sahaviriya steel industries plc - listed...
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Sahaviriya Steel Industries PLC
Thailand Focus
30 August 2012
1
The information contained in this presentation is intended solely for your personal reference only. If you
are not an intended recipient, you must not read, disclose, copy, circulate, retain, distribute or take any
action in reliance upon this material.
This presentation is not intended to substitute your own analysis and investigation, and should not be
considered a recommendation to any recipient of this presentation. Some statements contained herein
are forward-looking statements identified by the use of forward-looking terminology such as “may”, “will”,
“expect”, “anticipate”, “intend”, “estimate”, “continue”, “plan” or other similar words, which are subject to
various risks and uncertainties. These statements include statements with respect to Sahaviriya Steel
Industries Public Company Limited (the “Company” or “SSI”)’s, Sahaviriya Steel Industries UK Limited
(“SSI UK”)’s and their subsidiaries (collectively referred to as “SSI Group”) corporate plans, strategies and
beliefs and other statements that are not historical facts.
This presentation is prepared based on the assumptions and beliefs of SSI Group’s management in light
of the information currently available to the Company involving risks and uncertainties which may cause
the actual results, performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking statements. Nothing in this
presentation is, or shall be relied on as promise or representation of the Company as to the future.
Disclaimer
2
Overview of SSI
Agenda
Industry Outlook
Recent Update and Ongoing Project
Capital Increase and Recapitalisation Plan
Q2/2012 Performance and Financial Results
Q & A
Appendix:
3
SSI’s Milestones & Snapshot
• Started its operation with Slab
capacity of 3.6 mmtpa
• First slab produced in April 2012
• SSI was established by Sahaviriya Group, and
incorporated as a public company
• Became the first and only conventional
standalone Hot Strip Mill in Thailand
1990
• Invested in TCRSS
• Established PPC to operate deep sea
port in Prachuap Khirikhan
• Started its operation with HRC
capacity of 1.8 mmtpa
• Became a listed-company on the SET
1994 1995
• Expanded its HRC
capacity to 2.4 mmtpa
1997
• Invested in TCS to extend
further downstream
• Set up WCE to provide engineering
& maintenance services among the
group of companies
1999
• Acquired TCP’s iron and steel making facilities
through its overseas subsidiary, SSI UK
• Began SSI UK restart project to refurbish its
facilities
2011
2012
2013 • Installed two shore
cranes (100 tons each)
2004 2012
• Reached 26 mmt of
accumulative HRC
production, the first steel
producer in Thailand
• Expanded its HRC capacity
to 4.0 mmtpa, with P/O
capacity of 1.0 mmtpa
1994
1994
2012
2013
• Pulverized Coal Injection (PCI)
project expected to be in use
“Coastal Mill” #1 SSI and
its downstream mills are
integrated with the deep
sea port
Perfect strategic location
for steel business
Bang Saphan 400 km
south of Bangkok
Upstream facility with the
deep sea port in Northeast
UK
Perfect strategic location
for steel business
Teesside 400 km north of
London
“Coastal Mill” #1
“Coastal Mill” #2
4
Capacity
3.6 mtpa(2)
100,000 dwt(1) x 2 14 mmts through-put
HotCoil CleanStrip®
4 mtpa(2) 1 mtpa(2)
CRC 1.2 mtpa(2)
EG 0.24 mtpa(2)
Domestic capacity
Share n/a n/a 55% 66% 43% 100%
1) dwt = Deadweight ton
2) mtpa = million tons per annum
3) SV Group includes Sahaviriya Group, Sahaviriya Inter Steel Holdings, and Viriyaprapaikit Family
100% 51% 3.7% 50.15%
Finished products
out-bound
Raw materials
in-bound
Integrate World Class Steel Businesses
Innovate Premium Value Products
Major shareholders
as of 14 May 2012 3)
Coated Steel Sheet
Cold Rolled Coil
Hot Rolled Coil
Deep-sea Port
Iron and Steel Making
99.99%
Engineering & Maintenance Service
Long-term
Strategies
ASEAN’s Largest Flat Steel Producer
35%
10%
10%
45% SV Group
Citibank Nominees
Six SIS
Others
5
SSI customers: Sectors & Applications
Hot Rolled Coil
P/O Coil
Finished Coils Sectors Applications
Commercial Grade
General Steel Pipes
General Steel Structure
General Steel Cut-to-Sheet
Unique-Grade
Steel Pipes
Steel Cut-to-Sheet
Floor Plate Steel
High-Grade
Re-rolling
Gas Cylinder & Pressure
Vessels
Automotive & Home and
Electrical Appliances Parts
Shipbuilding and High
Strength Structure
Atmospheric Resistant Steel
and Line Pipe
Machinery and Industrial Tools
6
Leading Market Position in ASEAN
3.5
4.0
1.2
Thailand
& Europe
1 2 3 4 5 6 7 8
1 2 3 4 5 6 7 8
Target Customers
(Geographically)
Thailand Thailand Indonesia Malaysia Philippine
Key Products
CRC
HRC – P/O
HRC – Gen Use
Slab
Capacity (mtpa)
CRC
HRC
Slab
Integration with UK operation provides SSI with a leading market position as an
integrated producer in ASEAN
Remark : CRC capacity relates to SSI’s 50:50 JV, Thai Cold Rolled Steel Sheet PCL
Source : Company websites and Annual reports
7
Core Strengths
Premium Value Products: Focus to innovate high value-adding products with
higher margin – account for 39% of total sales in year 2011
Integrated World Class Steel Business: Iron & Steel Making Business in North
East UK and HRC Business and downstream facilities in Thailand
Location Competitive Advantage: (facilities in Thailand and United Kingdom)
UK: Higher grade ore at lower price in Atlantic Basin, shorter deliver time and
freight cost saving, benefit from EUROPE debt situation from Pound Currency
depreciation and cheaper raw material procurement, lower overall cost.
Thailand: High growth in ASEAN market particularly for high-grade flat
products, lower labour & overhead cost, shorter distance & lead-time to
customers
Diversify risk strategy: SSI UK supplies slab internally (SSI) and externally, and
vice versa for SSI
Strong market position: The leading flat steel producer in ASEAN
Synergies: Multiple synergy opportunities identified
8
SSI UK
SSI TH
Source : Clarkson Research Services and The TEX Report
Location Advantage: Markets in feasible reach (Slabs)
Ternium-Imsa/Hylsa CSI
AK Steel
Oregon Steel (Evraz)
Duferco Farrell
Usiminas
CSN Volta Redonda
Jindal
LEGEND
Potential – new customer
Potential – prior customer
Dongkuk
Shang Hsing
Krakatau
GRP
GDS
Welspun
Maghreb Steel
MIR Steel
Spartan
Dansteel
Dillenger
Marcegaglia-Bremen
Duferco Belgium
Thyssen Duisburg
Ilva Taranto
Marcegaglia-Nogaro
Beltrame
Colak
Salzgitter
9
SSI UK
SSI TH
Source : Clarkson Research Services and The TEX Report
Location Advantage: Resources in feasible reach
Sweden
Canada
USA
Brazil
Ukraine Russia
South Africa
India
Australia Mozambique
LEGEND
Coking coal
Iron ore
10
3-Year Plan: Higher value-added products player
Most modern & largest stand-alone hot
strip mill in SEA
Market leader of high grade steel
sheets in SEA
Superior Competitive Position
(Technical & Product Leadership)
Establish in-house steel and product development to fit
SSI’s purposes
Ability to share technological know-how & leverage R&D
Gain access and ability to produce a number of new steel
grades with bespoke requirements
Technical & product leadership in the Thai & SEA markets +
23 New customer, New Grade, IVP Product
Moving Towards High
Value-added products High Grade Products,
22%
Unique Products,
15% General
Products, 63%
1st Half 2012
High Grade Products,
39%
Unique Products,
12%
General Products,
49%
3-Year Plan
40 New customer, New Grade, IVP Product
Strategically-located coastal mill
Second largest furnace in Europe with
cost efficiency and high volume
Capability to develop a wide range of
high grade semi-finished products
Integration to Become Regional Leader
37% >50%
11
Agenda
Overview of SSI
Industry Outlook
Recent Update and Ongoing Project
Capital Increase and Recapitalisation Plan
Q2/2012 Performance and Financial Results
Q & A
Appendix:
Global Steel Outlook
12
World Steel Association (WSA)
o Apparent Steel Use will grow further by 3.6% to 1,422 MT in 2012,
following growth of 5.6% in 2011. In 2013, it is forecast that world steel
demand will grow further by 4.5% to around 1,486 MT.
Source : WSA press release , Oct, 2011
13
ASEAN: a major import region for steel products
Source : SEASI
(m tonnes)
2009 2010 2011E
Total Import
- Scrap N.A. N.A. 8.5
- Semi-finished Steel 9.6 9.6 8.1
- Section, bar & wire rods 4.7 5.9 6.8
- Hot-rolled sheets & strips 9.6 11.4 13.0
- Cold-rolled products 3.7 4.7 6.6
- Coated sheets & strips 3.0 4.8 4.8
Breakdown by country
- Thailand 8.9 12.0 12.2
- Vietnam 8.5 8.0 8.9
- Indonesia 5.5 7.3 8.0
- Malaysia 3.7 5.0 5.0
- Singapore 3.7 4.0 5.2
- Philippines 2.8 3.1 3.2
Price Movement: Ore, Coking Coal, and Slab
Slab price
Source: SBB
14
15
AEC & Impact on Thai Steel Industry
Automotive & Parts
Electrical & Electronics
Food Production Hub
(Packing)
Machinery and Metal
Working Production
Base
Manufacturing &
Assembly Hub
Electrical & Electronics
Thailand is center of ASEAN production
hub in electrical appliances
Food Production Hub
(Packing)
Thailand is center of world food
factory. Canned food output has been
grown up slightly. Mechanization of
agricultural process will increase more
output in canned food. Tourism Hub
Potential AEC-impacted sectors SSI targets high grade market, though impacted, growth is promising
Automotive & Parts
Thailand is center of ASEAN
production hub for automobiles.
Remark :* White goods include fan, rice cooker, refrigerator, air conditioner and compressor
Source : ISIT
0
10
20
30
40
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
White goods (Million Units)
CAGR 02-11
4.7%
0
200
400
600
800
1000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Canned Seafood (Unit : '000 tons)
Canned fruit (Unit : '000 tons)
CAGR 02-11
5.7%
0
500
1000
1500
2000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Passenger car ('000 units)
Commercial car ('000 units)CAGR 02-11
8.9%
0
10
20
30
40
50
60
2011E
Million tonnes Apparent Steel Consumption in ASEAN
Production Import Export Consumption
0
10
20
30
40
50
60
2011E
Million tonnes Apparent Steel Consumption in ASEAN
Production Import Export Consumption
16
Thailand flat steel demand: the biggest and most sophisticated in ASEAN
Application Midstream & Downstream Upstream (Iron & Steel Making)
Checkered
Source : WSA, ISIT, SEASI, Federation of Thai Industry
4.7 5.2 1.3
0.7
HRC P/O
Hot Rolling
2.7 2.2
4.9 MT
Cold Rolling
CRC
2.0 MT
Coating
Coated
3.0 MT
Local (MT)
Net Import (MT)
2011 Domestic
Demand
9.9 MT
Total Flat
Products
Slab
Thailand Flat Steel: largest and most sophisticated consumption in ASEAN, approximately 5.2 mtpa or 53% of total consumption served by import
0.7
2.3
MT
ASEAN’s industrialization and urbanization has driven and will drive consistent high growth.
LONG: CAGR 98-11
6.8%
FLAT: CAGR 98-11
9.2%
High growth, but served by import due to lack of raw material regionally
Apparent Steel Consumption High-grade Flat Steel Products Consumption
ASEAN steel demand is now 50 million ton per annum and is forecasted to constantly grow at 5.3%
47% 54%
53% 46%
1 2010
Long
Flat
90
80
70
60
50
40
30
20
10
CAGR 01-11
5.3%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20 17 2018 2019 2020
Forecast
CAGR 12-20
5.3%
17
Apparent HRC Supply (in ’000 tons)
Source: Iron and Steel Institution of Thailand for 2008-2011
* Year 2012 is forecasted upon actual data and SSI’s estimate
Q1/12 Q2/12 Q3/12*
Domestic Production 761 534 750
Import 879 917 808
Export 4 3 3
Total Supply 1,636 1,448 1,555
1,637
1,448
1,555
800
1,800
-
500
1,000
1,500
Q1/12 Q2/12 Q3/12
+7%
-12%
Apparent HRC supply in Q3/2012 will grow to approximately 1.55 MT or
+7% QoQ
Source: Iron and Steel Institution of Thailand for Q1-Q2/2012,
and SSI’s estimate for Q3/2012
Thailand HRC Outlook
4,986
4,389
5,848 5,837 6,273
-2,000
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2008 2009 2010 2011 2012*
Domestic Production
Import
Export
Total Supply
18
Agenda
Overview of SSI
Industry Outlook
Recent Update and Ongoing Project
Capital Increase and Recapitalisation Plan
Q2/2012 Performance and Financial Results
Q & A
Appendix:
SSI UK PCI Project (Progress of work at 30 Jun 2012)
19
Project start : Apr 2012
Target completion : Q1/2013
Overall civil progress : 40%
Steel Structure : 0%
Mechanical Erection : 0%
Electrical Erection : 0%
Machine Installation : 0%
Commissioning : 0%
PCI Building
68%
Pipe Bridge
48%
Raw Coal Handling
8%
Electrical Building and
Compressor House
60%
Nitrogen Storage
Compound
41%
Stoves Waste Gas
33%
Pulverized Coal Injection Plant (PCI) Project
Turnkey Project Management and Investment Cost 57 MUSD
Actual Payment 20 MUSD (Committed 31 MUSD)
SSI#3 Magsenger3
88kt
SSI#2 Shi Dai 20
86kt
20
The Continuous Journey of SSI UK Slab Shipments
SSI#1 Blue Fin
48kt
SSI#4 Goya
59kt
SSI#5 Eastern Glamour
88kt
SSI#6 Britannia G
88kt
Turkey#1 Lucija
41kt
SSI#7 CMB Sakura
57kt SSI#8
60kt
Turkey#2 Genco
Success
40kt
Current status of SSI UK slab utilization
Actual Q2/2012 : Total 134,000 Tons
Since the first slab was produced by SSI UK on April 18, 2012, SSI had received two shipments of
slabs totaling 134,000 tons in Q2/2012 and expect to receive 378,000 tons in Q3/2012. Quantity categorized by each segment is shown as below.
Plan Q3/2012 : Total 378,000 Tons
Cut to sheet
83.58% (112,000 Tons)
Pipe
13.43% (18,000 Tons)
Checkered product
2.61% (3,500 Tons)
Re-rolling 0.37% (500 Tons)
Cut to sheet
79.37% (300,000 Tons)
Pipe
14.42% (54,500 Tons)
Checkered product
2.65% (10,000 Tons)
Re-rolling
2.65% (10,000 Tons)
Automotive
0.53% (2,000 Tons)
Gas cylinder 0.40% (1,500 Tons)
21
Note: Slab arrival basis/ HRC production plan
22
Introduction of SSI UK slabs to hi-end customers project
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
20122013
2014
0.08
0.47
0.97
0.44
0.29
Qty (Million Tons)
Other Slab
SSI-UK Slab
(Others 38%)
Purpose: To introduce SSI UK slabs to be used in hi-end customers such as re-rolling,
HA/EA and automotive customers. In addition, it is also aimed to use SSI-UK slab with these customers to replace current slab sources.
SSI aims to utilize SSI UK
Slab for 100% of Hi-Grade
segment in 2014
(SSI UK
100%)
(SSI UK
62%)
(SSI UK 16%)
(Others 84%)
0.52
0.76
0.97
2012 2013 2014
Trial period with customers
Target in Q3/2013
Target in Q1/2013
Target in Q4/2013
Re-roll Jun 12 HA/EA Q3/2012
Auto Q3/2012
23
Agenda
Overview of SSI
Industry Outlook
Recent Update and Ongoing Project
Capital Increase and Recapitalisation Plan
Q2/2012 Performance and Financial Results
Q & A
Appendix:
Capital Increase & CD Buyback
24
Capital Increase & Allotment:
Current number of authorized = 27,708 m shares
Cancel 7,274 m shares authorized for the General Mandate (EGM 1/2555 on 8 June 12)
New share issued and allotment of 19,434 m shares as followings:
New total number of authorized shares = 39,868m shares
CD Buyback
Subject to: (1) 3/4 votes for approval at EGM, and (2) Independent Financial Advisor to provide opinion
report
Subscribers Offering Size Offering Price Max no. of shares (mm shares)
Remark
PP #1 Vanomet Equiv. $100m to 170m Baht 0.68 8,000 The remainder can be allotted to other
investors
RO Existing shareholders
Ratio of 10:1; Equiv. $39m Baht 0.68 1,834
PP#2 Other investors Equiv. approx $112m Baht 0.68 5,300 The remainder can be allotted to SVG
PP#3 SISH For CD Buyback and Sub-Loan Repayment
Baht 0.68 4,300
CD series Tenor Amount at
Issuance (mm units)
Amount
Outstanding (mm units)
Proposed Buyback Price
CD 1/2555 3 years 1,650 1,497 • At face value for general investors • 15% or more discount from face value for SISH
CD 2/2555 5 years 600 600 • 15% or more discount from face value
25
Comprehensive Financial Plan
Vanomet to provide to SSI UK
1) $100m in cash and 2) $70m trade credit
$125m slabs prepayment from
SSI will be converted in to equity
$33m Outstanding Sub-Loan
from SISH and accrued int. will be converted into equity
$80m - $100m equity from SSI
using PP+RO proceeds
SSI UK
Private Placement of new SSI
shares to Vanomet between $100m to $170m
SSI
Approx. $112m of new shares
to investors/partners
Approx. $39m of new shares to
shareholders at 10:1 right
offering Use as working capital for
business operation and the
repayment of debts
Approx. $92m of new shares to
SVG for CD Buyback and SISH
Sub-Loan repayment
$5 m CD Buyback from SISH and Vanomet
Now to October
Mid-November
Up to a total of $413 million capital increase
SSI Group: Comprehensive Financial Plan
Vanomet
Vanomet provides 170 MUSD
investment loan
− 100 MUSD in fresh fund
− 70 MUSD in credit line for
raw material purchase
SSI TH
SSI UK
Vanomet
Inject 133 – 203 MUSD as equity to SSI UK
− 100 – 170 MUSD to repay Vanomet’s
Investment Loan (same amount as
Vanomet’s subscription in SSI TH)
− 33 MUSD to repay SISH sub-loan + interest
125 MUSD to slab prepayment conversion
Up to 150 MUSD for working capital and
operating expense in SSI and SSI UK
Sponsor 1
100 – 170 MUSD
via PP
New
Investors
Up to 112
MUSD via RO
and PP
SSI UK
Lenders
SSI TH and Lenders have
signed MoU to terminate
standstill agreement and agree
key terms and conditions
SSI TH
SSI UK repay Vanomet in the same
amount of Vanomet’s subscription in
SSI TH
SSI TH buy-back
CD from CD holders
SSI UK repay for
sub-loan and
accrued int. to SISH
Step 1 Step 2
39 MUSD via RO
92 MUSD via PP
59 MUSD
33 MUSD
The plan will strengthen SSI’s capital structure and increase financial flexibility while enhancing market
position thru long-term partnership with Vanomet, a reputable international steel trading firm
Support from lenders
Vanomet’s Strategic Investment
26
SVG To support and participate in SSI TH’s
capital increase via RO
To allow for SSI TH to convert 125 MUSD
advance payment into equity at SSI UK
To agree to remove standstill agreement
To agree to rollover 100 MUSD bridge
facility to SSI UK
To increase capital for approx. 300 MUSD
to fill funding gap at SSI UK
To agree to convert its 125 MUSD
advance payment into equity at SSI UK
To provide 170 MUSD investment loan
which will be converted to SSI TH’s equity
within 1 year
Strengthen capital structure
Increase financial flexibility & liquidity
Enhance market position thru
partnership
Key Party Key Activity/Contribution
Key Improvement
Sponsor
W/C Lender
L/T Lender
SSI TH
Vanomet
27
Key Improvement from Comprehensive Financial Plan
Having new equity injected through RO & PP with funding from Vanomet & support from
existing lenders, SSI UK’s capital structure will be strengthened at D/E of ~1.2x
Debt: 821 MUSD
Equity: 269 MUSD
D/E ~3.1x
Debt: 790 MUSD
Equity: 644 MUSD1
Remark : 1) Assume equity raised through the offering of 250 MUSD being injected to
SSI UK and conversion of 125 MUSD slab prepayment
LT loan of 490 MUSD
ST loan of 100 MUSD
LT loan of 490 MUSD
ST loan of 100 MUSD
Working capital of 200 MUSD
Subordinated loan of 31 MUSD
Working capital of 200 MUSD
D/E ~1.2x
SSI TH’s slab advance payment of 125 MUSD
28
Jun 2012 Post-Capital Increase
SSI UK: Capital Structure Post Capital Increase
Debt: 1,708 MUSD
Equity: 545 MUSD
Jun 20121
Equity: 968 MUSD
Post-Capital Increase
Subordinated loan of 31 MUSD
IBD2 of 1,560 MUSD
Working capital of 50 MUSD
Convertible debenture (CD) of 67 MUSD
Debt: 1,560 MUSD
IBD of 1,560 MUSD
Remark : 1) FX (THB/USD) = 31.5
2) IBD = Interest Bearing Debt
Capital increase of 413 MUSD
Existing equity of 545 MUSD
Having new equity injected through RO & PP with funding from Vanomet & support from
existing lenders, SSI’s capital structure (consolidated) will be strengthened at D/E of ~1.6x
Gain from CD buyback of 10 MUSD
D/E ~3.1x D/E ~1.6x
29
SSI Group: Capital Structure Post Capital Increase
30
ShareholdersNo. of shares
(million shares)%
SVG* 6,545.87 35.70%
Vanomet 976.87 5.33%
Others 10,813.96 58.97%
Total 18,336.70 100.00%
Case 1: Assume SVG to subscribe entire RO portion
Case 2: Assume all shareholders fully subscribe RO according to their rights
Pre - Transaction Pro-forma Post – Transaction **
Note: * SVG = “Sahaviriya Group” consists of Sahaviriya Group Company Limited, Sahaviriya Inter Steel Holdings Company Limited, and
Viriyaprapaikit Family.
** The calculation are based on the following assumptions: (1) FX (THB/$) = 32.0
(2) Offering price = THB 0.68 per share
(3) All PP tranches are fully subscribed
35.70%
5.33%
58.97%
SVG Vanomet Others
30.45%
24.03%14.03%
31.49%
SVG Vanomet
New investors from PP Others
ShareholdersNo. of shares
(million shares)%
SVG* 11,500.46 30.45%
Vanomet 9,074.56 24.03%
New investors from PP 5,300.00 14.03%
Others 11,895.35 31.49%
Total 37,770.37 100.00%
ShareholdersNo. of shares
(million shares)%
SVG* 12,679.54 33.57%
Vanomet 8,976.87 23.77%
New investors from PP 5,300.00 14.03%
Others 10,813.96 28.63%
Total 37,770.37 100.00%
33.57%
23.77%14.03%
28.63%
SVG Vanomet New investors from PP Others
30.45%
24.03%14.03%
31.49%
SVG Vanomet
New investors from PP Others
Shareholding Structure
31
Agenda
Overview of SSI
Industry Outlook
Recent Update and Ongoing Project
Capital Increase and Recapitalisation Plan
Q2/2012 Performance and Financial Results
Q & A
Appendix:
32
SSI Group: Performance & Leverage Indicators
HRC EBITDA per Ton
ROE
Debt/EBITDA
7.0 x 4.7 x
14.0x
7.5x
200 2010 2011 1H 2011 1H 2012
8%
14%
-4%
200 2010 2011 1H 2011 1H 2012
Remark : 1) Consolidated basis, 2) Year End FX = THB 29.97:USD, 3) Year End FX
= THB 33.30:USD, 4) Year End FX = THB 31.83:USD, 5) 2011 EBITDA &
Net Profit include extra gain from business acquisition of
approximately 174 MUSD, 6) Quarter End FX = THB 30.43:USD, 7) Year
End FX = THB 30.99:USD
54 49
28 37
14
200 2010 2011 1H 2011 1H 2012
n.m.
Financial Highlights: 2009 – 2011 and 1H 2011-2012
UNIT 2009 2010 2011 1H 2011 1H 2012
Sale Volume MT 1.75 2.24 1.57 0.85 0.92
Sale & Services revenue1 MB 33,416 48,090 47,975 21,528 27,211
Revenue Growth % 20% 44% (0%) (16%) (YoY)
26% (YoY)
Average Selling Price /ton USD 551 663 769 746 743
HRC EBITDA per Ton USD 542 493 284,5 37 14
EBITDA1 MB 2,998 4,075 1,4055 5,603 (5,495)
Net Profit1 MB 1,273 2,446 (981)5 4,473 (7,863)
EPS1 Baht 0.10 0.19 (0.06)5 0.25 (0.43)
Debt/Equity1 time 1.2x 1.0x 1.8x 1.4x 3.1x
Debt/EBITDA1 time 7.0x 4.7x 14.0x 7.5x n.m.
ROE1 % 8% 14% (4%) n.m. n.m.
n.m. n.m.
33
HRC Shipment decreased to 423 k tons in Q2/12 from 497 k tons in Q1/12 and Slightly increase in slab inventory at
the end of Q2/12 due to slab orders from SSI UK
HRC Conversion Cost increased to USD 84/ton from USD 80/ton resulting from the reduced production volume
HRC Business Performance
0.52
0.33 0.41
0.30
0.50 0.42
0.54
0.28 0.37 0.38
0.50
0.37
340 337
224 202
278
230
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12
Shipment Production Volume Productivity (ton/hr)
73
99
90 85
80 84
68
91
78
85
72
84
1.71% 1.60% 1.58%
1.45% 1.56% 1.51%
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12
Real Normalized Yield Loss
32
53
40
61
54
47
48
72
47
68
48
51
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12
Slab turnover (excl. Intransit) HRC turnover
As of31 Mar
11
As of30 Jun
11
As of30 Sep
11
As of31 Dec
11
As of31 Mar
12
As of30 Jun
12
Slab Inventory 0.29 0.28 0.48 0.63 0.22 0.56
Slab Incoming 0.23 0.14 0.35 0.33 0.77 0.50
0.29 0.28
0.48
0.63
0.22
0.56
0.23 0.14
0.35 0.33
0.77
0.50
34
Premium Value Products accounted for 40% or 168 k tons in Q2/12
Premium Value Products accounted for 41% or 377k tons in H1/12, increasing 15% YoY
Innovated Value Products sold in Q2/12 = 57 k tons, declining from 81 k tons in Q1/12
Innovated Value Products sold in H1/12 =138 k tons, increasing from 89 k tons in H1/11 or
+55% YoY
HRC Business - Sales Ratio of Premium Value Products
58% 67%
59% 62% 58% 60% 61% 59%
12%
15%
16% 16% 15% 14% 13% 15%
18%
10% 11%
13% 11% 12% 15%
11%
5% 0% 3%
0% 7% 2%
3% 5%
7% 8% 10% 8% 10% 11% 7% 10%
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 . H1/11 H1/12
Innovated Value Product(High-Grade)
Innovated Value Product
High-Grade
Unique
Commercial
35
HRC Domestic Market Share
SSI’s Market share 27% in Q2/12 declining from 30% in Q1/12, while imports increase from
54% to 59%
* Recently identifiable from designated harmonized code for alloy steel (previously classified
as stainless steel)
0%
10%
20%
30%
40%
50%
60%
27%
14%
30%
16% 21%
15%
18%
Other (Alloy steel) *
SSI Local Suppliers Import
Carbon steels P&O
Carbon steels 21%
19%
19%
Q1/2012
Q2/2012
36
Note * HRC Rolling margin = metal spread
/ HRC selling price * 100
COST*
USD/ton 555-565
725-735
675-685
660-670
630-640
575-585
Note: * Import Cost of slab is based on CIF
HRC Selling Price (USD/Ton) and HRC Rolling Margin (%)
Slab Price (USD/Ton) and Volume of Slab Import (MT)
HRC Business Key Performance Snapshot
730-740 755-765 805-815 780-790 750-760 725-735
21%
14% 15% 17%
12%
16%
0%
5%
10%
15%
20%
25%
30%
0
500
1,000
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12
0.43 0.37
0.30
0.66
0.34 0.35
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12
HRC Business Performance
37
HRC EBITDA* (kUSD)
Negative HRC EBITDA 12.1 /ton in Q2/12, decreasing from USD 37.2 /ton in Q1/12 or -
132% QoQ due to new provisions set up for decline in value of inventories amounting
451 MB
Decrease in Q2/12 HRC EBITDA to negative 166 MB or -132% QoQ
H1/12 HRC EBITDA = USD 14.5 /ton declining from USD 37.2 /ton in H1/11
56.7
6.2
17.8 23.6
37.2
-12.1
37.2
14.5
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 H1/11 H1/12
HRC EBITDA* (USD/Ton)
29,666
2,059
7,361 7,164
18,481
-5,099
31,725
13,382
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 H1/11 H1/12
38
Slab production 477 k tons in Q2/2012
Slab sale 335 k tons in Q2/2012, exclusively sold within the Group of companies
Iron and Steel Making Business
Slab Production and Sale in Q2/2012
477
335
Prodcution Sale
Volume in Q2/2012 ('000 tons)
544 551
7
Average
RM Cost
Average
Selling Price
Slab Spread (USD/ton)
Production
39
Unit: MB 2012 2011 2012 2011
Q2 Q1 Q2 Jan-Jun Jan-Jun
Sale and Service Revenue 11,469 15,742 9,511 27,211 21,528
COGS (14,655) (17,312) (9,549) (31,976) (20,359)
SG&A (528) (600) (524) (1,128) (901)
Provision for loss under onerous
contracts (546) (5) 96 (551) -
Gain on business acquisition - - - - 5,271
EBITDA* (3,612) (1,879) (335) (5,491) 5,603
Interest Expenses (809) (684) (512) (1,493) (731)
Depreciation and Amortization (598) (286) (203) (884) (393)
Income Tax Expense (3) 8 (3) 5 (7)
Realized Gain (Loss) from FX (105) (249) (137) (354) (247)
Unrealized Gain (Loss) from FX 153 230 70 382 105
Net Profit (Loss) (5,022) (2,841) (1,053) (7,863) 4,473
EPS (Baht) (0.28) (0.16) (0.06) (0.43) 0.25
Consolidated P&L Snapshot
40
Note
• EBITDA = Net Profit + Tax Expense + Depreciation & Amortization + Interest Expenses
• Q1/11 EBITDA and net profit included gain from business acquisition
• Q3/11 EBITDA calculated from net profit included gain from business acquisition
Consolidated EBITDA & Net Profit (MB)
GROUP P&L
5,938
-354
3,170
-1,986 -1,879 -3,612
5,584
-5,491
5,525
-1,072 -2,965
-2,376 -2,841
-5,022
4,453
-7,863
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 H1/11 H1/12
EBITDA Net Profit
41
Consolidated Financial Position
Unit : MB 30 Jun 2012 31 Dec 2011 31 Dec 2010
Trade Receivables 4,665 5,240 2,962
Inventories 24,423 25,178 14,205
Plants, Properties and Equipments 53,383 50,149 20,293
Investments in Jointly-Controlled Entities 4,708 4,683 4,045
Other Assets 4,186 1,114 988
Total Assets 91,365 86,364 42,493
Short-term Debt and Current Portion of
Long-term Interest Bearing Debt 28,214 25,683 14,500
Trade Payables 14,479 10,685 3,157
Long-term Interest Bearing Debt 25,565 19,641 4,437
Other Liabilities 5,934 5,407 524
Total Liabilities 74,192 61,416 22,618
Equity Attributable to Equity Owners 16,319 24,096 19,093
Non-controlling Interests 854 852 842
Total Equity 17,173 27,204 19,875
Total Liabilities and Equity 91,365 86,364 42,493
42
Overview of SSI
Agenda
Industry Outlook
Recent Update and Ongoing Project
Capital Increase and Recapitalisation Plan
Q2/2012 Performance and Financial Results
Q & A
Appendix:
Background
Source: Company data
Vanomet Group Structure
Vanomet Holding AG
Vanomet AG Vanomet Finance AG Vanomet International AG Atlantic Steel AG Vanomet Asia AG
100% 100% 100% 100% 100%
Appendix: Factsheet on VANOMET Holding AG
43
VANOMET is a company registered under Swiss law, founded in 1991 by Ruedi Mathis,
a steel specialist with many years of experience in the industry
One of the world's largest independent steel trading companies with full range of
services tailored to specific clients’ needs including consulting, financing, marketing,
trust services, and logistics
Vanomet is a diversified international trading company with its head office in Zug,
Switzerland handling steel products and non-ferrous metals through a large network of
offices and agencies throughout the world.
SSI TH has been a strategic client with Mr. Mathis for more than 30 years
44
Unit : MB Q2/12 Q1/12 Q4/11
Sale Revenues 7,424 4,085 5,266
Cost of Good Sold (10,839) (6,106) (7,130)
Admin Expenses (327) (433) (212)
Provision for loss under onerous contracts (264) - (311)
Gain from Business Acquisition - - -
EBITDA (3,581) (2,486) (2,215)
Interest Expenses (358) (266) (261)
Bank Fees (5) (19) (11)
Gain (Loss) on FX (28) (143) 96
Gain (Loss) on Investment 13 16 (21)
Other Incomes - 8 -
Income Tax - 10 552
Net Profit (Loss) (4,384) (2,849) (2,031)
SSI UK Financial Results
Note: * Excluded gain from business acquisition
45
SSI UK Financial Results (Cont.)
Unit : MB 30 Jun 2012 31 Mar 2012 31 Dec 2011
Current Assets 12,837 8,918 8,553
Non-current Assets 34,636 32,480 31,218
Total Assets 47,473 41,398 39,771
Short-term Liabilities 10,530 7,789 7,565
Other current Liabilities 10,698 8,847 5,963
Total Current Liabilities 21,719 16,636 13,528
Long-term Loans 14,156 12,137 10,057
Total Liabilities 40,488 32,797 27,732
Share Capital 14,506 12,255 12,255
Retained Earning (7,882) (3,499) (650)
Total Equity 6,984 8,601 12,038
Total Liabilities & Equity 47,473 41,398 39,771