Q3 2008 Business and Financial Performance December 12, 2008 - PowerPoint PPT Presentation

ZŁOMREX S.A. Q3 2008 Business and Financial Performance December 12, 2008

Content 1. Introduction 2. Business overview 3. Financials 4. Q4 2008 outlook 5. Q&A 2

ZŁOMREX S.A. Introduction Section 1

Introduction Speakers Krzysztof Krzysztof Dominik Walarowski Zola Barszcz Commercial CFO Chief Member of the Director Accountant Board Member of the Age - 32 Age – 35 Board 8 yrs with 6 yrs with Age – 51 Złomrex Złomrex 4 yrs with Złomrex 4

Introduction Q3 2008 Highlights � Fair market conditions; good sales and financial results, however slightly below the budget. � Further work on restructuring of Distribution Division and Zeljezara Split. � Management of short-term financing. � GDP growth of 4,8% in Poland � Total Polish steel consumption at the level of Q3 2007 but long products down by 11%. � Sharp demand and prices collapse starting September 2008. 5

Introduction Q3 2008 Highlights INCOME STATEMENT Q3 2008 Q3 2007 Q3 2006 '000 PLN Revenue 1 151 698 951 215 561 192 Cost of sales -996 623 -836 703 -475 693 Gross profit 155 075 114 512 85 499 Other income 4 003 1 267 933 Distribution expenses -45 597 -35 942 -9 097 Administrative expenses -45 194 -38 158 -20 560 Other expenses -6 430 -4 883 -1 812 EBIT 61 857 36 796 54 963 EBIT margin 5,4% 3,9% 9,8% Financial income -580 -917 1 925 Financial expenses -32 034 -20 423 -9 839 Net financing costs -32 614 -21 340 -7 914 Excess in the net fair value of acquired assets over cost 17 1 590 5 894 Profit before tax 29 260 17 046 52 943 Income tax expense -8 352 -1 320 -8 890 Profit for the period 20 908 15 726 44 053 Depreciation and amortization -19 478 -14 710 -9 044 EBITDA 81 335 51 506 64 007 EBITDA margin 7,1% 5,4% 11,4% 6

ZŁOMREX S.A. Business overview Section 2

Business overview Steel production CRUDE STEEL PRODUCTION (1) Q3 2008 % YoY Q3 2007 Q3 2006 million tones Poland 2,7 4% 2,6 2,7 EU (27) 50,4 1% 49,8 50,1 Global 337,2 2% 330,3 310,7 PRODUCTION OF FINISHED PRODUCTS (2) Q3 2008 % YoY Q3 2007 Q3 2006 million tones Poland 2,7 10% 2,4 2,6 flat products 1,2 8% 1,1 1,2 long products 1,5 12% 1,3 1,5 (1) Source: IISI (2) Source: HIPH 8

Business overview Steel use STEEL USE (1) Q3 2008 % YoY Q2 2007 Q1 2006 million tones Poland 2,85 0% 2,85 2,84 long products 0,92 -11% 1,04 1,13 flat products 1,66 7% 1,54 1,37 other 0,27 2% 0,26 0,33 STEEL USE (1) Sep-08 % YoY Sep-07 Sep-06 million tones Poland 0,84 -9% 0,92 0,97 long products 0,29 -28% 0,41 0,41 flat products 0,47 8% 0,43 0,41 other 0,08 0% 0,08 0,16 (1) Source: HIPH 9

Business overview Prices UNIT PRICES (1) Q3 2008 % YoY Q3 2007 Q3 2006 PLN / Tone Scrap metal 1 067 40% 763 763 Billets 2 301 40% 1 644 1 489 Bars 2 542 29% 1 977 2 009 Scrap metal Billets 2008 Prices Bars 3 000 2 642 2 569 2 500 2 491 2 403 2 338 2 305 2 284 2 254 2 203 2 179 2 107 2 051 2 036 2 000 1 993 1 890 1 816 1 714 1 674 1 595 1 525 1 500 1 275 1 231 1 180 1 081 1 024 1 000 928 858 835 803 711 500 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct (1) Source: ZŁOMREX 10

Business overview Q3 2008 performance drivers Q3 2008 Q3 2007 SALES NEW ACQUISITIONS’ CONTRIBUTION REPORTED HISTORICAL REPORTED ZLOMREX STX ZJEL TOTAL Tones SCRAP 50 409 49 816 593 0 593 46 685 BILLETS 75 804 68 800 7 004 0 7 004 48 169 FINISHED PRODUCTS 286 177 229 007 37 077 20 093 57 170 262 192 Q3 2008 Q3 2007 SALES NEW ACQUISITIONS’ CONTRIBUTION REPORTED HISTORICAL REPORTED ZLOMREX STX ZJEL TOTAL 000 PLN SCRAP 54 590 54 010 580 0 580 35 056 BILLETS 183 083 165 049 18 034 0 18 034 83 113 FINISHED PRODUCTS 683 378 561 439 70 308 51 631 121 939 733 710 OTHER 72 091 70 900 1 191 0 1 191 99 336 11

Business overview Segments SCRAP METAL Q3 2008 Q3 2007 PURCHASES FROM EXTERNAL SUPPLIERS (Tones) ZLOM 0 162 374 ZLMET 161 580 52 999 HSJ 52 430 46 767 ZJEL 29 670 N/C OTHER 0 0 INTERNAL USE (Tones) ZLOM 80 112 109 469 ZLMET 39 728 0 HSJ 67 727 70 454 ZJEL 31 826 N/C SALES TO EXTERNAL CUSTOMERS (Tones) ZLOM 0 29 235 ZLMET 49 448 17 007 OTHER 961 443 SALES (‘000 PLN) CONSOLIDATED 54 590 35 056 TOTAL PURCHASES in TONNES 243 680 262 140 TOTAL INTERNAL USE in TONNES 219 393 179 923 TOTAL SALES in TONNES 50 409 46 685 TOTAL SALES in '000 PLN 54 590 35 056 12

Business overview Segments BILLETS Q3 2008 Q3 2007 PURCHASES (Tones) EXTERNAL SOURCES 0 8 098 PRODUCTION (Tones) FERR 99 672 96 755 HSJ 58 334 61 130 ZJEL 26 327 N/C INTERNAL USE (Tones) ZLOM 26 202 51 307 FERR 15 060 0 HSJ 51 886 57 974 ZJEL 22 926 N/C SALES TO EXTERNAL CUSTOMERS (Tones) ZLOM 52 371 45 013 FERR 5 158 0 HSJ 11 271 3 156 STX 7 004 N/C ZJEL 0 N/C SALES (‘000 PLN) CONSOLIDATED 183 083 83 113 TOTAL PURCHASES in TONES 0 8 098 TOTAL PRODUCTION in TONES 184 333 157 885 TOTAL INTERNAL USE in TONES 116 074 109 281 TOTAL SALES in TONES 75 804 48 169 TOTAL SALES in '000 PLN 183 083 83 113 13

Business overview Segments FINISHED PRODUCTS Q3 2008 Q3 2007 PRODUCTION (Tones) ZWWB 30 015 31 786 FERR 11 832 14 607 HSJ 44 998 47 539 ZJEL 25 297 N/C SALES OF PROD. DIV. TO DISTR. DIV. (Tones) ZLOM 26 665 9 393 FERR 5 080 0 HSJ 1 352 2 753 ZJEL 1 256 N/C SALES TO EXTERNAL CUSTOMERS (Tones) ZLOM 20 046 43 029 ZLMET 1 943 477 FERR 9 438 0 HSJ 40 728 44 634 ZJEL 20 093 N/C DISTRIBUTION DIVISION (Tones) Retail 145 796 127 730 Bulk product 48 133 46 322 SALES ('000 PLN) 683 378 733 710 TOTAL PRODUCTION in TONES 112 142 93 932 TOTAL RETAIL SALES in TONES 145 796 127 730 TOTAL BULK PRODUCT SALES in TONES 140 381 134 462 TOTAL SALES in '000 PLN 683 378 733 710 14

ZŁOMREX S.A. Financials Section 3

Financials P&L INCOME STATEMENT Q3 2008 REPORTED ZLX HIST STX VASTH ZJEL ELIMIN '000 PLN Revenue 1 151 698 613 135 119 140 395 230 60 909 -36 716 Cost of sales -996 623 -522 398 -114 530 -340 840 -55 440 36 585 Gross profit 155 075 90 737 4 610 54 390 5 469 -131 Other income 4 003 2 703 -16 842 474 0 Distribution expenses -45 597 -16 827 -3 026 -25 114 -630 0 Administrative expenses -45 194 -24 129 -5 624 -11 655 -3 583 -203 Other expenses -6 430 -4 384 311 -1 498 -859 0 EBIT 61 857 48 100 -3 745 16 965 871 -334 EBIT margin 5,4% 7,8% -3,1% 4,3% 1,4% Financial income -580 4 614 -596 -1 966 664 -3 296 Financial expenses -32 034 -22 378 -1 415 -8 115 -3 299 3 173 Net financing costs -32 614 -17 764 -2 011 -10 081 -2 635 -123 Excess in the net fair value of assets over cost 17 0 0 17 0 0 Profit before tax 29 260 30 336 -5 756 6 901 -1 764 -457 Income tax expense -8 352 -7 189 -66 -1 218 0 121 Profit for the period 20 908 23 147 -5 822 5 683 -1 764 -336 Depreciation and amortization -19 478 -12 744 -1 175 -3 179 -1 312 -1 068 EBITDA 81 335 60 844 -2 570 20 144 2 183 734 EBITDA margin 7,1% 9,9% -2,2% 5,1% 3,6% 16

Financials Assets ASSETS Q3 2008 Q2 2008 Q1 2008 Q4 2007 Q3 2007 '000 PLN A. TOTAL NON-CURRENT ASSETS 1 206 681 1 202 021 1 206 519 1 208 532 818 474 I. Intangible assets 44 511 44 007 44 596 45 973 58 132 1 111 319 1 099 609 1 113 788 1 114 816 718 849 II. Property, plant and equipment III. Other receivables 3 044 9 318 2 992 2 979 1 990 IV. Investment property and other investments 28 842 28 217 22 813 22 292 23 029 V. Deferred tax assets 18 965 20 870 22 330 22 472 16 474 B. TOTAL CURRENT ASSETS 1 348 867 1 538 732 1 429 609 1 474 070 1 313 638 I. Inventories 689 772 775 174 687 781 697 974 655 160 II. Trade and other receivables 581 852 722 424 647 760 506 684 513 341 III. Cash and cash equivalents 71 247 35 138 88 072 263 416 144 534 IV. Assets classified as held for sale 5 996 5 996 5 996 5 996 603 TOTAL ASSETS 2 555 548 2 740 753 2 636 128 2 682 602 2 132 112 17