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EarningsEarnings CallCall 1Q131Q13
May 10May 10th, 2013, 2013
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New strategic view
Vision:Be the best provider of refractoriessolutions and industrial minerals,
leveraging and developing our minerals base
Expand industrial Ensure leadership Maintain a global low Grow selectively and
On
eg
lob
al
org
an
iza
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Expand industrial minerals base
Ensure leadership in our core markets
Maintain a global low cost production base
Grow selectively andaggressively
Continue to develop high quality, low cost raw material sources to support our current
businesses as well as new businesses where
we can have a sustainable competitive
advantage
Strive to keep offering high quality and
innovative products, unrivaled services and
cost performance
Optimize production globally to improve
efficiency and support growth
Develop global supply chain management
Pursue long term growth opportunities in selected
markets where we can deliver superior value to
our customers and shareholders
▪Meritocracy▪Ethics
▪Profit▪Management and Method
▪Agility and Transparency▪Respect for Safety, Environment and Communities
▪Customer▪People
Our values
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DMR (manufacturing unit in China)
Low cost production base: The plant is located in the city of Dalian, northeast China,region which owns around 20% of world’s reserves of magnesite, making ita highly strategic location for refractory production
New markets: This new plant will allow us to better serve geographies
Recent aquisitionsMaintain a global low
cost production
base
Grow
selectively
and
aggressively
New markets: This new plant will allow us to better serve geographiesand segments where Magnesita has a marginal presence todayand where we want to expand sales in a selective way
Location: Dalian is an important export hub in China withexcellent logistics
Capacity: 50.000 tons/year
Closing: Expected to occur in ~60 days, after approvalof the Economic and Trade Bureau of Dalian Development Area,in the People´s Republic of China.
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in the People´s Republic of China.
DMR external viewChina
CHINA
Reframec (51% of equity)
Ensure leadership in our core markets: The Reframec acquisition reinforces Magnesita's leadership in its core industrial markets in South America, as it expands its services beyond the steel industry
Reframec: Leader in engineering, installation and repair services
Recent aquisitionsEnsure
leadership
in our core markets
Reframec: Leader in engineering, installation and repair servicesfor refractories used in cement production in Brazil
Closing: ~60 days. Post-close, Reframec will continue to operate independently
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Refractory assembly in rotary kiln
-5.5%-5.5%
11.011.611.9
-7.8%-7.8%
South America
Refractory Solutions Sales - Steel
Crude Steel Production¹ (million tons) Main markets
+4.0%
-3.6%
226217234
000’ tons
Sales - Magnesita
1Q134Q121Q12
+0,5%
+0,5%
452450450
R$ Million
EU-27
80,6 %4Q12
20.7
1Q12
23.2
-8.6%-8.6%
+2.5%+2.5%
1Q13
21.2
United States1Q134Q121Q12
1Q13
452
4Q12
450
1Q12
450
4Q12
39.7
1Q12
43.9
-5.7%-5.7%
+4.3%+4.3%
1Q13
41.4
EU-27
5
Source: ¹WSA
Sales - Magnesita
Refractory Solutions Sales - Industrial
19,4%
+4.2%
+29.0%
42
33
41 101109
84
+28.8%
+7.8%
R$ million000’ tons
1Q134Q121Q12 1Q12 1Q134Q12
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Volume (000’ tons) Gross profit and gross margin
Refractory Solutions Sales - Consolidated
Revenue (R$ million)
534
15,8%
550
18,3%
+5.0%
+1.8%+1.8%
560
19,4%
90,7%
--2.4%
+7.3%
1Q13
268
4Q12
250
1Q12
275
Volume (000’ tons) Gross profit and gross margin (R$ million; %)
84,2%
1Q12
81,7%
1Q13
80,6%
4Q12
SteelIndustrial
34.3%
4Q12
29.7%
1Q12
30.8%
1Q13
192
158170
1Q134Q121Q12 4Q121Q12 1Q13
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+14.7%+14.7%
-28.4%-28.4%
28,8
40,3
Revenue (R$ million) Gross profit and gross margin (R$ million; %)
39.0%41.2%41.4%
Minerals and Services sales
Minerals
4,7%
1Q13
28,8
4Q121Q12
25,1
-8.6%-8.6%
Revenue (R$ million)
1Q134Q121Q12
Gross profit and gross margin (R$ million; %)
1117
10
Services
4,6%
1Q13
-8.6%
-22.4%-22.4%
36,928,6
4Q121Q12
31,3
8
1Q13
12.4%
4Q12
14.7%
1Q12
5.5%
452
4,6%
Consolidated sales (R$ million)
Consolidated
+1,8%+1,8%+1,1%+1,1%
617,9611,1606,9
PER SEGMENT
1Q134Q121Q12
6%
1Q13
5%
4Q12
5%
1Q12
PER REGION1Q134Q121Q12
10% 12% 13%6%
7%
87%
5%
5%
91%
5%4%
91%
ServicesMineralsRefractoriesOthersEuropeNorth AmericaSouth America
10%
18%
23%
49%
12%
19%
22%
47%
13%
19%
22%
47%
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Gross profit, EBITDA and net income
Gross Profit(R$ million)
EBITDA (R$ million)
14.4%
18.8%
13.5%
33.5%
29.5%29.9%
Gross Profit(R$ million)
Net Income (R$ million)
0.0%
4.3%4.7%207
180182
26
0
28
14.4%
4Q12 1Q13
13.5%
1Q12
116
8388
1Q134Q121Q12
10
4Q12 1Q131Q12
Operational cash flow, CAPEX and Cash cycle
Cash conversion cycle¹ (in days)¹
OCF and CAPEX Cash cycle
143 143 145 139 153
67 69 68 77
65
131 131 136 139 141
79 82 78 76 77
1T12 2T12 3T12 4T12 1T13
Cash conversion cycle¹ (in days)¹
77,5
16,8
97,4
55,7
23,5
74,5
OCF
CAPEX
1Q12 2Q12 3Q12 4Q12 1Q131T12 2T12 3T12 4T12 1T13
Ciclo de caixa Fornecedores Estoques Clientes
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¹LTM
4Q121Q12 1Q13
1Q12 2Q12 3Q12 4Q12 1Q13
Cash cycle Suppliers Inventories Clients
Debt and Leverage
Net debt / EbitdaEBITDA* LTMNet Debt
1,4x
Net debt / EbitdaEBITDA* LTMNet Debt
1.0591.0581.0311.002907
2,6x2,8x2,9x2,9x2,7x
907 1.4x1.4x1.4x
2,7x
Total Excluding Perpetual Bond
1Q134Q123Q122Q121Q12
Perpetual Bond
1Q12 1Q132Q12 4Q123Q12
*EBITDA excluding non recurring *EBITDA excluding non recurring
R$2%
-14%
907
401373357350334
566536513486
907
401373357350334
Amortization Schedule (R$ million) Net Debt per currency
2018+
1.472
20172016201520142013Mar-13
Cash
Amortization
Perpetual Bond
12
-3%
EUR
Others-2%
19%
80%
2%
13%
USD104%
Dec-12
Mar-13
678
7880621530
964
508
The Company applied, from 2013 fiscal year, IFRS 11 - "Joint Arrangements" issued in May 2011, and
included as an amendment to the text of the CPC 19 (R2) - "Joint Venture". Thus, the method of
IFRS 11 – Joint arrangement
included as an amendment to the text of the CPC 19 (R2) - "Joint Venture". Thus, the method of
proportionate consolidation is no longer permitted, the Company ceased to consolidate jointly controlled
Krosaki Magnesite Refractories LLC (United States). Additionally, from January 1st, 2013, holdings in
Krosaki Magnesite Refractories LLC (40%) are being accounted by the equity method. For comparison
purposes, the balance sheet of December 31, 2012 and March 31, 2012 were adjusted in the Quarterly
Information Form (“Formulário ITR”) considering the change of accounting practice. In the 1Q13 Earnings
Release, the Company has decided not to make changes in the quarters of 2012 to not impact the reports
and analysis already disclosed to the market.
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Octavio Pereira Lopes CEO and IRO
Eduardo Gotilla Global Finance & IR Director
Daniel Domiciano Silva
Investor Relations contacts:
Daniel Domiciano SilvaInvestor Relations
Phone: 55 11 3152-3202/[email protected]
www.magnesita.com
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