2016.05 - apresentação institucional ingri.gerdau.com/enu/6989/2016.05 - apresentao institucional...
TRANSCRIPT
Investor Presentation
Heavy plate rolling mill starts operating in July at the Ouro Branco mill (MG)
Economic outlook
3
Sources: IMF and Focus
GDP Growth 2014 2015f 2016f
World 3.4% 3.1% 3.2%
US 2.4% 2.4% 2.4%
Brazil 0.1% -3.8% -3.8%
China 7.3% 6.9% 6.5%
Global steel demand is expected to decrease in 2016
4
Source: World Steel Association
Region / Country (in mmt and %)
2015 2016f 15/14 16/15
World 1,500 1,488 -3.0% -0.8%
European Union 153 155 2.8% 1.4%
NAFTA 135 139 -8.4% 3.2%
Central & South America 45 43 -7.3% -6.0%
Brazil 21 19 -16.7% -8.8%
Asia and Oceania 985 969 -3.3% -1.7%
China 672 645 -5.4% -4.0%
Capacity utilization rate improved
6
Source: World Steel Association
In million metric tons
70%
72% 72%
68%
70%
67%66%
72%
Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16
Chinese steel exports are affecting steel industry
7
In million metric tons
Source: World Steel Association
*annualized from 1Q16
62
93
112 111
2013 2014 2015 2016 pace*
Price recovery
8
In US$/t
TurkeyChina
Source: Platts
Prices were updated until May, 24th
331294
176
320
275
Jan/
14
May
/14
Sep
t/14
Jan/
15
May
/15
Sep
t/15
Jan/
16
May
/16
US Scrap export
507
367
248
360317
573
493
323
484
450
Jan/
14
May
/14
Sep
t/14
Jan/
15
May
/15
Sep
t/15
Jan/
16
May
/16
Rebar export
136
69
4260 53
Jan/
14
May
/14
Sep
t/14
Jan/
15
May
/15
Sep
t/15
Jan/
16
May
/16
Iron Ore CFR China
Global player with dominant regional presence
10
Steel Units
Associated Companies
Joint ventures
USA. & Canada
Mexico
Colombia
Peru
ChileUruguai
Argentina
Brazil
Dominican Republic
Venezuela
India
Spain
Guatemala
► Largest long steel producer
in the Americas and 2nd
largest globally
►Operations in 14 countries
with relevant market share
►Relevant level of direct
purchase and captive
scrap (50%)
►6.3 billion tons of iron
ore resources
– Self-sufficiency at
Ouro Branco mill
►Coke unit and coking
coal mines in Colombia
►Partial level of energy
self generation
Upstream
Vertically integrated operations
► Low cost structure
►Mini-mills and
integrated mills key to
low cost strategy
► Latest generation
technology
Steel
►Reinforcing steel
fabrication facilities (Fab
Shops)
►Drawn products
►Multi-product
distribution network
► Tailor-made added-
value approach (~40%
of sales to civil
construction)
Downstream
11
Brazil North America Special Steel
Ready-to-use products
► Housing
► Infrastructure
► Industrial and commercial buildings
► Agriculture
► Exports
► Infrastructure
► Non-residential
► Industrial
► Automotive
► Shipbuilding
► Energy
Billets, blooms& slabs
Merchant bars Rebars
Fabricated steel
Heavystructural shapes Wire-rod
Wires
NailsSBQ
South America
► Housing
► Infrastructure
► Industrial and commercial buildings
Broad product portfolio and geographic diversification
HRC Iron Ore
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Wire
28% of Net Sales
31% of EBITDA
40% of Net Sales
38% of EBITDA
12% of Net Sales
14% of EBITDA
20% of Net Sales
17% of EBITDA
*Net sales and EBITDA in the last 12 months
Focus in adding value to our products
13
Technical Assistance Agreement
For the production of high-quality steel plates to be supplied to the Americas and to the World
• Technical support to optimize Gerdau’s Plate Mill learning curve• High level supervision and training for our Steelmaking and Plate Mill
teams• Short cut to high-tech steel plates (includes development of new products
with JFE’s know-how, e.g. API X80 grade steel plates)
Main Benefits for
Gerdau
To support our State-of-the-Art Plate Mill facility at Ouro Branco Works (Brazil)
Capacity 1.1 mt/yearStart-up: July 2016
Digital Mill Araçariguama (SP)
Plate milEarlier entrance: July
Gerdau among the best companies in Brazil in
leadership development!
Strategic RoadmapNew partnerships in wind power market
18 ideas implemented for 2 challenges addressed:
Processes simplification and Working capital reduction
The Gerdau we are creating
Transforming Gerdau to achieve our goals and share our success:
check out these great examples!
Gerdau Lean Delivery Systems in Special Steel
in North AmericaQuicker deliveries with optimized
logistic costs.
IT as a collaborative partner in North America BDTablets in the scrap yard, GoPro cameras for maintenance production, iPhone thermography capability
Gerdau Agile DayThink big. Start small.Deliver results in a valuable and simple way.
Gerdau is 4th - World-Class Steelmaker Ranking
7.97.6
7.57.3
7.37.2
7.17.1
7.17.0
7.07.0
7.07.0
6.96.96.9
6.96.9
6.96.86.86.8
6.7
POSCONucor
Nippon SumitomoGerdau
SeverstalJSW Steel
NLMKJFE
HyundaiErdemir
CSNSDI
SAILVoestalpine
Tata SteelHadded
JindalArcelorMittalChina Steel
EvrazBaosteelFinarvedi
MMKTernium
23 factors analyzed, including:
• Profitability
• Value-added product mix
• Cost-cutting efforts
• Pricing power in home market
• Threat from nearby competitors
• Size
• Downstream business
• M&A, alliances and JV’s
• …
15
Source: World Steel Dynamics
Financial highlights
16
G&A expenses declined 10% in 1Q16 compared to 1Q15
Unit 1Q16 1Q15 ∆% 4Q15 ∆%
Shipments '000 ton 3,851 4,143 -7.0% 3,887 -0.9%
Net Sales R$ million 10,085 10,447 -3.5% 10,449 -3.5%
Cost of Goods Sold R$ million (9,272) (9,335) -0.7% (9,662) -4.0%
SG&A R$ million (644) (660) -2.4% (655) -1.7%
EBITDA R$ million 930 1,106 -15.9% 911 2.1%
EBITDA Margin % 9.2% 10.6% 8.7%
Net Income R$ million 14 267 -94.8% (41)*
Free Cash Flow R$ million 11 (502) 1,225 -99.1%
* In the 4Q15, the net income was adjusted by extraordinary events
EBITDA and EBITDA margin per BD
17
Geographic diversification reduces volatility
EBITDA (R$ million) EBITDA Margin (%) Participation of adjusted EBITDA per BD
30.9%
Brazil BD
521
186 248
15.7%
6.9%9.2%
1Q15 4Q15 1Q16
38.4%
NorthAmerica BD
254396 355
6.6%9.2% 8.3%
1Q15 4Q15 1Q16
13.7%
SouthAmerica BD
127206 183
9.6%13.9% 14.8%
1Q15 4Q15 1Q16
17.0%
Special Steel BD
260151 174
11.6%
6.9% 8.0%
1Q15 4Q15 1Q16
Positive free cash flow despite challenging scenario
EBITDA is sufficient to service all commitments
18
930
11
(37)(290)
(107)
Adjusted EBITDA1Q16
CAPEX Income Tax Debt Interest Working Capital Free Cash Flow1Q16
(485)
1,106
(502)
(287)
(195)
(514)
Adjusted EBITDA1Q15
CAPEX Income Tax Debt Interest Working Capital Free Cash Flow1Q15
(612)
35% CAPEX reduction in 2016
Main projects
� Construction of heavy plate rolling mill at Ouro Branco Unit in Brazil
� Construction of new melt shop in Argentina
3.1
2.6
2.3 2.3
1.5
2012 2013 2014 2015 2016 (F)
CAPEX Disbursements (R$ billion)
-35%
19
1Q16:
R$ 485
million
Indebtedness under control
20
EBITDA in the last 12 months
Average Debt Term: 6.3 years
R$ billion
Debt & Leverage Ratio
Average Debt Cost: 7.1%
Gross debt declined by R$ 2.8 billion; R$ 1.9 billion due to FX effect and R$ 0.9 billion to amortizations
4.0
1.2 0.9
3.5
4.1
0.2
2.3
3.2
1.8
2017 2018 2019 2020 2021 2022 2023 2024 2025andafter
R$ billion
Long-Term Debt Amortization Schedule
21
Closing Remarks� Strong presence in North America and management efforts in all operations
supported a 21% decrease in working capital in 1Q16 compared to 1Q15,
resulting in positive free cash flow.
� Improvement in consolidated EBITDA compared to 4Q15.
� Compared to 1Q15, EBITDA grew in both North America BD (+40%) and
South America BD (+44%).
� Gerdau's 1Q16 performance does not indicate the full year period trend.
� Recovery in international commodity prices.
� Focus on generating free cash flow and reducing financial leverage in 2016:
� Costs and SG&A reduction;
� CAPEX restriction (-35% in comparison with 2015).
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Closing Remarks
� Gerdau continues to undergo a transformation process: creating
more value and strengthening the competitiveness of its operations.
� Long-term initiatives:
� Streamlining operations and internal structures;
� Modernizing the corporate culture; and
� Reassessing the potential profitability.
This presentation may contain forward-looking statements. These forward-looking
statements rely upon estimates, information or methods that may be incorrect or
inaccurate and may not actually occur. These estimates are also subject to risks,
uncertainties and assumptions, including, among others: general economic, political
and commercial conditions in Brazil and in the markets where we operate and existing
and future government regulations. Potential investors are hereby informed that these
estimates do not constitute a guarantee of future performance as they involve risks and
uncertainties. The Company does not undertake, and specifically denies, any obligation
to update any estimate, which only speak as of the date they are made.
Statement
23