Q3 2011 Business and Financial Performance November 28, 2011 1 - - PowerPoint PPT Presentation

▶
q3 2011 business and financial performance
SMART_READER_LITE
LIVE PREVIEW

Q3 2011 Business and Financial Performance November 28, 2011 1 - - PowerPoint PPT Presentation

Oct 24, 2022 278 likes •536 views

Q3 2011 Business and Financial Performance November 28, 2011 1 2011-11-28 Content 1. Introduction 2. Business overview 3. Financials 4. Internal Reorganization 5. Q4 2011 outlook 6. Q&A 2 2011-11-28 Section 1 Introduction 3

slide-1
SLIDE 1

2011-11-28 1

November 28, 2011

Q3 2011 Business and Financial Performance

slide-2
SLIDE 2

2011-11-28 2

Content 1. Introduction 2. Business overview 3. Financials 4. Internal Reorganization 5. Q4 2011 outlook 6. Q&A

slide-3
SLIDE 3

2011-11-28 3

Section 1

Introduction

slide-4
SLIDE 4

2011-11-28 4

Introduction

Speaker Krzysztof Zoła

CFO, 39 Age – 39 9 years with the Group

slide-5
SLIDE 5

2011-11-28 5

Introduction

Q3 2011 Highlights

  • Softening of demand, prices and margins for selected products (Q3 v. Q2). Weakening market offset by a positive

EUR/PLN development (weakening of the local currency)

  • Revenues stable; slight increase of profitability (Q3 v. Q2; adjusted for non-recurring items)
  • Combined capacities’ utilization stable. HSJ weakening, FERR improving.
  • Adjusted EBITDA (PLN 42,2m) hit 2011 high; increase by 5,6% compared to Q2 2011; in Q3 2010 it was close to

zero

  • GDP growth 3,5% in Poland
  • Polish steel production: decrease by 4% Q3 2011 v. Q2 2011; 10% increase compared to Q3 2010
  • Finalization of internal reorganization

59% 54% 79% 86% 86% 636 000 COMBINED 52% 37% 70% 86% 72% 261 000 HSJ 64% 66% 85% 86% 96% 375 000 FERR Y 2010 Y 2009 Q1 2011 Q2 2011 Q3 2011 UTYLIZATION RATE ANNUAL CAPACITY

slide-6
SLIDE 6

2011-11-28 6

Section 2

Business Overview

slide-7
SLIDE 7

2011-11-28 7

Business Overview

Environment

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

340,2 10% 375,0 Global 40,0 6% 42,5 EU (27) 2,0 10% 2,2 Poland million tons Q3 2010 % YoY Q3 2011 CRUDE STEEL PRODUCTION (1) 2 036 11% 2 262 Bars 1 651 22% 2 016 Billets 861 19% 1 023 Scrap metal PLN / Ton Q3 2010 % YoY Q3 2011 UNIT PRICES (2) 2 323 2 318

  • 2%

2 262 Bars 2 137 2 014 0% 2 016 Billets 1 038 988 4% 1 023 Scrap metal PLN / Ton Q1 2011 Q2 2011 % QoQ Q3 2011 UNIT PRICES (2)

slide-8
SLIDE 8

2011-11-28 8

Business Overview

Q3 2011 performance drivers

127 832 26% 160 752 Total 44 641 30% 57 902 Products 58 656 15% 67 469 Billets 24 535 44% 35 381 Scrap metal Tons Q3 2010 % YoY Q3 2011 SALES 253 289 39% 351 990 Total 135 331 33% 179 812 Products 96 833 40% 135 985 Billets 21 125 71% 36 193 Scrap metal 000 PLN Q3 2010 % YoY Q3 2011 SALES

slide-9
SLIDE 9

2011-11-28 9

Business Overview

Segments

21 125 27 798 27 667 36 193 TOTAL SALES in '000 PLN 24 535 26 997 28 016 35 381 TOTAL SALES in TONS 133 965 148 899 157 220 156 459 TOTAL INTERNAL USE in TONS 125 862 172 323 183 183 183 863 TOTAL PURCHASES in TONS 21 125 27 798 27 667 36 193 CONSOLIDATED SALES '000 PLN 221 228 184 OTHER 24 314 26 769 27 832 35 381 ZLMET SALES TO EXTERNAL CUSTOMERS Tons ZJEL 44 159 52 768 63 023 52 414 HSJ 89 806 96 131 94 197 104 045 FERR INTERNAL USE Tons ZJEL 27 573 36 016 36 994 29 355 HSJ 68 372 101 697 111 832 110 594 ZLMET 29 917 34 610 34 357 43 914 FERR PURCHASES FROM EXTERNAL SUPPLIERS Tons Q3 2010 Q1 2011 Q2 2011 Q3 2011 SCRAP METAL

slide-10
SLIDE 10

2011-11-28 10

Business Overview

Segments

96 833 98 038 131 141 135 985 TOTAL SALES in '000 PLN 58 656 45 871 65 122 67 469 TOTAL SALES in TONS 54 947 79 408 71 249 69 369 TOTAL INTERNAL USE in TONS 113 603 125 273 136 360 136 838 TOTAL PRODUCTION in TONS 96 833 98 038 131 141 135 985 CONSOLIDATED SALES '000 PLN 6 11 OTHER ZJEL 771 2 236 5 256 3 459 HSJ 57 885 43 629 59 855 64 010 FERR SALES TO EXTERNAL CUSTOMERS Tons ZJEL 37 407 43 131 50 588 43 206 HSJ 17 540 36 277 20 661 26 163 FERR INTERNAL USE Tons ZJEL 38 178 45 367 55 844 46 665 HSJ 75 425 79 906 80 516 90 173 FERR PRODUCTION Tons Q3 2010 Q1 2011 Q2 2011 Q3 2011 BILLETS

slide-11
SLIDE 11

2011-11-28 11

Business Overview

Segments

135 331 312 970 218 207 179 812 TOTAL SALES in '000 PLN 44 641 59 534 64 138 57 902 TOTAL BULK PRODUCT SALES in TONS 44 781 63 799 65 140 57 683 TOTAL PRODUCTION in TONS 135 331 312 970 218 207 179 812 CONSOLIDATED SALES '000 PLN 31 996 39 155 43 838 33 722 HSJ 12 645 20 379 20 300 24 180 FERR SALES TO EXTERNAL CUSTOMERS Tons 33 366 40 618 44 437 34 793 HSJ 11 415 23 181 20 703 22 890 FERR / ZW-WB PRODUCTION Tons Q3 2010 Q1 2011 Q2 2011 Q3 2011 FINISHED PRODUCTS

slide-12
SLIDE 12

2011-11-28 12

Section 3

Financials

slide-13
SLIDE 13

2011-11-28 13

Financials

P&L

421 27 332 40 007 51 794 EBITDA

  • 11 103
  • 11 148
  • 10982
  • 10 442

Depreciation and amortization

  • 13 482

27 778 100 482

  • 7 718

Profit for the period

  • 1 422

35 903 53 145 1 156 Profit/loss for the period from discontinued operations

  • 214
  • 4 775

25 767 5 110 Income tax expense

  • 11 846
  • 3 350

21 570

  • 13 984

Profit/Loss before tax

  • 1 164
  • 19 534
  • 7 455
  • 55 336

Net financing costs

  • 4 006
  • 19 878
  • 11 561
  • 55 882

Financial expenses 2 842 344 4 106 546 Financial income

  • 10 682

16 184 29 025 41 352 EBIT

  • 5 903
  • 3 753
  • 4 396
  • 1 982

Other expenses

  • 18 121
  • 745

254 3 356 Other gains/(losses) – net

  • 4 888
  • 9 558
  • 9 433
  • 10 924

Administrative expenses

  • 9 148
  • 7 486
  • 8 618
  • 9 720

Distribution expenses 4 190 2 878 4 336 13 188 Other income 23 188 34 848 46 882 47 434 Gross profit

  • 251 283
  • 297 225
  • 352 832
  • 349 134

Cost of sales 274 471 332 073 399 714 396 568 Revenue Q3 2010 Q1 2011 Q2 2011 Q3 2011 INCOME STATEMENT '000 PLN

Includes:

  • PLN 6,962: profits re

internal reorganization,

  • PLN 2,773: negative

EBITDA of OM.

  • PLN 681: release of social

benefits provisions Adjusted EBITDA: PLN 42,229 Includes PLN 40,9m of FX losses related to indebtedness

slide-14
SLIDE 14

2011-11-28 14

Financials

Assets

1 613 436 1 125 450 1 005 669 1 022 192 TOTAL ASSETS 636 317

  • V. Assets of disposal groups and discontinued operations

103 249 102 389 16 715 16 715

  • IV. Assets classified as held for sale

9 886 9 215 36 250 40 505

  • III. Cash and cash equivalents

101

  • 3. Income tax receivable

4 79 083 34 861 37 363

  • 2. Other investments

197 871 267 876 251 936 254 172

  • 1. Trade and other receivables

197 875 346 959 286 797 291 636

  • II. Receivables

171 244 218 225 195 466 203 499

  • I. Inventories

1 118 571 676 788 535 228 552 355

  • B. TOTAL CURRENT ASSETS

55 628 36 136 65 764 77 045

  • VI. Deferred tax assets

19 030 19 321 18 561 20 897

  • V. Prepaid perpetual usufruct of land

4 036 4 051 4 610 4 598

  • IV. Investment property and other investments

1 894 256 244 247

  • III. Other receivables

386 690 369 187 362 933 349 170

  • II. Property, plant and equipment

27 587 19 711 18 329 17 880

  • I. Intangible assets

494 865 448 662 470 441 469 837

  • A. TOTAL NON-CURRENT ASSETS

Q3 2010 Q1 2011 Q2 2011 Q3 2011 ASSETS '000 PLN

Includes PLN 24,5m of escrowed domestic distribution transaction proceeds Includes PLN 34,8m of claims against the Croatian Government related to Zeljezara Split

slide-15
SLIDE 15

2011-11-28 15

Financials

Equity and liabilities

1 613 436 1 125 450 1 005 820 1 022 192 TOTAL EQUITY AND LIABILITIES 388 000

  • III. Liabilities of disposal group classified as held for sale

1 156 403 375 375

  • 8. Provisions for payables

520 1 951 1 599

  • 7. Income tax payable

4 690 3 877 1 261 1 951

  • 6. Employee benefits obligation

9 475 2 954 2 853 2 825

  • 4. Defferd government grants and other deffered income

276 684 296 303 222 082 220 801

  • 3. Trade payables

84 821 82 108 28 665 26 423

  • 2. Bank overdraft

91 095 100 396 43 631 39 617

  • 1. Interest-bearing loans and borrowings

468 441 486 041 300 818 293 591

  • II. Current liabilities

4 385 6 285 4 579 6 277

  • 3. Other

508 235 510 240 478 040 526 810

  • 2. Interest-bearing loans and borrowings

12 940 11 983 10 963 10 093

  • 1. Employee benefits obligation

525 560 528 508 493 582 543 180

  • I. Non-current liabilities

1 382 001 1 014 549 794 400 836 771

  • B. LIABILITIES

11 618 79 326 102 448 9 082

  • III. Minority interest

87 373

  • 16 116

61 281 43 895

  • II. Reserves and retained earnings

132 444 47 691 47 691 132 444

  • I. Issued share capital

231 435 110 901 211 420 185 421

  • A. EQUITY

Q3 2010 Q1 2011 Q2 2011 Q3 2011 EQUITY AND LIABILITIES '000 PLN

Increase primarily due to EUR/PLN hike by 11%

slide-16
SLIDE 16

2011-11-28 16

Financials

Cash flow & metrics

  • 75 587
  • 123 236
  • 4 718

NET INCREASE IN CASH

  • 21 092
  • 97 232
  • 8 683

FROM FINANCING ACTIVITIES

  • 704
  • 2 118
  • 4 099

FROM INVESTING ACTIVITIES

  • 53 791
  • 23 886

8 064 FROM OPERATING ACTIVITIES Q1 2011 Q2 2011 Q3 2011 CASH FLOW '000 PLN n/a n/a 12,3 7,7 4,6 Net debt / LTM EBITDA n/a n/a 55 432 66 823 119 007 LTM EBITDA 791 244 674 265 683 529 514 086 552 345 Net debt 247 280 231 435 110 901 211 420 185 421 Equity 0,6%

  • 4,9%

8,4% 25,1%

  • 1,9%

Net profit margin 10,0% 0,2% 8,2% 10,0% 13,3% EBITDA margin 101 65 94 65 66 Receivables turnover (days) 93 61 66 50 52 Inventories turnover (days) 0,87 1,80 0,73 1,07 1,13 Quick ratio 1,27 2,17 1,18 1,72 1,82 Liquidity ratio Q2 2010 Q3 2010 Q1 2011 Q2 2011 Q3 2011 MAIN METRICS

Includes PLN 14,2m

  • f WC outflow
slide-17
SLIDE 17

2011-11-28 17

Section 4

Internal Reorganization

slide-18
SLIDE 18

2011-11-28 18

Internal Reorganization

Former Group Structure - Post distribution division divestiture – Q1-Q2 2011

FERROSTAL

92.4%

ZŁOMREX S.A.

Scrap Other Production HSW-HSJ OMS

100% 100% Non-core business and non-operational subsidiaries 1

COGNOR

64,4%

OTHER ACTIVITIES

ZW-WB

100%

ZLOMREX METAL ZIF

99,9% 100%

SCRAP TRADING STEEL PRODUCTS PRODUCTION

100%

slide-19
SLIDE 19

2011-11-28 19

Internal Reorganization

Former Group Structure – prior to the HSJ / ZLX merger – Q3 2011

FERROSTAL

92.4%

PS Holdco

Scrap Other Production HSW-HSJ OMS

100% Non-core business and non-operational subsidiaries

COGNOR

56,86%

OTHER ACTIVITIES

ZW-WB

100%

ZLOMREX METAL ZIF

99,9%

SCRAP TRADING STEEL PRODUCTS PRODUCTION

100%

Other Production

Non-core business and non-operational subsidiaries 100%

Złomrex

MERGER

7,55%

slide-20
SLIDE 20

2011-11-28 20

Internal Reorganization

Current Group Structure – post the HSJ / ZLX merger

FERROSTAL

92.4%

PS Holdco

Scrap Other Production OMS

100% Non-core business and non-operational subsidiaries

COGNOR

56,86%

OTHER ACTIVITIES

ZW-WB

100%

ZLOMREX METAL ZIF

99,9%

SCRAP TRADING STEEL PRODUCTS PRODUCTION

100%

Other Production

Non-core business and non-operational subsidiaries 100%

HSJ

7,55%

Cognor Group Restricted Group

FERROSTAL 375 kT EAF, carbon and middle alloy steels ZW-WB 198 kT rolling mill – flat bars, plain bars, squares HSJ 261 kT EAF, high alloy steels 178 kT rolling mill – high diameter bars 101 kT rolling mill – thick sheets ZŁOMREX METAL scrap collection network in 18 main locations across whole Poland

slide-21
SLIDE 21

2011-11-28 21

Section 5

Q4 2011 Outlook

slide-22
SLIDE 22

2011-11-28 22

Q4 2011 Outlook

Main factors

  • Polish GDP growth around 3,5%
  • Further pressure on demand and prices partially offset by weak Zloty and relatively strong

Polish market

  • Utilization rate slightly below Q3 2011 level
  • Targeted 2011 revenues and EBITDA will be met closer to the upper range – PLN 1,400m

and PLN 150m respectively

  • End of 2011 net debt target may be outperformed should EUR/PLN remain above 4,2
  • Net Debt to LTM EBITDA to fall below 4x
slide-23
SLIDE 23

2011-11-28 23

Section 6

Q & A

slide-24
SLIDE 24

2011-11-28 24

COGNOR SA

  • ul. Zielona 26, 42 - 360 Poraj
  • tel. +48 34 316 01 10, fax +48 34 316 01 12

cognor@cognor.eu, www.cognor,pl