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Usiminas Presentation1Q12
Agenda
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Usiminas and its Business Units
Financial Highlights
Market Overview
2
World Production - 2011Total 1,490 million tons
3Source: World Steel
* 2011 data not available yet
695.5
107.6 86.2 72.2 68.7 68.5 44.3 35.3 35.2 34.1
China J apan USA India Russia South Korea
Germany Ukraine Brazil Turkey
Production per Company – 2010*
98.2 37.0 35.4 35.0
31.1 23.2 23.2 22.3 22.1
18.7
7.3
Arcelor MittalBaosteel
PoscoNippon Steel
J FEJ iangsu Shangang
Tata SteelU.S. Steel
AnsteelGerdau
30th - Usiminas
78 61 68 76 83
61 57 72
35 28 29
15
21 14 12
9
17 21
18
26 41 39
7 18 18 13 9
22 22 10
39 31 32
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Steel Iron Ore Coal
Value Transfer on the Steel ChainProfit distribution on the steel production chain – %
4Source: Mckinsey
Production – million tons
Brazilian MarketFlat Steel
5Source: IABR / INDA
Inventories in the Distribution Network Flat Steel Imports – thousand tons
Apparent Consumption – million tons
3.5 3.7 3.8 4.1 4.0 3.7 3.8 3.7 3.3 3.23.8
3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12
2.7 2.93.4
3.93.3 3.1 3.1 3.3 3.2 3.0 3.4
3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12
0.78 0.77 0.781.04
1.24 1.24 1.15 1.23 1.11 1.01 1.01
2.4 2.6 2.43.2
3.9 4.13.2
3.63.0 2.9 2.8
3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12
Thousand tons Monthly basis
315 283
667790 823 865
416 415570
500584
3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12
Domestic Market
Investments in industry in 2012: R$17.1 billion Investments in infrastructure in 2012: R$105.3 billion Investments in housing during the period of 2011/2014 : R$279 billion
Benefit from the Brazilian positive outlook
6
MEDIUM AND LONG TERM PROJECTS
2011-2015~ US$ 389 Bi
2012~ R$ 761 millions
2012~ R$ 230 millions
Source: Valor Economico, PAC’s website, Petrobras’s website,Portal da Copa – Governo Federal
2012~ R$ 25,6 Bi
2012~ R$ 11.1 Bi
4.5 million tons of steel
2.7 long
1.8 flat
1.5 million tons of steel
0.9 long
0.6 flat
Agenda
7
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Usiminas and its Business Units
Financial Highlights
Market Overview
Time line
Foundationof Usiminas
OperationStart Up
Privatization
Usiminas:1991
Cosipa: 1993
Listing on Latibex
Aquisition of J. Mendes iron ore mines
Aquisition of Zamprogna
Soluções Usiminas,
con-solidation
of the companies Rio Negro,
Dufer, Fasal and
Zamprogna and
industrial units Usial and Usicort
Single CNPJ: Cosipa is
incorporated by
Usiminas
Creation of Mineração Usiminas
Port AgreementMineração
Usiminas and MMX
Selling of Ternium shares
Joint Mining and
Cooperation Agreement with MMX, MBL and Ferrous
Negociation with J.
Mendes concluded
Acquisition of Litigation
Area
1956
1991
2005
2008
2009
2010
20112012
Entrance of Ternium/ Tenaris
in Usiminas’ Control Group
New shareholders agreement
singned among
Niippon Group,
Ternium / Tenaris and
Usiminas Pension Fund.
8
Strategically Located
9
Mining
Steel
Steel processing Capital Goods
Everyday Steel Application
10
Auto Industries
Cold Rolled and Galvanized (EG and
HDG)
Ship-Building
Heavy Plates
Pipelines
Heavy Plates and Hot Rolled
Pressure Vessels
Heavy Plates
Agricultural Machines
Heavy Plates and Hot Rolled
Civil Construction
Heavy Plates, Cold and Hot Rolled and Galvanized (EG and
HDG)
Autoparts
Hot Rolled
Household Appliances
Cold Rolled and Galvanized (EG
and HDG)
Shareholder Composition
11
Voting Capital – ON
Control Group: 63.86% of Voting
Capital
Total Capital 1,013,786,190
Nippon Group29.45%
Ternium / Tenaris 27.66%
Usiminas Pension Fund
6.75%
Free Float25.70%
Previ10.44%
49.84%46.84%
Geração Futuro, 3.42%
ON PNPN 508,525,506ON
505,260,684
The highlighted shareholders are the ones in the control group and those represented on the Board of Directors. The Board of Directors is represented by: 3 representatives from Ternium / Tenaris, 3 from Nippon Group, 1 from Usiminas Pension Fund, 1 from the Employees Representative, 1 from Previ and 1 from Geração Futuro Funds.
Complete solution of services and value added products through its Business
Units
12
Mining
Steel
Steel Processing Capital Goods
UPS
TREA
MD
OW
NST
REAM
* Controled by Usiminas ** Results accounted through equity income
Ipatinga
Automotiva Usiminas *
Metform and Codeme stake **
Cubatão
Unigal Usiminas *Mineração Usiminas *
Soluções Usiminas *
Usiminas Mecânica *
Investments
Total amount for 2011R$ 2.5 billion
Strategic focus on enhancing competitiveness of current operations
Ongoing Projects
Coke Plant 3 750,000
tons(Usiminas Ipatinga)
CLC500,000
tons(Usiminas Ipatinga)
Galvanizing Line
550,000 tons
(Unigal)
Hot Strip Mill 2.3 million
tons(Usiminas Cubatão)
MiningProduction Reach total capacity of29 million
tons
In operation
3Q10 4Q10 2Q11
Foundry24,000 tons(Usiminas Mecânica)
4Q11 1Q12 Energy self sufficiency Reach total capacity of
500 MW
Hot Run
13
Results Accounted by Business Unit
14
Income Statement per Business Units - Non Audited (R$ million)
Note: All transactions among the business units are made at market price. MRS results are accounted through equity on Equity Income.
R$ million1Q12 4Q11 1Q12 4Q11 1Q12 4Q11 1Q12 4Q11 1Q12 4Q11 1Q12 4Q11
Net Revenue 239 241 2,573 2,426 497 519 251 368 (674) (739) 2,886 2,815Domestic Market 217 214 2,234 2,141 490 508 251 368 (654) (729) 2,539 2,502 Export Market 22 27 339 285 6 11 0 0 (20) (11) 347 313
COGS (100) (78) (2,574) (2,439) (447) (494) (258) (311) 666 735 (2,713) (2,587)Gross Profit 139 163 0 (14) 49 25 (7) 58 (8) (4) 173 227Operating Income (Expenses) (35) (50) (100) (81) (51) (62) (23) (24) 0 1 (209) (216)EBIT 104 113 (100) (95) (2) (38) (30) 34 (8) (3) (36) 11EBITDA 111 129 100 74 11 (22) (25) 41 (8) (4) 190 218 EBITDA Margin 46% 54% 4% 3% 2% -4% -10% 11% - - 7% 8%
Mining Steel Steel Processing
Capital Goods Adjustment Consolidated
Cubatão
Ipatinga
Steel
1515
Installed Nominal Capacity : 9.5 million tons / year
Flat Steel ProductionUsiminas has a full range of flat steel products
Slabs Hot Coils Cold CoilsHeavy PlatesSlab Caster EG HDG
1,950,000t OptmizedRolling Capacity
2,000,000t 1,900,000t 1,020,000t350,000t
Cubatão Plant -1,200,000t -2,100,000t 1,000,000t 4,500,000t
3,700,000t Nominal Capacity 5,650,000t 2,000,000t 9,500,000t 1,050,000t360,000t
-
Ipatinga Plant 1,050,000t360,000t 2,500,000t 3,550,000t1,000,000t5,000,000t
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Galvanized
Domestic MarketUsiminas is focused on the domestic market with a product range tosupply different sectors
17
17%14%
3%7%
7%
6%
28%
8%
10%
Auto Parts
Auto industries
Rolled Machinery
Small Diameter Tubes
Civil Construction/Shapes
Household Appliances
Distribuitors
Industrial Equipment
Other
Sales – thousand tons
Segments Breakdown of Sales
– 1Q12
1Q11 2Q11 3Q11 4Q11 1Q12
1,230 1,343
1,162 1,136 1,246
358 240
243 204
266
Domestic Market Foreing Market
EBITDA / ton
18*Iron Ore at Market price
US$*
R$*
91 126 98 101 119227
291236
299
420
111158
47 37
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1Q12
166 231 230 294 367
664 709
513 581
771
221 277
78 66
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1Q12
Steel Business Unit
Mining and Logistics
19
Belo HorizonteItabiraIPATINGA
São Paulo
ITAÚNAVitória
TUBARÃOPort
ITAGUAÍ Port
CUBATÃOPort
19
Logistics
20
Tubarão Port
Itaguaí Port(Ingá)
MODALMineraç
ão Usiminas
EFVM
Existing Routes
CUBATÃO Plant / Port
New Routes
TCS / TSA
Trammel
Sepetiba Port
ExportsExports Exports
40 Km
60 Km
IPATINGA Mill
Current status Mining and Logistics
4 mining sites, acquired from J. Mendes Group in Feb/2008
Reserves of 2.6 billion tons Located in Serra Azul-MG, one of the
richest iron ore sites in Brazil
1Q12: production of 1.9 million tons MRS: 20% of voting shares and part
of the Control Group Land in Itaguaí-RJ, acquired in 2008
Production – MM ton:
2008 2009 2010 2011 1Q12
3.85.5
6.8 6.3
1.9
21
Mining and LogisticsStrategic partnership
US$ 6.4 billionMineração Usiminas S.A Estimated Market Value
Acquisition by Sumitomo Corporation of 30% of Mineração Usiminas S.A., through the subscription of new shares, up to the total amount of US$ 1.9 billion.
70.0%
30.0%
22
Expansion Plan
Capex until 2015 is estimated at R$4.5 billion including new processing lines/plants, industrial facilities projects, equipment, loading terminals, etc.
Lifetime until 2045
Mining
23
Iron Ore Production Capacity – million tons by the end of the year
2010 2011 2012 2013 2014 20152 2 2 2 2 25 6 6 4 4 4
7 8 10 12
29 29
2 6
23 23
Lump Sinter Feed Pellet Feed
AgreementsMining
24
MMX Port and Joint Mining Agreements
MBL Joint Mining Agreement
New mine acquired from Mineração Ouro Negro (former
litigation area)
Conclusion of the negotiation with J. Mendes
Right of way agreement with Ferrous
Mineração Usiminas
25
MBL
Arcelor Mittal
Ferrous(Santanense)
Comisa Emicon
MMX
Ferrous
MUSAPau de Vinho
MUSAEast
Minerita
MUSACentral
MUSAWest
Itatiaiuçu
Igarapé São JoaquimDe Bicas
Serra Azul
Mineração Usiminas mining operation is highlighted in yellow.
Itaguaí Port
2626
27
Camaçari
CachoeirinhaPorto Alegre
Campo Limpo Paulista
São PauloGuarulhos
Taubaté
Recife
Serra
BetimSanta Luzia
Soluções UsiminasSteel Processing
Soluções Usiminas
28
11 industrial units in MG, SP, RS, ES and PE. Processing capacity of 2 million tons/year.
1Q12 Net Revenues of R$239 million
Leadership: Is the leader in the steel distribution sector since 2010, according to INDA.
Steel Processing
Steel Processing
Automotiva Usiminas
29
Clients 500 km
1.000 km
1.500 km
Pouso Alegre Unit
30
Automotiva Usiminas
Pouso Alegre – MG– Close to major auto makers. – Full service company.
1Q12 Net Revenues of R$58 million
Major Clients: – Ford, Mercedes Benz, Fiat, Volkswagen,
Volvo, General Motors, International Trucks, Honda Toyota, PSA Peugeot Citroën, Scania.
Steel Processing
30
Capital Goods
31
Usiminas Mecânica
Ipatinga – MG It is one of the largest capital goods’ company in the country.
1Q12 Net Revenues of R$251 million Market Sectors:
– Industrial Assembly– Structures / Metal Bridges and Blanks– Industrial Equipment – Industrial Erection– Foundry and Railcars
Highlights: – Electrical-mechanical Assembly Services for
Mineração Usiminas and Sitrel (Votorantim).– Supply of the steel beams for the lane change of the
urban transportation compositions - São Paulo Expresso Tiradentes Project.
Capital Goods
32
33
Usiminas MecânicaCapital Goods – some of its projects
Ship Block
3rd Bridge in Brasília
Ship Blocks Plant Design
Agenda
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Usiminas and its Business Units
Financial Highlights
Market Overview
34
4Q11 Consolidated ResultsHighlights*
35
EBITDA – R$ Million Net Income – R$ Million
Sales – thousand tons (steel products) Net Revenues – R$ Million
1Q11 4Q11 1Q12
1,558
1,340
1,512
1Q11 4Q11 1Q12
3,063
2,8152,886
1Q11 4Q11 1Q12
337
218 190
1Q11 4Q11 1Q12
16
77
-37
1Q12
EBITDA / EBITDA Margin
36*IFRS
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1T120
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
954 1,3441,5472,429
3,072
5,6245,5254,368
5,003
6,008
1,4852,650
1,264190
40%
34% 32%37% 35%
46%42%
35% 36% 38%
14%20%
11%7%
Ebitda (R$) Ebitda Margin
Debt Profile
37
Debt - R$ million
Cash 2012 2013 2014 2015 2016 2017 2018 2019 2020 on
2,899
412824 924 904 734
415 30333 155
1,935
264
977 569 440 653
242923
2 1
Local Currency Foreign Currency
676
4,834
1,801 1,493
1,387
657
1,226
15635
1,344
DEBT PROFILEDuration: R$: 39 months US$: 43 months
Leverage – Consolidated Basis
38
Net Debt / EBITDA
*
* For the purpose of covenant calculation, this ratio was in the range of 2.94 times and 3.10 times, depending on the criteria used by the lenders, even though there is no measurement in the 1Q12.
1Q09 2Q09 3Q08 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12
4.33.8
3.1 2.93.3
4.14.9
3.6
2.32.8
3.43.9 3.9
0.8 1.0 1.3 1.9 1.7 1.5 1.6 1.4 1.0 1.62.5 3.1 3.6
Net Debt (R$ bi) Net Debt/EBITDA
Balance Sheet Structure1Q12
39
Capital Employed Funded By
Total: 22,958 Million
79%
21%
17%
83%
Net Working Capital
Net Fixed Assets
Shareholders Equity
Net Debt
Cristina Morgan C. DrumondHead of IR
[email protected]: 55-31-3499.8772
Fax: 55-31-3499.9357
www.usiminas.com/ri
ADRLevel I
Luciana Valadares dos [email protected]
Phone: 55-31-3499.8619
Leonardo Karam [email protected]
Phone: 55-31-3499.8056
Diogo Dias Gonç[email protected]
Phone: 55-31-3499.8710
Mariana Paes [email protected]
Phone: 55-31-3499.8617
Declarations relative to business perspectives of the Company, operating and financial results and projections, and references to the growth of the Company, constitute mere forecasts and were based on Management’s expectations in relation to future performance. These expectations are highly dependent on market behavior, on Brazil’s economic situation, on the industry and on international markets, and are therefore subject to change.