investor/analyst presentation [company update]
TRANSCRIPT
-
8/20/2019 Investor/Analyst Presentation [Company Update]
1/30
-
8/20/2019 Investor/Analyst Presentation [Company Update]
2/30
JSW Steel Limited
3QFY16 Results PresentationJanuary 29, 2016
-
8/20/2019 Investor/Analyst Presentation [Company Update]
3/30
2
Key highlights – 3QFY16
Standaloneperformance
Crude Steel production: 2.70 million tonnesSaleable Steel sales: 2.55 million tonnesGross Turnover: ` 8,076croreNet Sales: ` 7,207 croreOperating EBITDA: ` 878croreNet Debt to Equity: 1.48x and Net Debt to EBITDA: 5.67x
Consolidatedperformance
Gross Turnover: ` 9,562croreNet Sales: ` 8,621 croreOperating EBITDA: ` 892 croreNet Debt to Equity: 1.83x and Net Debt to EBITDA: 6.66x
-
8/20/2019 Investor/Analyst Presentation [Company Update]
4/30
3
Agenda
BusinessEnvironment
OperationalPerformance
FinancialPerformance
Projects Update
-
8/20/2019 Investor/Analyst Presentation [Company Update]
5/30
4Source: Bloomberg, IMF and JSW Steel
Global economy
Global economic outlook remains fragile, IMF revisesdown 2016 global GDP growth yet again to 3.4%.
Downside risk persists with 1) slowdown and rebalancingin China, 2) global trade imbalances driven by a sharpdrop in commodity prices as well as weakeningcurrencies, 3) limited room for further monetary stimulus,and 4) uncertainty around monetray tightening by US
Expectations of a pick-up in global growth momentum is waning
3 . 1 %
1 . 9 % 2 .
5 % 1 . 5 %
0 . 6 %
4 . 0 %
7 . 3 %
6 . 9 %
3 . 8 %
2 . 4 % 3 .
1 % 1 .
6 %
1 . 2 % 4
. 7 %
7 . 5
%
6 . 3 %
3 . 4 %
2 . 1 %
2 . 6 %
1 . 7 %
1 . 0 % 4 .
3 %
7 . 5
%
6 . 3 %
World AMEs US EuroArea
Japan EMEs India China
2015E (Jan'16) 2016P (Apr'15)
2016P (Jan'16)
GDP growth - 2015 estimates and 2016 projections by IMFGDP growth - 2015 estimates and 2016 projections by IMF
60
100
140
180
220
D e c - 1 2
M a r - 1 3
J u n - 1 3
S e p - 1 3
D e c - 1 3
M a r - 1 4
J u n - 1 4
S e p - 1 4
D e c - 1 4
M a r - 1 5
J u n - 1 5
S e p - 1 5
D e c - 1 5
All CommodityFuel (Energy)Metals
IMF World Commodity Price Index, 2005=100
25
50
75
100
125
D e c - 1 2
M a r - 1 3
J u n - 1 3
S e p - 1 3
D e c - 1 3
M a r - 1 4
J u n - 1 4
S e p - 1 4
D e c - 1 4
M a r - 1 5
J u n - 1 5
S e p - 1 5
D e c - 1 5
BRL/USD INR/USDJPY/USD RUB/USDEUR/USD CNY/USD
Key currencies' movement against USD - Dec 31, 2012=100
-
8/20/2019 Investor/Analyst Presentation [Company Update]
6/30
5Source: World Steel Association, World Steel Dynamics, Bloomberg and JSW Steel
Global steel scenario
World Crude Steel production in CY2015 fell by 2.9%, ascapacity utilization in Dec’ 15 dropped below 65% – mostregions continue to witness a decline
Global steel demand continues to weaken with lowerinvestment activities
Steel exports from steel-surplus countries (as domesticdemand falls faster than production cuts) are at elevatedlevels
Predatory pricing is intensifying trade measures to check surging imports and pricing pressure
40
60
80
100
120
140
-20%
-10%
0%
10%
20%
30%
D e c - 1
3
M a r - 1
4
J u n - 1 4
S e p - 1 4
D e c - 1
4
M a r - 1
5
J u n - 1 5
S e p - 1 5
D e c - 1
5
China apparent steel consumption (%YoY growth)China steel Exports (annualized, mn tonnes) -RHS
- 8 . 6
- 4 . 8 - 4
. 3
- 2 . 7
- 2 . 5
- 2 . 3 - 1
. 8
- 2 . 9
2 . 9
- 6 . 8 -
5 . 1
- 5 . 8
- 3 . 4 -
1 . 4
- 2 . 1 -
0 . 7
- 2 . 5
3 . 1
N . A
m e r i c a
J a p a n
C I S
K o r e a
S . A m e r i c a
C h i n a
E U
W o r
l d
I n d i a
9MCY15 CY15
Global crude steel production (% YoY Change)
220300380460540620700
J a n - 1 4
A p r - 1
4
J u l - 1 4
O c t - 1
4
J a n - 1 5
A p r - 1
5
J u l - 1 5
O c t - 1
5
J a n - 1 6
North America ExW North Europe ExWBlack Sea expor t FOB China export FOB
r i c s ( t
)
-
8/20/2019 Investor/Analyst Presentation [Company Update]
7/30
6Source: JPC and JSW Steel All figures are in million tonnes, * Apparent finished steel consumption net of double counting effect
Indian economy and steel industry
Consumption of domestically produced steel fell by
1.2%YoY in 9MFY16 as total steel imports surged by29%YoY
9MFY16 Finished steel exports fell by 30%YoY.
Steel industry is grappling with headwinds of insipiddemand, excess supply and pricing pressure driven bysurge in imports at predatory pricing
Consumer discretionary spending, public capex
(highways, ports, power transmission, etc.) and foreigndirect investment have continued to improve,supporting a gradual growth recovery
However, weaker exports and private capex have beena drag
Progress on policy reforms coupled with government’s measures to pump prime the economy bode well forsteel demand over the medium term
Adequate measures urgently required to check unbridled and unfair imports of steel
66.5 56.5 54.167.1 58.9 53.5
Crude SteelProduction
Finished SteelConsumption*
Consumption of domestically
produced steel9MFY15 9MFY16
0.9%4.4%
-1.2%
1.76 0.48 0.29 0.42
2.430.86
0.36 0.44
2.80
1.24
0.40 0.55
3Q 2Q 1Q
FY15 FY16Total Steel
Imports
FY15 FY16China
FY15 FY16Korea
FY15 FY16Japan
2.770.72 0.59 0.62
3.16
0.87 0.58 0.90
3.11
1.080.51
0.75
-
8/20/2019 Investor/Analyst Presentation [Company Update]
8/30
7
Agenda
BusinessEnvironment
OperationalPerformance
FinancialPerformance
Projects Update
-
8/20/2019 Investor/Analyst Presentation [Company Update]
9/30
8
3.17
2.70
3.25
3QFY15 3QFY16 2QFY16
Crude Steel Production
Quarterly volumes – standalone
YoY-15%
3QFY15 3QFY16 2QFY16
Flat 2.56 1.87 2.57
Long 0.50 0.63 0.64
3.03
2.55
3.19
3QFY15 3QFY16 2QFY16
Saleable Steel Sales
YoY-16%
3QFY15 3QFY16 2QFY16
Flat 2.44 1.86 2.50
Long 0.47 0.66 0.65
Semis 0.01 0.03 0.03
QoQ-17%
QoQ-20%
All figures are in million tonnes
-
8/20/2019 Investor/Analyst Presentation [Company Update]
10/30
9
9.57 9.36
9MFY15 9MFY16
Crude Steel Production
8.97 8.84
9MFY15 9MFY16
Saleable Steel Sales
All figures are in million tonnes
9M volumes – standalone
YoY-2%
9MFY15 9MFY16
Flat 7.60 6.94
Long 1.58 1.96
9MFY15 9MFY16
Flat 7.22 6.77
Long 1.43 1.93
Semis 0.32 0.15
YoY-1%
-
8/20/2019 Investor/Analyst Presentation [Company Update]
11/30
10Source: JPC and JSW Steel, * Domestic sales in million tonnes^ Total sales in million tonnes – JSW Steel Standalone + JSW Steel Coated Products (net-off inter-company sales)
Quarterly sales highlights – consolidated
Increase in Retail sales by 82%YoY helped overall domestic sales to grow by 8%YoY despite the plannedshut downs at all upstream locations
Product mix improved with value added products sales reaching 36% of total sales despite lowerexports
TMT sales grew 107%YoY and CRCA sales grew 18%YoY
61%49% 53%
24% 40% 35%15% 11% 13%2.16* 2.34* 2.82*29%
12% 10%3.03^ 2.67^ 3.14^
3QFY15 3QFY16 2QFY16
OE Retail Auto Exports
65% 64% 66%
35% 36% 34%
3QFY15 3QFY16 2QFY16
Value added & special Products Other products
-
8/20/2019 Investor/Analyst Presentation [Company Update]
12/30
11Source: JPC and JSW Steel, * Domestic sales in million tonnes^ Total sales in million tonnes – JSW Steel Standalone + JSW Steel Coated Products (net-off inter-company sales)
9M sales highlights – consolidated
Increase in Retail sales by 80%YoY helped overall domestic sales to grow by 19%YoY despite theplanned shut downs in 3QFY16 at all upstream loactions and lower exports
Product mix improved with value added products sales reaching 35% of total sales
62%53%
23% 35%15% 12%6.56* 7.82*27%
12%8.98^ 8.93^
9MFY15 9MFY16
OE Retail Auto Exports
67% 65%
33% 35%
9MFY15 9MFY16Value added & special ProductsOther products
-
8/20/2019 Investor/Analyst Presentation [Company Update]
13/30
12
Quarterly retail sales highlights – consolidated
57% 55% 57%
43% 45% 43%
3QFY15 3QFY16 2QFY16
Retail - Branded Sales
Retail - Others Sales
Branded steel product’s sale grew 4% YoY to 45% of total Retail sales
TMT sale grew 220%YoY – Individual residential, real estate, commercial were major contibutors
HR CTL sale grew 60%YoY; Coated Steel sale grew 38%YoY – General engineering, construction and individualresidential projects were major contibutors
Increased retailer network by 1,083 to 5,783 during the quarter
Retail sales grew by 82%YoY
514
936 976
3QFY15 3QFY16 2QFY16
Retail sales (‘000 tonnes )
+82%
-4%
-
8/20/2019 Investor/Analyst Presentation [Company Update]
14/30
13 Above mentioned approved grades are the highest among the specific product/grade-group; the lower gradesupto the highest grades are also approved.
Automotive and appliance grade approvals
Applications Components
Hood 270F 340P 270F 340PRoof 270F 590RDoors 270F 270FBody side outer 270F 270FBIW (Inner) 980Y 590R 440WFloor 270FStructural 980Y 590Y 590R
Reinf. Pillar 980YWheels SPFH440 SPFH590 SAPH 590 HR 750Engine SCM435 S36CV 86B45 SAE1070 SAE4140Transmission 16MnCr5 SAE4124 SAE8822 SAE5160 SAE4145SuspensionFront Panel EDD IFSide Panel D DD
Cold Rolled Coated HRPOHot Rolled Alloy Steel Longs
Appliance
Grades Approved
Automotive
20MnCr5Ni51CrMoVn
-
8/20/2019 Investor/Analyst Presentation [Company Update]
15/30
14
Agenda
BusinessEnvironment OperationalPerformance FinancialPerformance Projects Update
-
8/20/2019 Investor/Analyst Presentation [Company Update]
16/30
15
Exceptional items related to overseas assets
Particulars Standalone Consolidated
JSW Steel (USA) Inc - US Plate & Pipe Mill 537 140
Periama Holding LLC and its subsidiaries – US Coal 53 27JSW Panama (Holding) Corporation and itssubsidiaries - Chile
183 161
JSW Steel (Netherlands) BV 99 0
Total 871 327
Rs. Crores Equivalent 5,596 2,121
A provision for diminution in value of investments and loans and advances of ` 5,596crore(at standalone level) and ` 2,121crore (at consolidated level) related to overseas assetshas been made during the quarter
USD mn
-
8/20/2019 Investor/Analyst Presentation [Company Update]
17/30
16
Financials – standalone
crore
Particulars 3QFY16 3QFY15 9MFY16 9MFY15
Gross Turnover 8,076 12,368 29,923 37,765
Net Sales 7,207 11,310 26,841 34,566
Operating EBITDA 878 2,117 3,948 7,198
Other Income 96 88 294 306
Finance Cost 663 781 1,991 2,224
Depreciation 642 712 1,904 2,075
Exceptional Items (5,597) (102) (5859) (291)
Profit Before Tax (5,928) 611 (5,511) 2,914
Tax (1,786) 196 (1,641) 936
Profit after Tax (4,142) 415 (3,870) 1,978
-
8/20/2019 Investor/Analyst Presentation [Company Update]
18/30
17
Operating EBITDA movement – standalone
crore
2,117
878
(332)
1,406
(2,350)
23 14
EBITDA3QFY15
Volume Cost NSR Mix Others EBITDA3QFY16
-
8/20/2019 Investor/Analyst Presentation [Company Update]
19/30
18
Volumes 3QFY16 3QFY15 9MFY16 9MFY15
Production* 0.33 0.36 1.11 1.17
Sales 0.34 0.37 1.14 1.18
crore
*Including Job Work
Operational performance – JSW Steel CoatedProducts
Million tonnes
Key P&L data 3QFY16 3QFY15 9MFY16 9MFY15
Turnover 1,629 2,270 5,687 5,042
Operating EBITDA 38 65 250 268
Profit after Tax (22) (18) 26 1
-
8/20/2019 Investor/Analyst Presentation [Company Update]
20/30
19
Sales (net tonnes) 3QFY16 3QFY15 9MFY16 9MFY15
Plate Mill 36,192 63,822 1,26,215 2,45,413
Pipe Mill 12,421 18,101 47,175 43,972
Production (net tonnes) 3QFY16 3QFY15 9MFY16 9MFY15
Plate Mill 48,547 83,601 1,64,978 2,89,043Utilization (%) 20% 34% 23% 39%
Pipe Mill 13,217 18,898 42,800 38,780
Utilization (%) 10% 14% 10% 9%
USD mn
Net tonnes = 0.907 metric tonnes
Operational performance – US Plate & Pipe Mill
Key P&L data 3QFY16 3QFY15 9MFY16 9MFY15
Turnover 39.58 79.81 145.45 267.72EBITDA + Other Income (4.89) (0.46) (17.38) 6.10
Profit after Tax (15.37) (16.09) (60.09) (39.19)
-
8/20/2019 Investor/Analyst Presentation [Company Update]
21/30
20
Particulars 3QFY16 3QFY15 9MFY16 9MFY15
Production (Tonnes) - 2,18,515 83,774 6,63,638
Sales (Tonnes) - 2,24,123 1,60,667 7,70,670
Turnover - 14.20 8.60 64.51
Operating EBITDA (0.32) (6.45) (0.12) (8.56)
Profit after Tax (0.63) (6.38) (3.92) (13.04)
Operational performance – Chile
USD mn
-
8/20/2019 Investor/Analyst Presentation [Company Update]
22/30
21
Financials – consolidated
Particulars 3QFY16 3QFY15 9MFY16 9MFY15Gross Turnover 9,562 14,026 34,045 43,038
Net Sales 8,621 12,927 30,746 39,686
Operating EBITDA 892 2,296 4,248 7,720
Other Income 23 13 87 93
Finance Cost 811 937 2,469 2,635
Depreciation 773 890 2,394 2,536
Exceptional Items (2,122) - (2,124) (21)
Profit Before Tax (2,792) 482 (2,652) 2,620
Tax (1,810) 175 (1,651) 932
Share of Associates and Minority Interest 58 22 88 46
Profit after Tax (923) 329 (913) 1,734
crore
-
8/20/2019 Investor/Analyst Presentation [Company Update]
23/30
22*Net Debt excludes Acceptances
Net debt movement – consolidatedcrore
Particulars 31.12.2015 30.09.2015
Cash & cash equivalent ( ` crore) 1,161 1,378Net Debt/Equity (x) 1.83 1.72
Net Debt/EBITDA (x) 6.66 5.32
39,00839,483567
(460)
151 217
Net Debt*as on Sep'15
New Loan Taken Repayments Fx Impact Movement in FD/MF Net Debt*as on Dec'15
-
8/20/2019 Investor/Analyst Presentation [Company Update]
24/30
23
Agenda
BusinessEnvironment OperationalPerformance FinancialPerformance Projects Update
-
8/20/2019 Investor/Analyst Presentation [Company Update]
25/30
24
Projects' update
Blast Furnace -1 reconstruction at Vijayanagar: expected to be commissioned in 4QFY16
-
8/20/2019 Investor/Analyst Presentation [Company Update]
26/30
25
Projects' update contd. …
Blast Furnace reconstruction at Salem: expected to be commissioned in 4QFY16
-
8/20/2019 Investor/Analyst Presentation [Company Update]
27/30
26
Projects' update contd. … Blast Furnace Modification at Dolvi: expected to be commissioned in 4QFY16
New sinter plant (2.5 MTPA) at Dolvi: expected to be commissioned in 4QFY16
-
8/20/2019 Investor/Analyst Presentation [Company Update]
28/30
27
Projects' update contd. … New Billet Caster (1.5 MTPA) at Dolvi: expected to be commissioned in 4QFY16
New Bar Mill (1.4 MTPA) at Dolvi: expected to be commissioned in 4QFY16
-
8/20/2019 Investor/Analyst Presentation [Company Update]
29/30
28
Certain statements in this report concerning our future growth prospects are forward looking statements, whichinvolve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward looking statements. The risk and uncertainties relating to these statements include, but are not limited torisks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competitionwithin Steel industry including those factors which may affect our cost advantage, wage increases in India, ourability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time framecontracts, our ability to commission mines within contemplated time and costs, our ability to raise the financewithin time and cost client concentration, restrictions on immigration, our ability to manage our internaloperations, reduced demand for steel, our ability to successfully complete and integrate potential acquisitions,liability for damages on our service contracts, the success of the companies in which the Company has madestrategic investments, withdrawal of fiscal/governmental incentives, impact of regulatory measures, politicalinstability, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of ourintellectual property and general economic conditions affecting our industry. The company does not undertake toupdate any forward looking statements that may be made from time to time by or on behalf of the company.
Forward looking and cautionary statement
-
8/20/2019 Investor/Analyst Presentation [Company Update]
30/30
29
Thank you