Download - Apres padrao mrsa_1_q10_eng
Presentation to Investors Presentation to Investors 1st quarter 2010
Contents
• Company History
• Highlights
• Refractory Products
• Group Profile
• Mineral Reserves
• Production Process and Capacities
• Competition
Key Figures• Key Figures
• Competitive Advantages vs. Risks
2• Stock Performance
Company History
2009Capital Increase: In October, the controlling shareholdres approved a R$ 350 million
2007Control Change: GP and Gavea acquired control of Magnesita
approved a R$ 350 million capital increase, of which BNDES took part
1939Foundation: Magnesita Ltda.
1969Listing: Company IPO on the São Paulo Stock Exchange
q gS.A., held two tender offers and purchased shares in the market
2010March: bond issue of US$ 400 MM denominated notes with semiannually payble fixed
f 8 % g
was established after the discovery of a large amount of magnesite in the Brumado mines (Bahia State)
(BOVESPA)
1990CPP f ll i h ll f
2008Novo Mercado* lisitng on April
September: LWB is acquired for € 657 MM
interest of 7.875% per annum and maturity date in 2020
1944Industrial operations started
CPP: following the collapse of import tarriffs for refractories in Brazil, Magnesita created a revolutionary business model, CPP – “Cost por Performance”
€ 657 MM
Over 70 years of experience in the refractories business
3
Over 70 years of experience in the refractories business* Note: “Novo Mercado” is a listing segment of the São Paulo Stock Exchange designed for companies that voluntarily undertake to abide by corporate governance and disclosure practices in addition to those already required by Brazilian Law and the CVM.
Highlights
Leading Market Position
1
Long Standing Relationships
2
Leading Market Position Worldwide
38
Long Standing Relationships with Blue-Chip Customer Base
Vertically Integrated Business Model
Strong & Experienced Management Team
47
Solution Based Business Model
56
Up-to-date Technology
Long-Life of Mineral Reserves with High Quality
5Attractive Industry Dynamics with Significant Potential to Export the CPP model
6
4
CPP model
Group Profile
York
Valenciennes
Flaumont
HildenOberhausen
HagenKruft
Taiyuan
Chizhou Kaohsiung
Brumado
Coronel Fabriciano
Contagem
Ramalho (Arg) - RASA
• The only fully integrated magnesian and dolomitic refractory producer worldwide, offeringrefractory solutions for steel, cement and glass production, among others;
• 28 manufacturing and mining facilities in four continents, with 7,499 people and overg g p p300 clients worldwide;
• Two decades of expertise in the Cost per Performance model, in partnership with the topsteel companies worldwide. 5
Shareholders Composition Profile – 04/30/10
Invest. Funds
Brokers/Banks/Distributors
4,6% Others1,6%
GP38 5%Individuals
Invest. Funds and clubs12,6%
38,5%Individuals12,8%
Rhrone8 1%Gavea
Foreigners18,2%
8,1%Gavea3,6%
Controlling Group = 50.2%
TOTAL SHARES 257 954 378
Others = 49.8%
TOTAL SHARES = 257,954,378
Refractory Products
• Refractories are heat-resistant materials manufactured in a widei f i i d h di h i li ivariety of compositions and shapes according to their application.
Main Refractory Consumers Worldwide
Processes Chemical
Non-ferrous5%
Others5%
above 1,200º C
Steel70%
Ceramic5%
Glass4%
Chemical 4%
Cement7%
77 7
Refractory Products
How much refractory is needed to produce:
1 f 0 6 k1 t f t l 12 k 1 car = ~ 10 kg 1 aircraft = 1 1 tonnes1 tonne of cement = ~ 0.6 kg1 tonne of steel = ~ 12 kg 1 car = ~ 10 kg 1 aircraft = ~ 1.1 tonnes
9 000 t f t l 9,000 tonnes of steel 70,000 m³ of concrete 103,000 m² of glass 2 700 tonnes of aluminium
463,000 tonnes of steel 27 millions m³ of concrete
2,700 tonnes of aluminium + others
Burj Al Arab Hotel = ~200 tonnesThree Gorges Dam Hydroletric= ~11,000 tonnes
88
j
Refractory – Main Families and Uses
Magnesian Steel production (FBI 2001=100)
• 34% of the net revenues in 2009
Carbon Steel
290
390
490
• Composition: 63% of magnesite sinter• Main use: steel production
90
190
290
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Chi W ld (E Chi ) W ld
Dolomitic Specialty Steel
China World (Ex-China) World
200Stainless steel production (FBI 2001=100)
• 35% of the net revenues in 2009• Composition: 60% of dolomite sinter• Main use: specialty steel production
100125150175
Aluminous
2001 2002 2003 2004 2005 2006 2007 2008
World Asia
Cement production (FBI 2001=100)Aluminous
• 21% of the net revenues in 2009• Composition: 54% of alumina• Main use: cement production
Cement
150
200
250
300
99
• Main use: cement production 10020
01
2002
2003
2004
2005
2006
2007
2008
2009
2010
China World (Ex-China) World 9
The Cost per Performance Model
After the LWB acquisitionBefore the LWB acquisition
69%36%
tuni
ty
31%
69%
64%
100%
Opp
ort
31%
Magnesita + LWBMagnesita LWB
CPP
Volume
10
Volume
Rationale of The Cost per Performance Model
Monitoring Costumer ProcessRaw Material R&D Center
• High-grade raw material
M30 Magnesite sinter
• Equipment maintenance
• Engineering and process
management
• Product tests
• Continuous improvementM30 Magnesite sinter
Dolomite Sinter
management
• Logistics & Inventory Handling
• Continuous improvement
• Innovation
• Solutions for market
demands• High productivity demandsg p y
• Cost reduction
• High refractory performance
Profitability
Fi l P i B P i (Δ t l d d)Final Price = Base Price + (Δ x steel produced)
11
Refractory – Life Expectancy (LE)
Blast Furnace Ladle
• Amount of refractory: 900 tonnesLE 15
• Amount of refractory: 70 tonnes• LE: 150 runs (1 month)• LE: 15 years • LE: 150 runs (1 month)
Torpedo Car Casting
• Amount of refractory: 25 tonnes• Amount of refractory: 200 tonnes• LE: 1,500 runs (2 years)
• Amount of refractory: 25 tonnes• LE: 10 hours
Converter Rotary Kiln
• Amount of refractory: 800 tonnes• LE: 5,500 runs (6 months)
• Amount of refractory:Burning: 250 tonnesHeating: 350 tonnes
• LE:
12
Burning: 10 monthsHeating: 5 years
Note: Average values 12
Mineral Reserves
Mineral reserves (million tonnes)
• On average, 3 tonnes of magnesite are Life
(years)Magnesite 831 - - -Dolomite 51 25 31 18Talc (Magnesite) 2 - - -Ch it 2
g , gneeded to produce 1 tonne of M-30 sinter and 4 tonnes of magnesite are needed to produce 1 tonne of M-10 sinter;
(y )
87
59185
Chromite 2 - - -Clays 20 - - -Pyrophilite 1 - - -Graphite 36 - - -
;
• On average, 4 tonnes of dolomite are needed to produce 1 tonne of dolomite sinter. 55
64150
8
P d ti C it (th d t / )Production Capacity (thousand tonnes/year)
475320
60 48
Dolomite Sinter
Magnesite Sinter
Magnesia Oxide
Talc
13
Production Process – Magnesite Sinter
14
Production Process – Burned Refractory
RAW MATERIAL’SSILO
PRESSSINTER’S
BAY
MIXER
PILE IN
BURN CARS
CRUSHER
WEIGHING
HOT AIR DRYER
TUNNER KILN
MILL
UNLOAD PILE
TO PLATESELECTION AND
PACKING
CUT AND MILLING MACHINE
15
Production Capacity (1,000 tonnes/year)
200 256
DolomiteSinter
Refractories
127 180337
Refractories DolomiteSinter
Refractories
USA
BELGIUM
FRANCEGERMANY
CHINA
Sinter
65 120
CHINADolomite
SinterRefractories
590
CAPACITYRefractories:1.43 million tonnes
Magnesite Sinter: 320 thousand tonnesDolomite Sinter: 475 thousand tonnes30
320SOUTH AMERICA
Dolomite Sinter: 475 thousand tonnes30
DolomiteSinter
RefractoriesMagnesiteSinter 16
Steel Production (million tonnes)
133 125 81
240 229 168
North AmericaEurope
Asia81
2007 2008 2009E 2007 2008 2009E
749 782 842 Asia
2007 2008 2009E
48 48 38
1,351 1,3291,204
South AmericaWorld
861 829 629
490 500575
2007 2008 2009E
172007 2008 2009EWorld (Ex-China) China
Source: World Steel Association
Cement Production (million tonnes)
372 350 324 North America
Europe + CIS
Asia93 84 75
2007 2008 2009E2007 2008 2009E
2,047 2,119 2,207
Asia
2007 2008 2009E
1,360 1,400 1,47093 100 100
2,923 2,971 3,021South America
World
1,563 1,571 1,551
1,360 1,400 ,
2007 2008 2009E
Source: Marketing Intelligence - Magnesita
2007 2008 2009EWorld (Ex-China) China 18
Competition
1,597RHI
Net Revenues 2008 (€ million) - Generalists
Global
594
896
Krosaki
Magnesita
Asia/Japan
Global
Vesuvius 12%
Market Share Based on Revenues
390
580
ANH
Shinagawa
North America
Asia/Japan
RHI 12%
Net Revenues 2008 (€ million) - Specialists
1 730Vesuvius Global
Magnesita 7%
Shinagawa+ JFE 7%
KROSAKI 6%
Others 53%
300
575
1,730
Refratechnic
Saint-Gobain
Vesuvius Global
Global
Global
KROSAKI 6%ANH 3%
300Minteq Global
19Note: Revenue figures, except those for Magnesita and RHI, were estimated by Industrial Minerals
Key figures – 1Q10
Revenue by:Operating Location vs Costumer Location
Revenue byProductOperating Location vs. Costumer Location Product
53,5% 52,1%
17,9%24,2%
16 0%19,8%
Services; 5,5%
Other products;,
4,4%
16,0%10,0%
2,1%
South America North America Europe Asia Others
Refractories89,5%
products; 3,2%
Sinter; 1,8%
South America North America Europe Asia Others
Production Destination
R$ 565.9 million
2020
Key Figures – Last 12 Months
Net Revenues (R$ million)Refractories Sales (1,000 tonnes)
41% 39% 40% 46% 47%
59% 61% 60% 54% 53%
180 7
190.9219.9
238.7 451.0 454.2 483.6 537.7 565.9
41% 39% 40%
1Q09 2Q09 3Q09 4Q09 1Q10
Domestic Market Export Market
203.8 180.7
1Q09 2Q09 3Q09 4Q09 1Q10
0,3
1Q09 2Q09 3Q09 4Q09 1Q10
EBITDA Net Debt (R$ million)
110,1138,8 123,39,9%
15,8%22,8%
25,8%21,8%
0,1
0,2
0,32,104 1,918
1,434 1,414 1,414
44,471,6
-0,1
0
,
03.31.09 06.30.09 09.30.09 12.31.09 03.31.10
1Q09 2Q09 3Q09 4Q09 1Q10
R$ million Margin %
21* Note: Pro-forma data include the figures for the subsidiary LWB, for the purpose of comparison
Key Figures
24 4 20 1
Net Income 1Q10 (R$ million)Net Income (R$ millions)
33,6
-12,2
24,4 20,1 14,6
1Q09 2Q09 3Q09 4Q09 1Q10
33,6
-61,9
12,2
(19,0)
South America Other Units
• Due to changes in accounting practices in late 2008, the goodwill paid on the purchase of shares for expected future profitability was reclassified to Intangible Assets Thus expenses on goodwill for expected future profitability was reclassified to Intangible Assets. Thus, expenses on goodwill amortization are no longer recorded on the Income Statement.
• Increased sales volume and anti-crisis measures and adjustments improved performance and indicate a positive trend.
22* Note: Pro-forma data include the figures for the subsidiary LWB, for the purpose of comparison
Key Figures – By Region
1Q10 Net Revenues (R$ million)119,1
77 0
1Q10 Gross Profit
77,039,3%
29,3%
South America Other Units
R$ million Margin %
Workforce in 03.31.101Q10 EBITDA
Asia; 5,7%
North America;
5 8%
84,5
38,6South
America; 82,3%
5,8%
Europe; 6,2%27,9%
14,7%
South America Other Units
23
South America Other UnitsR$ million
TOTAL = 7,499
Key Figures - Costs
COGS Breakdown – 1Q10
28 7% 31 8% 35 1% 34 1% 34 7%
COGS vs. Gross Margin
Energy Others
321,6 309,9 313,9 354,1 369,728,7% 31,8% 35,1% 34,1% 34,7%
Raw material39,7%Maintainence
4,7%
gy3,4% 16,4%
1Q09 2Q09 3Q09 4Q09 1Q10
R$ million Gross Margin Labor18,4%
Fuel10,6%
Depreciation6,7%
SG&A Expenses (R$ million) Direct Costs (Estimated**)
By Type By Currency
18,4%10,6%
115,2 115,2
Variable67%
By Type
Foreign65%
By Currency,98,0 96,4 102,5
,
Fixed33%
Local35%
24** Considering the historical data of the product mix and capacity use
* Note: Pro-forma data include the figures for the subsidiary LWB, for the purpose of comparison
Net Debt
691,7
Amortization schedule after the bond issue (R$ million)
322,1 315,2 318,1
41,43,6 15,1
2010 2011 2012 2013 2014 2015 20202010 2011 2012 2013 2014 2015 2020
By Currency
* Pro-forma amortizations calculated after the debt renegotiation with Itau in April 2010 and not includingthe debts from advances for foreign exchange contracts
• With the US$ 400 million bond issue, Magnesitais in a more comfortable position regarding debt;
By Currency
debt;
• Apart from advanced contract exports (ACC’s), there is no significant disbursements until 2013 .
Local52,5%
Foreign47,5%
2525
Competitive Advantage vs. Business Risks
• Global Presence;• Global Presence; • High concentration of costumers:• High concentration of costumers:
Advantages Risks
• Global Presence;
• Fully integrated in dolomite and magnesite sinter;
• Great availability of high grade raw materials;
• Global Presence;
• Fully integrated in dolomite and magnesite sinter;
• Great availability of high grade raw materials;
• High concentration of costumers:
o Steel: 10 groups account for 50% of revenues
o Cement: 7 groups account for 55% of revenues
• High concentration of costumers:
o Steel: 10 groups account for 50% of revenues
o Cement: 7 groups account for 55% of revenues• Great availability of high-grade raw materials;
• Solution-based business model;
• Strategic partnerships with technology providers;
• Great availability of high-grade raw materials;
• Solution-based business model;
• Strategic partnerships with technology providers;
o Cement: 7 groups account for 55% of revenues
• Heavy dependence on the steel market.
o Cement: 7 groups account for 55% of revenues
• Heavy dependence on the steel market.
• Strategic partnerships with technology providers;
• Development of technologies through a modern Research & Development Center;
• Strategic partnerships with technology providers;
• Development of technologies through a modern Research & Development Center; 90
100
9000
10000
Steel Production x Refractories Sales(10³ tonnes)
• Aggressive cost management model.• Aggressive cost management model.
60
70
80
6000
7000
8000
40
50
4000
5000
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Steel Production in Brazil Refractories ‐ SA Units
26
Steel Production in Brazil Refractories ‐ SA Units
Stock Performance
250,000
300.00
350.00
ousand
)
sis 10
0)
9 =
100
150,000
200,000
200.00
250.00
300.00
olum
e (R$
tho
Evolution (ba
s
03/3
1/09
50,000
100,000
100.00
150.00
age T
rading
Vo
Share P
rice E
‐0.00
50.00
Avera
Volume MAGG3 Ibovespa
2727
Thanks for your Attention!
Flavio Rezende Barbosa
y
Chief Financial and Investor Relations Officer
Adriana Fernandes LanaI t R l ti M gInvestor Relations ManagerPhone: (+55 31) 3368-1069
Lucas Lima FerreiraInvestor Relations AnalystPhone: (+55 31) 3368-1068
[email protected] www.magnesita.com.br
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