magnesita presentation confcall_2_q11_eng
TRANSCRIPT
1
Earnings call – 2Q11August 11,2011
2
Highlights
Strong growth in sales and volume, gaining market share
• R$ 583 million in net revenues, growing 9.3% in Refractory Solutions vs. 2Q10
• 13.8 % increase in refractory volume vs. 2Q10
• 17.4 % growth in sales to the industrial sector and 8.2% to the steel sector
Strong net income and cash generation
•R$ 30.8 million net profit, 41 % higher than 1Q11 and 22% over 2Q10
•R$ 103.2 million EBITDA with a margin of 17.7%
•R$ 85.8 million in operating cash flow
•R$ 91 million working capital reduction vs. 2Q10, R$ 15 million vs. 1Q11
Pressured gross margin due to raw material price increases as well as currency effects
• 31.4 % of gross margin (0.9 p.p. lower than the margin in 1Q11)
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Strong growth driven by Refractory Solutions
Product line Quarter Change%
2Q11 (a) 1Q11 (b) 2Q10 (c) (a/b) (a/c)
Refractory solutions
Volume (t) 294,434 277,799 258,762 6.0 13.8
Revenues (R$ ‘000) 526,424 495,768 481,592 6.2 9.3
Minerals
Volume (t) 145,984 130,128 370,535 12.2 -60.6
Revenues (R$ ‘000) 19,844 34,474 25,496 -42.4 -22.2
Services
Revenues (R$ ‘000) 36,749 45,049 44,652 -18.4 -17.7
TOTAL
Revenues (R$ ‘000) 583,017 575,291 551,740 1.3 5.7
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Strong growth in Refractory Solutions
11.5%
+9.3%
2Q11 -constant currency
536.9
2Q11
526.4
1Q11
495.8
2Q10
481.6
6.0%
+13.8%
2Q11
294.4
1Q11
277.8
2Q10
258.8
Steel production
Year-over-year
2.6% ex-China5.5% global
Sequential
1.6% ex-China2.4% global
Net revenueR$ million
Refractory volume‘000 tons
17.5% revenue growth vs. 2Q10 outside South America
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Refractory solutions - growth both in steel and in industrial
Net revenues - Steel sectorR$ million
Net revenues - Industrial sectorR$ million
+8.9%
+8.2%
2Q11
457.7
1Q11
420.4
2Q10
423.1
-8.9%
+17.4%
2Q11
68.7
1Q11
75.4
2Q10
58.5
6
Regions 1H11 Total
North America 1 14
Europe 1 8
Asia 1 4
South America - 33
TOTAL 3 59
New CPP contractsNumber of contracts
CPP contractsNumber of contracts
Refractory Solutions - CPP
31% of revenues from the steel sector
59595652
474240
3631
272624
2Q
10
1Q
10
4Q
09
3Q
09
2Q
09
1Q
09
20
08
Bef
ore
20
08
2Q
11
1Q
11
4Q
10
3Q
10
59
24
16
2009
3
2010 Total2008
2
Before 2008
14
2Q11
0
1Q11
7
Gross profit and gross marginR$ million, %
Minerals
Services
RefractorySolutions
Gross profit and margin per product lineR$ million, %
Gross profit per product line
185.7
32.3
2Q10
199.2
36.1 31.4
2Q11
183.3
1Q11
166.0180.6
37.5 32.1
168.8
33.5
10.3
51.9
13.7
39.7
11.6
45.4
11.3
4.1
2Q111Q11
6.0
13.4
2Q10
7.0
15.7
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Strong net income and cash flow generation
Net incomeR$ million
+22%
+41%
2Q11
30.8
1Q11
21.8
2Q10
25.1
EBITDAR$ million, %
Cash flow from OperationsR$ million
2Q11
85.8
1Q11
186.4
2Q10
-14%
+10%
2Q11
103.2
17.7
1Q11
93.8
16.3
2Q10
120.6
21.9
-0.3
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44-day shorter cash conversion cycle
44 -day shorter cash convesion cycle vs. 2Q10
Cash conversionDays
Working capitalR$ million
R$ 91.3 million reduction vs. 2Q10
(additional R$ 15 millionover 1Q11)
790.6
R$ 91 million
2Q111Q11
805.2
4Q10
832.6
3Q10
934.1
2Q10
882.0
145153161
193189
129129129154158
6556484049
2Q111Q114Q103Q102Q10
Suppliers
Inventory
Cash cycle
10
DebtR$ million
1.951
1.631 1.636 1.491
908 854 3.1
2.1 2.1
2Q10 1Q11 2Q11
NetDebt/EBITDA 2.8 x
56.8% lower financial result vs. 2Q10
R$ 54 million reduction in net debt –maintaining 2.1 x EBITDA
2.1 x 2.1 x
11
Financing Sept/11
Environmental License Concluded
Start-up Mar/12
(1) According to Industrial Minerals
Investment: R$ 220 million through 2012
Financing: 80% at attractive rates
Production: increase in capacity by 120 ktpa
Magnesite (Brumado-BA) Graphite (Almenara-MG)
Description
Stage Deadline
Timetable
Financing Dec/11
Environmental License Dec/11
Start-up Dec/12
Investment: R$ 80 million through 2012
Financing: 80% at attractive rates
Production : capacity of 40 ktpa
Description
Stage Deadline
Timetable
Verticalization projects remain “on track”
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• Sale of land in São Caetano, R$ 19.8 million• Impact on EBITDA, net income and cash in 3Q11
Sale of real estate
• Partner: Sudamin• Annual steel production of 1.9 million tons• Transfer of know-how, supply of raw materialsand technical assistance
Partnership in Colombia
Sudamin
• Partner: Refratários Socialistas de Venezuela• Annual steel production of 5.7 million• Transfer of know-how, supply of raw materials and technical assistance
Partnership in Venezuela
RSV
Consolidation ofleadership in SA
Subsequent Events