Q2 2008 Business and Financial Performance September 1, 2008 - PowerPoint PPT Presentation

ZŁOMREX S.A. Q2 2008 Business and Financial Performance September 1, 2008

Content 1. Introduction 2. Business overview 3. Financials 4. Q2 2008 outlook 5. Q&A 2

ZŁOMREX S.A. Introduction Section 1

Introduction Speakers Krzysztof Krzysztof Walarowski Zola Member of the CFO Board Age – 51 Age – 35 4 yrs with 6 yrs with Złomrex Złomrex 4

Introduction Q2 2008 Highlights Very good market conditions; record breaking sales and financial results, � much over the budget. Work on restructuring of Distribution Division and Zeljezara Split. � Management of short-term financing. � GDP growth of 5,6% in Poland � Steel consumption decline by 9% in Poland after extremely strong Q2 2007 � when it went up by 31% YoY. � Sharp increase of scrap prices – by 47% and product prices by 10-15% YoY. 5

Introduction Q2 2008 Highlights INCOME STATEMENT Q2 2008 Q2 2007 Q2 2006 '000 PLN Revenue 1 248 059 980 530 498 804 Cost of sales -1 063 161 -849 652 -429 026 Gross profit 184 898 130 878 69 778 Other income 7 884 4 708 1 412 Distribution expenses -46 353 -36 134 -6 917 Administrative expenses -42 797 -39 338 -17 990 Other expenses -10 357 -4 266 -3 607 EBIT 93 275 55 848 42 676 EBIT margin 7,5% 5,7% 8,6% Financial income 29 816 25 346 2 230 Financial expenses -38 754 -35 430 -10 121 Net financing costs -8 938 -10 084 -7 891 Excess in the net fair value of acquired assets over cost 793 1 132 0 Profit before tax 85 130 46 896 34 785 Income tax expense -16 626 -11 417 -7 431 Profit for the period 68 504 35 479 27 354 Depreciation and amortization -18 892 -17 543 -8 939 EBITDA 112 167 73 391 51 615 EBITDA margin 9,0% 7,5% 10,3% 6

ZŁOMREX S.A. Business overview Section 2

Business overview Business environment CRUDE STEEL PRODUCTION (1) Q2 2008 % YoY Q2 2007 Q2 2006 million tones Poland 2,8 0% 2,8 2,5 EU (25) 53,2 -1% 54,0 53,6 Global 355,3 7% 332,3 311,7 STEEL USE (April-May) (2) Q2 2008 % YoY Q2 2007 million tonnes Poland 1,925 -9% 2,118 long products 0,772 -18% 0,944 flat products 0,946 -2% 0,962 other 0,207 -2% 0,212 UNIT PRICES (3) Q2 2008 % YoY Q2 2007 Q2 2006 PLN / Tone Scrap metal 1 186 47% 808 703 Billets 2 022 14% 1 775 1 457 Bars 2 310 8% 2 144 1 826 (1) Source: IISI (2) Source: HIPH (3) Source: ZŁOMREX S.A. 8

Business overview Q2 2008 performance drivers Q2 2008 Q2 2007 SALES NEW ACQUISITIONS’ CONTRIBUTION HISTORICAL REPORTED REPORTED ZLOMREX STX ZJEL TOTAL Tones SCRAP 59 070 58 380 690 0 690 60 111 BILLETS 43 646 42 273 1 373 0 1 373 45 466 FINISHED PRODUCTS 358 527 287 400 41 573 29 554 71 127 249 626 Q2 2008 Q2 2007 SALES NEW ACQUISITIONS’ CONTRIBUTION HISTORICAL REPORTED REPORTED ZLOMREX STX ZJEL TOTAL 000 PLN SCRAP 69 382 68 690 692 0 692 48 455 BILLETS 93 995 91 198 2 797 0 2 797 79 892 FINISHED PRODUCTS 1 003 230 838 870 98 303 66 057 164 360 743 467 OTHER 81 452 79 573 1 879 0 1 879 108 716 9

Business overview Segments SCRAP METAL Q2 2008 Q2 2007 PURCHASES FROM EXTERNAL SUPPLIERS (Tones) ZLOM 0 188 627 ZLMET 189 705 N/C HSJ 60 963 50 366 ZJEL 37 678 N/C OTHER 0 0 INTERNAL USE (Tones) ZLOM 115 207 103 970 ZLMET 0 N/C HSJ 69 061 71 412 ZJEL 32 427 N/C SALES TO EXTERNAL CUSTOMERS (Tones) ZLOM 0 60 033 ZLMET 58 161 N/C OTHER 909 78 SALES ('000 PLN) CONSOLIDATED 69 382 48 455 TOTAL PURCHASES in TONNES 288 346 238 993 TOTAL INTERNAL USE in TONNES 216 695 175 382 TOTAL SALES in TONNES 59 070 60 111 TOTAL SALES in '000 PLN 69 382 48 455 10

Business overview Segments BILLETS Q2 2008 Q2 2007 PURCHASES (Tones) EXTERNAL SOURCES 12 745 19 773 PRODUCTION (Tones) FERR 101 591 90 920 HSJ 59 482 62 063 ZJEL 27 704 N/C INTERNAL USE (Tones) ZLOM 72 017 67 743 HSJ 58 155 59 547 ZJEL 27 704 N/C SALES TO EXTERNAL CUSTOMERS ZLOM 40 946 42 950 FERR 0 0 HSJ 1 327 2 516 STX 1 373 N/C ZJEL 0 N/C SALES ( '000 PLN) CONSOLIDATED 93 995 79 892 TOTAL PURCHASES in TONNES 12 745 19 773 TOTAL PRODUCTION in TONNES 188 777 152 983 TOTAL INTERNAL USE in TONNES 157 876 127 290 TOTAL SALES in TONNES 43 646 45 466 TOTAL SALES in '000 PLN 93 995 79 892 11

Business overview Segments FINISHED PRODUCTS Q2 2008 Q2 2007 PRODUCTION (Tones) ZWWB 37 654 22 076 FERR 23 122 25 380 HSJ 52 221 50 185 ZJEL 34 278 N/C SALES OF PRODUCTION TO DISTIBUTION (Tones) ZLOM 13 645 10 235 HSJ 1 904 2 134 SALES TO EXTERNAL CUSTOMERS (Tones) ZLOM 47 838 41 564 HSJ 47 791 45 184 ZJEL 29 554 N/C CDG retail + bulk product 17 557 16 454 CGÓR retail + bulk product 14 287 6 875 COPO retail + bulk product 12 411 11 045 STX retail + bulk product 41 573 N/C VASTH retail + bulk product 145 908 124 824 OTHER retail 1 608 3 680 SALES ('000 PLN) 1 003 230 743 467 TOTAL PRODUCTION in TONNES 147 275 97 641 TOTAL RETAIL SALES in TONNES 171 877 117 626 TOTAL BULK PRODUCT SALES in TONNES 186 650 132 000 TOTAL SALES in '000 PLN 1 003 230 743 467 12

ZŁOMREX S.A. Financials Section 3

Financials P&L INCOME STATEMENT Q2 2008 REPORTED ZLX HIST VASTH STX ZJEL ELININ '000 PLN Revenue 1 248 059 666 711 427 146 114 621 69 599 -30 018 Cost of sales -1 063 161 -566 845 -357 618 -105 635 -62 768 29 705 184 898 99 866 69 528 8 986 6 831 -313 Gross profit Other income 7 884 5 261 1 449 595 579 0 Distribution expenses -46 353 -12 315 -29 625 -3 784 -629 0 Administrative expenses -42 797 -22 879 -7 890 -8 100 -3 172 -756 Other expenses -10 357 -5 582 -1 063 -2 553 -1 159 0 EBIT 93 275 64 351 32 399 -4 856 2 450 -1 069 EBIT margin 7,5% 9,7% 7,6% -4,2% 3,5% Financial income 29 816 35 212 6 701 1 666 -406 -13 357 Financial expenses -38 754 -32 348 -6 170 -2 802 -2 487 5 053 Net financing costs -8 938 2 864 531 -1 136 -2 893 -8 304 Excess in the net fair value of assets over cost 793 0 793 0 0 0 Profit before tax 85 130 67 215 33 723 -5 992 -443 -9 373 Income tax expense -16 626 -11 407 -5 420 -39 0 240 Profit for the period 68 504 55 808 28 303 -6 031 -443 -9 133 Depreciation and amortization -18 892 -12 457 -3 129 -1 428 -1 337 -541 EBITDA 112 167 76 808 35 528 -3 428 3 787 -528 EBITDA margin 9,0% 11,5% 8,3% -3,0% 5,4% 14

Financials Assets ASSETS Q2 2008 Q1 2008 Q2 2007 '000 PLN A. TOTAL NON-CURRENT ASSETS 1 202 021 1 206 519 814 971 I. Intangible assets 44 007 44 596 31 466 II. Property, plant and equipment and usufruct of land 1 099 609 1 113 788 752 819 9 318 2 992 1 988 III. Other receivables IV. Investment property and other investments 28 217 22 813 18 299 V. Deferred tax assets 20 870 22 330 10 399 B. TOTAL CURRENT ASSETS 1 538 732 1 429 609 1 387 399 I. Inventories 775 174 687 781 695 848 II. Trade and other receivables 722 424 647 760 543 026 III. Cash and cash equivalents 35 138 88 072 147 922 IV. Assets classified as held for sale 5 996 5 996 603 TOTAL ASSETS 2 740 753 2 636 128 2 202 370 15

Financials Equity and Liabilities EQUITY AND LIABILITIES Q2 2008 Q1 2008 Q2 2007 '000 PLN A. EQUITY 743 960 698 948 570 296 I. Issued share capital 47 691 47 691 47 691 II. Reserves and retained earnings 551 962 504 198 382 306 III. Minority interest 144 307 147 059 140 299 B. LIABILITIES 1 996 793 1 937 180 1 632 074 I. Non-current liabilities 782 200 812 667 882 826 1. Interest-bearing loans and borrowings 630 361 652 510 777 190 2. Employee benefits 45 516 46 471 39 444 3. Other payables 37 390 44 074 28 581 4. Deferred grants and other deferred income 2 985 2 877 2 267 5. Deferred tax liabilities 65 948 66 735 35 344 II. Current liabilities 1 214 593 1 124 513 749 248 1. Interest-bearing loans and borrowings 415 227 441 356 254 353 2. Other financial liabilities 12 895 7 936 4 876 3. Employee benefits 3 161 3 139 8 240 4. Income tax payable 14 346 18 498 12 147 5. Provisions for payables 1 945 3 018 13 983 6. Trade and other payables 761 346 650 070 455 403 7. Deferred grants and other deferred income 5 673 496 246 TOTAL EQUITY AND LIABILITIES 2 740 753 2 636 128 2 202 370 16

Financials Cash Flow CASH FLOW Q2 2008 Q2 2007 Q2 2006 '000 PLN 26 032 -14 655 42 787 A. FROM OPERATING ACTIVITIES -32 042 -31 816 -24 829 B. FROM INVESTING ACTIVITIES -28 987 99 403 -5 106 C. FROM FINANCING ACTIVITIES 17