Q3 2010 Business and Financial Performance December 20, 2010 - - PowerPoint PPT Presentation

ZŁOMREX S.A.

Q3 2010 Business and Financial Performance

December 20, 2010

2

Content

• 1. Introduction
• 2. Business overview
• 3. Financials
• 4. Q4 2010 outlook
• 5. Q&A

ZŁOMREX S.A.

Introduction

Section 1

4

Introduction

Speakers

Krzysztof Zola CFO Member of the Board Age – 38 8 yrs with Złomrex

5

Introduction

Q3 2010 Highlights

• Slight decrease of demand and prices
• Revenues’ increase by 23% compared to Q3 2009
• Profit for the period for the first time since Q2 2009
• GDP growth over 4% in Poland
• Steel production decrease by 5% in Poland: Q3 2010 v. Q3 2009
• Negotiations over certain asset disposals

ZŁOMREX S.A.

Business overview

Section 2

7

Business overview

Business environment

(1) Source: World Steel Association (2) Source: ZŁOMREX SA

2 542 1 515 34% 2 036 Bars 2 301 1 235 34% 1 651 Billets 1 067 696 24% 861 Scrap metal PLN / tonne Q3 2008 Q3 2009 % YoY Q3 2010 UNIT PRICES(2) 340,4 318,1 7% 340,2 Global 55,1 36,3 10% 40 EU (27) 2,7 2,1

• 5%

2 Poland million tonnes Q3 2008 Q3 2009 % YoY Q3 2010 CRUDE STEEL PRODUCTION(1)

8

Business overview

Q2 2010 performance drivers

377 778 15% 433 751 FINISHED PRODUCTS 41 718 132% 96 833 BILLETS 21 258

• 1%

21 125 SCRAP 000 PLN Q3 2009 % YoY Q3 2010 SALES 175 471

• 13%

152 006 FINISHED PRODUCTS 33 774 74% 58 656 BILLETS 30 565

• 20%

24 535 SCRAP Tonns Q3 2009 % YoY Q3 2010 SALES

9

Business overview

Segments

21 258 21 125 TOTAL SALES in '000 PLN 30 565 24 535 TOTAL SALES in TONNS 111 160 133 965 TOTAL INTERNAL USE in TONNS 125 690 125 862 TOTAL PURCHASES in TONNS 21 258 21 125 CONSOLIDATED '000 PLN SALES 627 221 OTHER 29 938 24 314 ZLMET ZLOM SALES TO EXTERNAL CUSTOMERS Tonns ZJEL 36 404 44 159 HSJ 74 756 89 806 FERR INTERNAL USE Tonns ZJEL 23 813 27 573 HSJ 91 968 68 372 ZLMET 9 909 29 917 FERR ZLOM PURCHASES FROM EXTERNAL SUPPLIERS Tonns Q3 2009 Q3 2010 SCRAP METAL

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Business overview

Segments

41 718 96 833 TOTAL SALES in '000 PLN 33 774 58 656 TOTAL SALES in TONNES 62 273 54 947 TOTAL INTERNAL USE in TONNES 96 047 113 603 TOTAL PRODUCTION in TONNES TOTAL PURCHASES in TONNES 41 718 96 833 CONSOLIDATED SALES '000 PLN 279 771 HSJ 33 495 57 885 FERR SALES TO EXTERNAL CUSTOMERS Tonnes ZJEL 31 300 37 407 HSJ 30 973 17 540 FERR INTERNAL USE Tonnes ZJEL 31 579 38 178 HSJ 64 468 75 425 FERR PRODUCTION Tonnes EXTERNAL SOURCES PURCHASES Tonnes Q3 2009 Q3 2010 BILLETS

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Business overview

Segments

ZJEL 24 936 31 996 HSJ 28 322 12 645 FERR ZLOM SALES TO EXTERNAL CUSTOMERS Tonnes ZJEL 8 203 2 003 FERR+ZWWB 2 982 580 HSJ ZLOM SALES OF PRODUCTION TO DISTIBUTION Tonnes ZJEL 29 418 33 366 HSJ 29 304 11 415 FERR+ZWWB PRODUCTION Tonnes Q3 2009 Q3 2010 FINISHED PRODUCTS

12

Business overview

Segments

377 778 433 751 TOTAL SALES in '000 PLN 78 729 68 485 TOTAL BULK PRODUCT SALES in TONNES 96 742 83 521 TOTAL RETAIL SALES in TONNES 58 722 44 781 TOTAL PRODUCTION in TONNES 377 778 433 751 CONSOLIDATED SALES '000 PLN 2 760 2 337

• retail

OTHER 17 751 18 708

• bulk product

64 290 60 649

• retail

COGAT 68

• bulk product

1 865 223

• retail

STX 7 652 5 136

• bulk product

27 827 20 312

• retail

COG

ZŁOMREX S.A.

Financials

Section 3

14

Financials

P&L

• 10 798

5 684 29 645 15 437 EBITDA 12 537 17 205 12 244 14 169 Depreciation and amortization

• 57 056
• 15 647
• 19 047

4 600 Profit for the period

• 54 155

7 292

• 9 713

6 811 Profit/loss from discontinued operations 2 045

• 15 090

21 018

• 2 039

Income tax expense

• 4 946
• 7 849
• 30 352
• 172

Profit before tax 569

• 75

608

• 65

Share of profits of associates 17 820 3 747

• 48 361
• 1 375

Net financing costs 4 814

• 17 366
• 28 927
• 6 422

Financial expenses 13 006 21 113

• 19 434

5 047 Financial income

• 23 335
• 11 521

17 401 1 268 EBIT

• 4 309
• 4 378
• 5 117
• 7 184

Other expenses 8 782 13 493 2 146 6 245 Other gains/losses net

• 39 508
• 20 271
• 18 070
• 20 832

Administrative expenses

• 18 083
• 23 037
• 39 174
• 30 957

Distribution expenses 3 679 3 852 7 395 4 689 Other income 26 104 18 820 70 221 49 307 Gross profit

• 401 780
• 348 877
• 461 117
• 477 175

Cost of sales 427 884 367 697 531 338 526 482 Revenue '000 PLN Q3 2009 Q1 2010 Q2 2010 Q3 2010 INCOME STATEMENT

15

Financials

Assets

1 573 242 1 556 205 1 666 886 1 626 518 TOTAL ASSETS 239 053 223 065 343 891 319 344

• C. Assets and disposal group of assets

classified as held for sale 32 496 13 389 14 872 25 689

• IV. Cash and cash equivalents

3 103 3 058 128 186

• 2. Income tax receivable

205 453 264 312 315 629 310 630

• 1. Trade and other receivables

208 556 267 370 315 757 310 816

• III. Receivables

5 536 5 305 5 790 1 407

• II. Other investments

256 901 255 046 260 868 259 565

• I. Inventories

503 489 541 110 597 287 597 477

• B. TOTAL CURRENT ASSETS

57 198 43 794 66 819 64 423

• VI. Deferred tax assets

46 023 46 007 19 284 19 193

• V. Prepaid perpetual usufruct of land

14 044 5 278 14 731 18 369

• IV. Investment property and other investments

3 295 11 274 2 339 2 760

• III. Other receivables

667 965 645 119 582 605 566 597

• II. Property, plant and equipment

42 175 40 558 39 930 38 355

• I. Intangible assets

830 700 792 030 725 708 709 697

• A. TOTAL NON-CURRENT ASSETS

Q3 2009 Q1 2010 Q2 2010 Q3 2010 ASSETS ‘000 PLN

16

Financials Equity and Liabilities

1 573 242 1 556 205 1 666 886 1 626 518 TOTAL EQUITY AND LIABILITIES 154 932 152 775 175 138 175 850

• C. Liabilities of disposal group

1 856 7 756

• III. Deferred income

834 801 1 162 1 302

• 8. Provisions for payables

2 338 1 690 6 051 4 711

• 7. Employee benefits

323 300 327 706

• 6. Income tax payable

129 543 113 954 105 103 109 662

• 5. Bank overdraft

271 030 349 936 364 845 378 474

• 3. Trade payables

1 145 9 475

• 2. Other financial liabilities

170 056 157 468 159 357 134 042

• 1. Interest-bearing loans and borrowings

575 269 626 005 644 601 638 372

• II. Current liabilities

16 195 16 725 15 990 11 459

• 5. Deferred tax liabilities

2 409 2 174 1 834 1 608

• 4. Deferred government grants and other def. income

115 912 845

• 3. Other payables

534 267 501 277 541 656 520 447

• 2. Interest-bearing loans and borrowings

39 057 37 108 39 475 39 094

• 1. Employee benefits

592 043 557 284 599 867 573 453

• I. Non-current liabilities

1 167 312 1 183 289 1 244 468 1 211 825

• B. LIABILITIES

91 952 87 576 112 645 108 610

• III. Minority interest

111 355 84 874 86 944 82 542

• II. Reserves and retained earnings

47 691 47 691 47 691 47 691

• I. Issued share capital

250 998 220 141 247 280 238 843

• A. EQUITY

Q3 2009 Q1 2010 Q2 2010 Q3 2010 EQUITY AND LIABILITIES ‘000PLN

17

Financials

Cash Flow

45 835

• 3 387

10 973 5 858 NET INCREASE IN CASH

• 26 573
• 29 850

2 644

• 18 145
• C. FROM FINANCING ACTIVITIES

19 908 15 772

• 10 775

27 765

• B. FROM INVESTING ACTIVITIES

52 500 10 691 19 104

• 3 762
• A. FROM OPERATING ACTIVITIES

'000 PLN Q3 2009 Q1 2010 Q2 2010 Q3 2010 CASH FLOW

18

Financials

Metrics

802 515 759 310 791 244 747 937 Net debt 250 998 220 141 247 280 238 843 Equity 1,4%

• 4,3%
• 3,6%

0,9% Net profit margin

• 13,5%

1,5% 5,6% 2,9% EBITDA margin 50 65 53 53 Receivables turnover (days) 64 66 51 49 Inventories turnover (days) 0,43 0,46 0,52 0,53 Quick ratio 0,88 0,86 0,93 0,94 Liquidity ratio Q3 2009 Q1 2010 Q2 2010 Q3 2010 MAIN METRICS

ZŁOMREX S.A.

Q4 2010 Outlook

Section 4

20

Q4 2010 outlook

• Polish GDP over 3%
• Decrease of demand and stabilization of prices
• Decrease in steel consumption in Poland in comparison to Q3 2010
• Decrease in production level
• Signing of two divestment transactions related to Polish and International distribution businesses

ZŁOMREX S.A.

Q&A

Section 5