h1 2010 results presentation v6 - ezz steel · 245 1,000 1,200 1,400 848 851 904 970 1,071 1,144...
TRANSCRIPT
First Half First Half 2010 2010 Financial Results Financial Results
PresentationPresentation26 26 August August 20102010
Disclaimer
ezzsteel ( formerly: Al Ezz Steel Rebars S.A.E. ) or “ESR” give notice that:
The particulars of this presentation do not constitute any part of an offer or a contract.
The information contained in this presentation may contain certain projections and forward-looking statements that
reflect the company’s current views with respect to future events and financial performance. These views are based on
current assumptions which are subject to various risks and which may change over time. No assurance can be given that
future events will occur, that projections will be achieved, or that the company’s assumptions are correct. Actual results
may differ materially from those projected
2
None of the statements contained in this presentation is to be relied upon as a statement or representation of fact.
All parties must satisfy themselves as to the correctness of each of the statements contained in this presentation.
ezzsteel do not make or give, and neither it’s subsidiaries nor any of their directors or officers or persons in their
employment or advisors has any authority to make or give, any representation or warranty whatsoever in relation to
this presentation.
This presentation may not be stored, copied, distributed, transmitted, retransmitted or reproduced, in whole or in part,
in any form or medium without the permission of ezzsteel.
2
Key HighlightsGlobal steel demand has started to show signs of recovery
Improved financial performance in H1 2010
Revenues have increased 17% year-on-year
Net profit at EGP 241mn; up 150% on H1 2009
3
Our flat steel facility, EFS, returned to production at the start of Q2 2010
We have installed additional flexibility during the stoppage at this site
Operational flexibility and modern technology have enabled us to quickly adapt to
market volatility
3
Steel Market OverviewWorld Crude Steel Production
Ton
ne
s
116
120 119 88 113
120
124 114
98
213
226
242
256
270 270
245
1,000
1,200
1,400
848 851904
970
1,071
1,144
1,247
1,346 1,326
1,220
44
Source: World Steel Association
Mil
lio
nTo
nn
es
129 152 182 222 283 353 416 489 500 568 267 323
193 187 188
193
202
196
207
210 198 139
62
90 135 120
123 126
134
128
132
133 125 82
35
57
106 103 108
111
113
112
116 88
37
55
98 100 101
106
113
113
44
53
186 189 202
213
107
128
-
200
400
600
800
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 H1 2009 H1 2010
China EU 27 NAFTA Japan CIS Other Countries
552
706
Overview of Domestic Steel Market Egypt Consumption
1,584 1,487 1,384 1,725 1,871 2,028
2,406
4,210
3,097 3,396
279 275 345 377 520 532 574 553 572 534
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
‘00
0 T
on
ne
s
55 Source: World Steel Association.
2008 Finished Steel Consumption Per Capita
-
H1 2002 H1 2003 H1 2004 H1 2005 H1 2006 H1 2007 H1 2008 H1 2009 H2 2009 H1 2010
Long Flat
Source: Company estimates.
85 124 125 151
216 250
281 316
441 502
597
-
100
200
300
400
500
600
700
Egypt Brazil South
Africa
Ukraine Iran Russia Turkey U.S. Spain Germany Japan
(Kg
)
Domestic Market Leader…
H1 10 Long Product Market Share Breakdown H1 10 Flat Product Market Share Breakdown
ezzsteel 45%
Beshay 10%
Al Garhi 14%
ezzsteel
43%
EISCO
14%
66
Estimated local market size of 3,396 thousand tonnes Estimated local market size of 534 thousand tonnesSource: Company estimates Source: Company estimates
Imports 16%
Bourieni 3%
Marakby 1%
Others 10%
Imports
43%
Revenue
H1 2010 Key Highlights Production
2,157
2,447
2,000
2,100
2,200
2,300
2,400
2,500
'00
0 T
on
ne
s
6,420
7,506
5,500
6,000
6,500
7,000
7,500
8,000
EG
P M
illi
on
s
7
EBITDA Net Income
7
H1 2009 H1 2010 H1 2009 H1 2010
96
241
0
50
100
150
200
250
H1 2009 H1 2010
EG
P M
illi
on
s845
1,206
0
200
400
600
800
1,000
1,200
1,400
H1 2009 H1 2010
EG
P M
illi
on
s
H1 2010 Production
953
470
735
927
489
799
600
800
1,000
88
470 489
231
0
200
400
EZDK Long EZDK Flat ezzsteel Long EFS Flat
H1 2009 H1 2010
H1 2010 Sales Breakdown
By Product By MarketBy product in EGP million By market in EGP million
Flat 2,284
31%
Export
1,452
19%
9
ezzsteel continues to generate the largest portion of its revenues in its growing domestic
market, where we enjoy a leading position
9
Long 5,138
69%
Domestic
6,054
81%
H1 2010 Revenues
Consolidated revenues
EGP Mn ESR/ERM EZDK EFSEzzsteel
Consolidated
Long 2,404 2,734 - 5,138
10
Flat - 1,620 665 2,284
Others - 79 5 84
Total 2,404 4,433 670 7,506
Standalone
Revenues2,728 4,372 681
10
H1 2010 Cost Breakdown
EGP Million ESR/ERM EZDK EFSezzsteel
Consolidated
Sales 2,728 4,372 681 7,506
COGS 2,605 3,365 737 6,412
COGS/Sales 95% 77% 108% 85%
1111
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
ESR/ERM EZDK EFS Ezz Steel Consolidated
Depreciation & Overheads
Labour
Energy
Raw Materials
H1 2010 ProfitabilityOperational profits EBITDA breakdown by division
741845
10941206
0
500
1000
1500
EG
P M
illi
on
s
761
207
-129
845
1,073
1076
1,206
-150
350
850
1,350
EG
P M
illi
on
s
1212
Gross Profit EBITDA
H1 2009 H1 2010
-150EZDK ESR/ERM EFS Consolidated
H1 2009 H1 2010
Profitability per tonne
353402
498549
0
200
400
600
Gross Profit EBITDA
EG
P
H1 2009 H1 2010
480538515
559
0
200
400
600
Gross Profit EBITDA
EG
P
Q1 2010 Q2 2010
7.0 7.03.0 3.0
10.0 10.0
Commitment to Growth Strategy
Domestic ExpansionsExisting Capacity Post Domestic Expansion Regional Expansions Post Regional Expansion
13
5.8
3.2
3.8
1.2
7.0
ExistingDRI
ExistingFinishedProduct
Additional DRI
AdditionalFinished Product
DomesticDRI
DomesticFinished Product
AlgeriaDRI
AlgeriaFinished Product
TotalDRI
TotalfinishedProduct
mn
tp
a
13
OutlookIn a general context of sharp volatility, we expect demand and prices of steel products
to improve gradually during the second half of 2010
Our current expansion efforts are focused on vertical integration and flexibility, which
includes expanding our DRI capacity and adding long product production capabilities at
EFS our dedicated flat steel facility
14
EFS our dedicated flat steel facility
14
Divisional Review: EZDK EZDK (Alexandria) H1 2009 H1 2010
Sales:
Value: EGP 4.3bn EGP 4.4bn
Volume:
Long: 925 thousand ton 817 thousand ton
Flat: 492 thousand ton 450 thousand ton
Exports as % of Sales:
Long: 2% 4%
16
Egypt’s largest steel complex
Capacity to produce 2 million tonnes of long products and 1 million tonnes of Flat products per year
Capable of long and flat production to international standards, including thin gauge flat steel
Privately operated port that can dock ships of up to 150,000 dwt - few other producers have this benefit
DRI for internal meltshop use is supplied by the plant’s MIDREX direct reduction units
16
Long: 2% 4%
Flat: 55% 46%
EBITDA: EGP 0.8bn EGP 1.1bn
Production:
Long Products: 953 thousand ton 927 thousand ton
Flat Products: 470thousand ton 489 thousand ton
Billets: 1,014 thousand ton 906 thousand ton
Divisional Review: ESR/ESRESR/ERM ( Sadat City & 10th of Ramadan)
H1 2009 H1 2010
Sales:
Value:
Long: EGP 2.1 bn EGP 2.4bn
Other: 324 thousand ton
Volume:
Long: 657 thousand ton 728 thousand ton
EBITDA: EGP 207mn EGP 107mn
17
Mini-mill in the strategic location of Sadat City, commissioned in 1995
Also operate a plant at the 10th Ramadan, which comprises of rolling mill and wire mesh factory
Capacity to produce 1.5 million tonnes of long products per year
17
EBITDA: EGP 207mn EGP 107mn
Production:
Long Products: 735 thousand ton 799 thousand ton
Billets: 418 thousand ton 399 thousand ton
Divisional Review: EFSEFS (Suez) H1 2009 H1 2010
Sales:
Value: EGP 257mm EGP 681mm
Flat: EGP 65mn EGP 665mn
Other: EGP 191mn EGP 16mn
Volume:
Flat: 31 thousand ton 194 thousand ton
18
One of the few producers in the world to operate thin slab casting technology, to produce thin gauges
of steel sheets with a minimum thickness of 1mm
Capacity to produce 1.3 million tonnes of either flat or long products per year
Installation of billet caster at EFS to enable flexibility in producing either flat steel or semi-finished long
products at times when the flat steel market is in a low cycle
18
Flat: 31 thousand ton 194 thousand ton
Exports as % of Sales: 100% 92%
EBITDA: EGP -129mn EGP 6mn
Production:
Flat Products: 231 thousand ton
ezzsteel at a Glance
The largest steel producer in the MiddleEast and Africa with a total actualcapacity of 5.8mn tonnes per annum
3.5mn tonnes of long products(Rebar)
2.3mn tonnes of flat products(HRC)
Ezz Industries Free Float
34%66%
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(HRC)
ezzsteel is listed on the Egyptian StockExchange and the London StockExchange (through a GDR program) andhas a market capitalisation of EGP 10 bnas at August 25th, 2010
55%
Al-Ezz Rollling
Mills
99%
55%
34%
Note: Ezzsteel direct and indirect stake in EFS: 64%
19