analyst meet presentation - jsw group€¦ · analyst meet presentation quarter ended june 30,...
TRANSCRIPT
1
Analyst Meet PresentationQuarter Ended June 30, 2012
2
Agenda
Business Environment
Operational Performance
Projects Update Financial Performance
3
Agenda
Business Environment
Operational Performance
Projects Update Financial Performance
4
2012 remains challenging
Global economy: slower growth
Source: IMF
Euro area sovereign debt crisis remains a concern
United States – recent data indicates growth continuesbut less robust than expected
Emerging economies – growth momentum has sloweddown reflecting weaker external demand
China – GDP growth slowed down to 7.6% YoY in Apr-Jun2012
Lower growth outlook has been reaffirmed with revisedGDP outlook for most of the economies
However policy easing lower energy prices and recentEU Summit agreement should support growth in 2HCY12
-1%
1%
3%
5%
7%
9%
Wo
rld
AM
Es
EMEs
Jap
an
Euro
Are
a
US
Ch
ina
Ind
ia
Sep 11 Jan 12 Apr 12 July 12
GDP growth outlook for 2012
5
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Jan
-07
Jun
-07
No
v-07
Ap
r-08
Sep
-08
Feb
-09
Jul-
09
De
c-09
May
-10
Oct
-10
Mar
-11
Au
g-11
Jan
-12
Jun
-12
Ch
ange
-%
Yo
Y
Overall WPI Food Fuel & Power
Indian economy: moderated momentum
Source: Central Statistical Organisation, Reuters*Netted off for double counting effect
India's medium- and long-term growth story remains intact
GDP growth was 5.3% during Jan –Mar 2012
Inflation has come down but remains at 7%+
May 2012 IIP has shown uptick in some sectors however Industrial activities have remainedsluggish in recent months,
Growth inducing steps expected from RBI/Government
-40%
-20%
0%
20%
40%
60%
Ap
r-0
7
Sep
-07
Feb
-08
Jul-
08
De
c-0
8
May
-09
Oct
-09
Mar
-10
Au
g-1
0
Jan
-11
Jun
-11
No
v-1
1
Ap
r-1
2
Overall IIP Machinery and equipmentConsumer goods Electricity
6Source: World Steel Association, Steel Business Briefing* Demand growth outlook by World Steel Association
World crude steel production grew by just ~1% in Jan-Jun 2012 compared with demand growthoutlook* of 3.3% in CY12
Steel prices corrected post Apr 2012 but are now range bound
Capacity utilization is around 80%
Pace of growth has slowed down but base demand remains intact
12
6.7
13
0.0
12
7.7
12
7.3
12
4.3
12
2.9
12
3.5
11
5.4
11
7.1 1
23
.7
12
1.0
13
2.6
12
9.5
13
1.2
12
7.9
64%
68%
72%
76%
80%
84%
85
95
105
115
125
135
Ap
r-11
Jun
-11
Au
g-11
Oct
-11
De
c-11
Feb
-12
Ap
r-12
Jun
-12
World crude steel production (million tonnes)Capacity Utilisation (%)
500
580
660
740
820
900
980
Jan
-10
Ap
r-10
Jul-
10
Oct
-10
Jan
-11
Ap
r-11
Jul-
11
Oct
-11
Jan
-12
Ap
r-12
Jul-
12
HR
C p
rice
s (U
SD/t
on
ne
)
North America Domestic - ExW Europe import CIF
Black Sea export FOB China export FOB
Global steel scenario
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-0.40
-0.20
0.00
0.20
0.40
0.60
Jan
-07
Jun
-07
No
v-07
Ap
r-08
Sep
-08
Feb
-09
Jul-
09
De
c-09
May
-10
Oct
-10
Mar
-11
Au
g-11
Jan
-12
Jun
-12
New orders PMI minus Finished inventories PMI
Crude steel production (% YoY)
China: macro-economic data signals demand stabilization
Source: World Steel Association, MySteel, National Bureau of Statistics of China
GDP slowed down to 7.6% YoY in Apr-Jun 2012 but still close to official target of 7.5% for CY12
Jun 2012 macro-economic data signals demand stabilization
Inflation has come down to 2.2% in Jun 2012 providing room for further policy easing
Crude Steel production grew by just 1% in 1HCY12, warehouse inventories have fallen in last 5months
Fiscal and Monetary easing should ensure economic growth at 7-8% in 2012
6.4
2.2
1
2
3
4
5
6
7
Oct
-10
De
c-10
Feb
-11
Ap
r-11
Jun
-11
Au
g-11
Oct
-11
De
c-11
Feb
-12
Ap
r-12
Jun
-12
Consumer price index (% YoY)
8Source: Steel Business Briefing, Platt‘s, Industry data, JSW Steel(All figures are in USD/tonne)
Raw materials prices show downward bias
115
130
145
160
175
190
Jun
-11
Jul-
11
Au
g-11
Au
g-11
Sep
-11
Oct
-11
No
v-11
De
c-11
Jan
-12
Feb
-12
Mar
-12
Ap
r-12
May
-12
Jun
-12
Jul-
12
IODEX 62% Fe $/dmt / North China import CFR
HCC quarterly contract prices were settled at~$220-225/t for 2QFY12
HCC spot prices rose to ~$225/t by Jun 2012due to supply side constraints with BMA’sForce Majeure
HCC spot prices have come down to $210/t inJul 2012 with BMA lifting Force Majeure andlower demand from China
Iron ore prices also have come down below$130/t after reaching ~$150/t in Apr 2012
Raw materials prices
20
9
22
5
33
0
31
0
28
5
23
5
20
6
22
1
160
200
240
280
320
360
400
Oct
-10
Jan
-11
Ap
r-11
Jul-
11
Oct
-11
Jan
-12
Ap
r-12
Jul-
12
Australian HCC Quaterly Contract FOBAustralian Spot HCC FOB
9
1.4
1.2
2.0
1.0
Import Export
1QFY12 1QFY13
42.0%
-16.3%
India steel scenario
Source: Joint plant Committee (All figures are in million tonnes)
Steel demand to remain positive despite challenges
18.0
18.4
18.7 19
.5
Finished Steel Production Apparent Finished Steel Consumption
1QFY12 1QFY13
3.6%5.8%
Apparent finished steel consumption grew by 5.8% in 1QFY13
Finished steel production grew by 3.6% in 1QFY13
1QFY13 steel imports increased by 42% to 2.0 million tonnes whereas steel exports decreased by16.3% to 1.0 million tonnes
Secondary steel producers are impacted by power shortages
10
295
360
30 Jun 2011 30 Jun 2012
1.390.32
Others JSW Shoppe
JSW Shoppe
Rolled: Long
Rolled: HR Products
43%
Domestic sales
excluding semis
(million tonnes,
% Share)
Value Added: Flat
81% 19%
45%
37%
18%
% Share through JSW Shoppe – 1QFY13
22%
JSW Shoppe has expanded footprints to 155 districts
No. of JSW Shoppe
11
0.40 0.410.45
1QFY12 1QFY13 4QFY12
Value Added1.71
2.11
2.31
1QFY12 1QFY13 4QFY12
Total Sales
Saleable steel sales – 1QFY13
All figures are in million tonnes
1.28
1.67 1.76
1QFY12 1QFY13 4QFY12
Rolled : Flat
YoY
QoQ23%
-9%YoY
QoQ30% -5%
YoY
2%QoQ
-10%
0.14
0.05
0.09
1QFY12 1QFY13 4QFY12
Semis
YoY
QoQ
-61%
-40%
0.290.38
0.46
1QFY12 1QFY13 4QFY12
Rolled : Long
YoYQoQ
31%-18%
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Agenda
Business Environment
Operational Performance
Projects Update Financial Performance
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Key highlights
* Standalone basis
Steel for gears and Shafts for International Tractors
Steel for bearing rings for JTEKT Corporation
Low carbon steel for structural inner components for Toyota & Hyundai
Micro-alloyed high strength steel, E-34 (< 3 mm) for long members forM/HCV of M&M
IF grade steel for skin panels for Ford and Honda
New product
approvals
Highest ever crude steel production: 2.14 million tonnes
Saleable steel sales: 2.11 million tonnes
Gross turnover*: ` 9,910 crores
Highest ever EBITDA*: ` 1,773 crores
Production/sales
Total 25.7 million tonnes of iron ore was sold through e-auctions till June2012 end
The company purchased 15.6 million tonnes of iron ore in e-auctions andreceived 80% of it till end June 2012
Iron ore e-auction
update
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Karnataka Iron ore update
The CEC has approved Reclamation & Rehabilitation (R & R) plans of 7 minesin category ‘A’. These mines are expected to commence operations oncompliance to certain conditions in Aug 2012.
The R&R plan is under preparation for remaining mines in category ‘A’.
The R&R plans for 3 mines in category ‘B’ are also ready. However, for themines falling under category ‘B’ the directions from the Hon’ble SupremeCourt to commence mining are yet to come.
On commencement of operations in Category ‘A’ and ‘B’ mines, iron oreavailability is exepected to improve.
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0.34
0.44 0.46
1QFY12 1QFY13 4QFY12
Rolled : Long
1.19
1.611.49
1QFY12 1QFY13 4QFY12
Rolled : Flat1.68
2.142.07
1QFY12 1QFY13 4QFY12
Crude Steel
YoY QoQ
36% 8%
Production – 1QFY13
All figures are in million tonnes
YoY QoQ
27% -6%
YoY QoQ
27% 4%
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Agenda
Business Environment
Operational Performance
Projects Update Financial Performance
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Projects' update
Beneficiation Plant – 2 (Phase II): being commissioned in FY13 in phased manner
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Projects' progress contd..
HSM – 2 (Phase II): will be commissioned by 2HFY13
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Projects' progress contd..
Cold Rolling Mill -2: Phase I will be commissioned by FY14 and Phase II by FY15
20
Projects' progress contd..
4th Stove at Blast Furnace 3 : will be commissioned by 2QFY13
4th Stove at Blast Furnace 4 : will be commissioned by 3QFY13
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Coke oven plant (at Dolvi for JSW Ispat): will be commissioned by FY14 end
Projects' progress contd..
Pellet plant (at Dolvi for JSW Ispat) Auto inspection line at Salem
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Agenda
Business Environment
Operational Performance
Projects Update Financial Performance
23
Financials (standalone)
* Forex losses
** Not Annualized
Particulars 1QFY13 1QFY12 Growth
Gross Turnover 9,910 7,627 30%
Net Sales 9,030 7,065 28%
Operating EBITDA 1,773 1,430 24%
Other Income 72 48 51%
Finance Cost 407 228 78%
Depreciation 468 388 21%
Exceptional Items* (592) (35)
Profit Before Tax 379 826 -54%
Tax 110 248 -56%
Profit after Tax 269 578 -53%
Diluted EPS (`)** 11.69 25.54
` Crores
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1,430
1,773 324
460
(600)
89 70
EBITDA1QFY12
Volume NSR Cost Mix Others EBITDA1QFY13
EBITDA movement – standalone
` Crores
25
12,771
14,022
2,468
(2,526)
575
734
Net Debt*as on Mar'12
New Loan Taken Repayments Forex Loss Movement in FD / MF
Net Debt*as on Jun'12
Net debt movement – standalone
* Net debt exclude acceptances
` Crores
Particulars 30.06.2012 31.03.2012
Cash & cash equivalent (` Crores) 2,424 3,159
Net Debt/Equity (x) 0.75 0.69
Net Debt/EBITDA (x) 2.35 2.27
26
Particulars Apr-Jun’12 Apr-Jun’11 Jul’11-Jun’12 Jul’10-Jun’11
Net income from operations 2,973 2,465 11,104 8,231
EBITDA (Including VAT benefits) 454 404 1,176 590
Net profit After Tax 478 (1,135) (317) (1,806)
Sales (million tonnes) Apr-Jun’12 Apr-Jun’11 Jul’11-Jun’12 Jul’10-Jun’11
HR Coils 0.65 0.58 2.47 2.06
Downstream products 0.09 0.07 0.36 0.23
Production (million tonnes) Apr-Jun’12 Apr-Jun’11 Jul’11-Jun’12 Jul’10-Jun’11
HR Coils 0.69 0.60 2.48 2.20
Downstream products* 0.09 0.08 0.36 0.24
` Crores
Operational performance – JSW Ispat Steel Ltd
* Saleable production
27
Particulars 1QFY13 1QFY12 4QFY12
Turnover 103.67 61.95 105.24
EBITDA + Other Income 6.39 3.67 42.56
Profit After Tax (8.16) (9.36) 27.66
Sales (NT) 1QFY13 1QFY12 4QFY12
Plate Mill 68,741 46,875 65,795
Pipe Mill 22,079 9,716 24,482
Production (NT) 1QFY13 1QFY12 4QFY12
Plate Mill 98,102 56,815 108,183
Utilization (%) 39% 22% 44%
Pipe Mill 22,011 8,986 22,541
Utilization (%) 16% 7% 16%
USD mn
Operational performance – US Plate & Pipe Mill
28
Operational performance – Chile
USD mn
Particulars 1QFY13 1QFY12 4QFY12
Production (Tonnes) 194,886 176,859 172,580
Sales (Tonnes) 343,249 194,347 101,199
Turnover 44.75 34.29 13.58
EBIDTA 8.48 12.74 0.89
Profit after Tax 5.27 7.93 (0.85)
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Consolidated financials
` Crores
Particulars 1QFY13 1QFY12 Growth
Gross Turnover 10,781 7,995 35%
Net Sales 9,902 7,432 33%
Operating EBIDTA 1,908 1,492 28%
Other Income 31 15 103%
Finance Cost 461 278 66%
Depreciation 533 444 20%
Exceptional Items (595) (35)
Profit Before Tax 351 750 -53%
Tax 151 258 -42%
Share of Associates and Minority Interest (150) (6)
Profit after Tax 50 485 -90%
30
Net debt movement – consolidated
` Crores
* Net debt exclude acceptances
Particulars 30.06.2012 31.03.2012
Cash & cash equivalent (` Crores) 2,539 3,265
Net Debt/Equity (x) 1.09 0.98
Net Debt/EBITDA (x) 2.81 2.73
16,644
18,389
3,343
(3,287)
963 726
Net Debt*as on Mar'12
New Loan Taken Repayments Forex Loss Movement in FD / MF
Net Debt*as on Jun'12
31
Forward looking and cautionary statement
Certain statements in this report concerning our future growth prospects are forward looking statements,which involve a number of risks, and uncertainties that could cause actual results to differ materially fromthose in such forward looking statements. The risk and uncertainties relating to these statements include,but are not limited to risks and uncertainties regarding fluctuations in earnings, our ability to managegrowth, intense competition within Steel industry including those factors which may affect our costadvantage, wage increases in India, our ability to attract and retain highly skilled professionals, time andcost overruns on fixed-price, fixed-time frame contracts, our ability to commission mines withincontemplated time and costs, our ability to raise the finance within time and cost client concentration,restrictions on immigration, our ability to manage our internal operations, reduced demand for steel, ourability to successfully complete and integrate potential acquisitions, liability for damages on our servicecontracts, the success of the companies in which the Company has made strategic investments, withdrawalof fiscal/governmental incentives, impact of regulatory measures, political instability, legal restrictions onraising capital or acquiring companies outside India, unauthorized use of our intellectual property andgeneral economic conditions affecting our industry. The company does not undertake to update anyforward looking statements that may be made from time to time by or on behalf of the company.
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Thank you