Volume Mining Business Unit Thousand Tons 1,161 1,139 39 91 1,206 135 775 1,122 1,048 1,071 41 670 12 734 658 4Q14 1Q15 2Q15 3Q15 4Q15 Sales to 3rd parties - Domestic Market Sales to Usiminas
36 Sales Volume Mining Business Unit Thousand Tons 6,754 6,028 526 521 5,564 785 6,115 1,338 499 2,036 5,623 680 457 446 833 3,790 0 279 4,981 4,322 4,331 4,219 4,110 3,511 2010 2011 2012 2013 2014 2015 Exports Sales to 3rd parties - Domestic Market Sales to Usiminas
37 Iron Ore Price PLATTS (62% Fe CFR China) US$/ton 74 62 58 55 47 4Q14 1Q15 2Q15 3Q15 4Q15
38 Iron Ore Price PLATTS (62% Fe CFR China) US$/ton 135 90 56 2013 2014 2015
Adjusted EBITDA and EBITDA Margin Mining Business Unit R$ million 27% 24 36% 43-5% (6) (24) -27% (102) -119% 4Q14 1Q15 2Q15 3Q15 4Q15 Adjusted EBITDA Adjusted EBITDA Margin 39
Adjusted EBITDA Mining Business Unit R$ million Adjusted EBITDA 3Q15 Higher Operational Result EBITDA before Extraordinary Effects Mining Unit Reestructure Adjusted EBITDA 4Q15 84 61 (24) (163) (102) 40
41 Adjusted EBITDA and EBITDA Margin Mining Business Unit R$ million 67% 62% 49% 51% 37% 638 604 439 582 277 2010 2011 2012 2013 2014 2015 (89) -22% Adjusted EBITDA Adjusted EBITDA Margin
42 Adjusted EBITDA Mining Business Unit R$ million Adjusted EBITDA 2014 Excluding the Sale of Surplus Electric Energy in 2014 Adjusted EBITDA in 2014 without Sale of Electric Energy Lower Operational Result EBITDA before Extraordinary Effects Sale of Surplus Electric Energy Mining Unit Reestructuring Adjusted EBITDA 2015 (56) 277 221 171 24 50 163 (89)
43 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 2015 Recife Santa Luzia Betim Serra Taubaté Guarulhos São Paulo Porto Alegre
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$869 million in 2015 Steel Structures Brasília 3rd Bridge 44
45 Agenda Usiminas Profile Market Data Usiminas and its business units Financial Results
46 Adjusted EBITDA and EBITDA Margin Consolidated R$ million 12% 14% 8% 302 380 227-3% (65) (250) 4Q14 1Q15 2Q15 3Q15 4Q15-10% Adjusted EBITDA Adjusted EBITDA Margin
47 Adjusted EBITDA Consolidated R$ million Adjusted EBITDA 3Q15 Excluding the Result of the Assets Sale/Write- Off on the 3Q15 Adjusted EBITDA in 3Q15 without the Assets Sale/Write- Higher Operational Off Result EBITDA before Extraordinary Effects Business Reestructuring Result of the Assets Sale/Write- Off Adjusted EBITDA 4Q15 111 57 (257) (65) (54) 11 (250) (50)
Adjusted EBITDA and EBITDA Margin Consolidated R$ million 20% 14% 11% 14% 16% 5% 3% 2,650 1,486 1,264 1,806 1,863 697 291 2009 2010 2011 2012 2013 2014 2015 Adjusted EBITDA Adjusted EBITDA Margin 48
49 Adjusted EBITDA Consolidated R$ million Adjusted EBITDA 2014 Excluding the Sale of Surplus Electric Energy in 2014 Excluding the Result of the Assets Sale/Write-Off Adjusted EBITDA in 2014 without Sale of Electric Energy and the Assets Sale/Write-Off Lower Operational Result EBITDA before Extraordinary Effects Sale of Surplus Electric Energy Business Reestructuring Result of the Assets Sale/Write-Off Adjusted EBITDA 2015 (379) (54) 1,863 (891) 1,430 65 (257) 540 (57) 291
Comparing Adjusted and CVM 527 EBITDA Consolidated R$ Thousand 50
51 Cash Position and Debt Profile Consolidated R$ million 2,024 304 1,920 1,825 2,158 Duration: R$: 28 months US$: 24 months 786 637 1,622 1,720 1,016 82 914 1,134 1,188 933 598 536 316 13 11 30 0 0 0 13 11 30 Cash 2016 2017 2018 2019 2020 2021 2022 2023 on Local Currency Foreign Currency
52 Cash and Indebtedness Consolidated - R$ million 6,702 7,149 7,605 8,111 7,886 3,850 4,528 4,716 5,714 5,862 2,852 2,621 2,889 2,397 2,024 4Q14 1Q15 2Q15 3Q15 4Q15 Cash Net Debit Gross Debit
53 CAPEX Consolidated - R$ million 3,192 81 41 2,490 276 365 3,070 1,643 112 1,849 555 976 981 64 317 600 1,110 52 94 964 784 50 112 622 2010 2011 2012 2013 2014 2015 Others Mining Steel
54 G&A Evolution Consolidated - R$ million 5.2% 4.6% 4.0% 4.2% 4.5% 134 122 108 101 109 4Q14 1Q15 2Q15 3Q15 4Q15 G&A G&A/Net Revenues
Working Capital Consolidated R$ billion 2.7 2.7 2.4 2.4 2.3 4Q14 1Q15 2Q15 3Q15 4Q15 55
56 Working Capital Steel Inventories Thousand Tons Inventory turnover (days) 886 932 911 747 639 64 67 64 67 48 4Q14 1Q15 2Q15 3Q15 4Q15
Net Income (Loss) - Consolidated R$ Million 208 (331) (1,042) 257 (1,740) (1,627) (3,685) 257 1,039 1,688 3Q15 4Q15 2014 2015 Impairment of Assets (Net of Withholding Taxes) Business Reestructuring Net Income (Loss) without Extraordinary Effects 57
Income Statement Per Business Unit R$ million Note: All intercompany transactions are made at arm s length basis 58
Income Statement Per Business Unit R$ million Note: All intercompany transactions are made at arm s length basis 59
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 Diogo Dias Gonçalves IR Manager diogo.goncalves@usiminas.com Phone: 55-31-3499-8710 Renata Costa Couto IR Analyst r.couto@usiminas.com Phone: 55-31-3499-8619 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.