ACERINOX GROUP: NOVEMBER 2010 · • Main investments in Acerinox, S.A., NAS and Columbus are...

ACERINOX GROUP: NOVEMBER 2010

Miguel FerrandisCFO of Acerinox Group

Spain Investors Day

Hotel Ritz, Madrid

22-23th November 2010

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

22,000

24,000

26,000

28,000

30,000

50 60 70 80 90 00 09 Source: VALE INCO e ISSF

Compound annual growth rate

Years 1950-2009: +5.5%

Thousand Mt.WORLD PRODUCTION OF STAINLESS STEEL

ACERINOX GROUP: Spain Investors Day

Other transportation3%

Other application3%

Appliances and consumer electronics

8%

Food industry9%

Automotive9%

Energy7%

Chemical and Pharmaceutical industry

7%

Building & Construction17%

Industrial machinery & Process

11%

Household equipment15%

Catering equipment11%

STAINLESS STEEL REAL DEMAND BY SECTORSYear 2008


3.06

3.52

2.49

3.06

4.69

5.03

Lead

Copper

Zinc

Aluminium

Steel withoutstainless steel

Stainless steel

Average 3.36

GROWTH OF STAINLESS STEEL AND ALTERNATIVE METALIC MATERIALS (Years 1995-2009)Compound annual growth in % per year

Source: ISSF


0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

55,000

Average 1990–2005: 8,062 USD/Mt. Ni

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10

OFFICIAL NICKEL PRICE IN THE L.M.E. (1991-October 2010)Monthly average values (USD/Mt. Ni.)


1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

7,000

USA

GERMANY

SOURCE: Metal BulletinResearch “Stainless SteelMonthly”

ASIA (since year 2008; average of China,Taiwanand South Korea)

01 02 03 04 05 06 07 08 09 10

STAINLESS STEEL COLD ROLLED SHEET PRICES AISI. 304 2.0 mm(2001 – October 2010)USD/Mt, final price, alloy surcharge included


0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Base Price Alloy Surcharge

01 02 03 04 05 06 07 08 09 10

STAINLESS STEEL COLD ROLLED SHEET PRICES AISI. 304 2.0 mm(2001 – October 2010)€/Mt, German market

SOURCE: MBR


0500

1,0001,5002,0002,5003,0003,5004,0004,5005,0005,5006,0006,5007,000

Base Price Alloy Surcharge01 02 03 04 05 06 07 08 09 10

SOURCE: MBR

STAINLESS STEEL COLD ROLLED SHEET PRICES AISI. 304 2.0 mm(2001 – October 2010)USD/Mt, North American market


210

13

-93

6 10

71

16

-112

-29

-136

19

201

-162

88

67

-200

-150

-100

-50

0

50

100

150

200

250

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

2008 2009 2010

RESULTS AFTER TAXES AND MINORITIES. ACERINOX CONSOLIDATED GROUPMillion €

2007


CONDENSED PROFIT & LOSS ACOUNT. ACERINOX CONSOLIDATED GROUP

Million € 1º Q. 10 2º Q. 10 3º T.10 2010 2009 Variation

Net sales 999,39 1.172,80 1.176,40 3.348,59 2.501,45 33,9%

Gross margin 262,56 382,62 290,74 935,92 393,88 137,6%% over sales 26,3% 32,6% 24,7% 27,9% 15,7%

EBITDA (*) 61,03 172,11 64,22 297,37 -189,35 ----% over sales 6,1% 14,7% 5,5% 8,9% -7,6%

Gross operating result 61,03 151,49 74,22 286,74 -215,04 ----% over sales 6,1% 12,9% 6,3% 8,6% -8,6%

EBIT 25,59 112,51 37,35 175,45 -319,20 ----

% over sales 2,6% 9,6% 3,2% 5,2% -12,8%

Result before taxes16,01 103,51 24,13 143,64 -345,22 ----

Result after taxes

and minorities10,11 71,00 16,39 97,50 -224,28 ----

Depreciation 35,36 37,92 36,61 109,89 102,77 6,9%Net cash flow 45,47 108,93 53,00 207,39 -121,50 ----

January-September

(*) EBITDA is defined as the operating result plus depreciation and provisions


Strong balance sheet

Prudent leverage

Well balanced debt

Diversified bank pool

TRADITIONAL FINANCIAL STRENGTHS


CONDENSED BALANCE SHEET OF ACERINOX CONSOLIDATED GROUPSeptember 2010

ASSETS LIABILITIESMillion € Sep-10 2009 Variation Million € Sep-10 2009 variation

Non-current assets 2,256.21 2,002.06 12.7% Equity 1,969.43 1,752.52 12.4%

Current assets 2,142.09 1,615.72 32.6% Non-current liabilities 924.67 800.07 15.6% - Inventories 1,403.61 1,154.45 21.6% - Interest-bearing loans and borrowings 647.53 543.18 19.2% - Debtors 599.06 371.19 61.4% - Other non-current liabilities 277.14 256.89 7.9% Trade debtors 574.12 304.17 88.7%

Other debtors 24.94 67.01 -62.8% Current liabilities 1,504.20 1,065.19 41.2% - Cash and other current assets 139.42 90.09 54.8% - Interest-bearing loans and borrowings 746.59 604.63 23.5%

- Trade creditors 486.97 306.15 59.1% - Other current liabilities 270.64 154.42 75.3%

TOTAL ASSETS 4,398.30 3,617.79 21.6% TOTAL EQUITY AND LIABILITIES 4,398.30 3,617.79 21.6%


30%

70%

Credit lines

Total existing lines:1,992 mill. €

Used creditfacilities

Availablecredit facilities

DEBT STRUCTURE


September 2010

Net debt

49%

51%

Long term debt

Short termdebt (*)

Net debt:1,275.94 million €

(*) Treasury has been deducted of the short term debt

Ongoing capex program

Keeping retribution to shareholders

Flexibility to manage a volatile working capital

FINANCIAL ACHIEVEMENTS IN A WORLDWIDE RECESSION


2009 2008 2007 2006 2005

- ACERINOX, S.A. 40,859 92,669 52,273 37,530 45,787

- NAS 45,996 164,845 99,428 99,365 125,078

- COLUMBUS 29,784 54,808 26,065 18,501 28,195

- BAHRU STAINLESS 101,977 --- --- --- ---

- ROLDAN AND INOXFIL 1,682 8,506 17,829 8,505 7,022

- DOMESTIC TRADING COMPANIES 138 1,301 3,078 2,923 4,349

- OVERSEAS TRADING COMPANIES 10,449 20,121 16,521 9,875 12,080

TOTAL 230,886 342,250 215,194 176,699 222,511

• Main investments in Acerinox, S.A., NAS and Columbus are already made• CAPEX for next years should be in line with the previous years and focused in Bahru Stainless

INVESTMENTS IN THE CONSOLIDATED GROUPThousand €


DividendDividend

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

0.50

0.55

05 06 07 08 09

0.34

0.26

0.08

0.34

0.26

0.08

0.48

0.35

0.10

0.45

0.35

0.10

0.45

0.35

0.10

0.03

Attendance bonusAGM

Issue PremiumRefund

RETURN TO SHAREHOLDERS€ / share


0

250

500

750

1.000

1.250

1.500

1.750

2.000

2.250

00 01 02 03 04 05 06 07 08 09 Sep10

Inventories

Trade debtors

Trade creditors

EVOLUTION OF THE WORKING CAPITALMillion €


Well Defined Production Strategy

Excellence Plan

Global Expansion

STRATEGIC PLAN 2008 - 2020


• Consolidate and develop a commercial network

• Use the group synergies, without adding new capacity to the market

2,665,000 mt/year4,100,000 mt/year4,500,000 mt/year

1,000,000 mt/year

1,000,000 mt/year

1,200,000 mt/year

900,000 mt/year

Hot rolling

600,000 mt/year1,000,000 mt/year

545,000 mt/year1,000,000 mt/year

850,000 mt/year

670,000 mt/year

Cold rolling

1,400,000 mt/year

1,100,000 mt/year

MeltingCapacity

STRATEGIC PLAN 2008 - 2020Bahru Stainless


MALAYSIA

THAILAND

VIETNAM

PHILIPPINES

INDONESIA

PACIFIC OCEAN

MALACCA STRAIT

INDIAN OCEAN

MALAYSIA

SINGAPORE

JOHOR PORT

TANJUNG PELEPAS PORT

SINGAPORE PORT

STRATEGIC PLAN 2008 - 2020Bahru Stainless: Strategic Location


Population SS production Consumption per

(million) (Mt/year) capita (kg/year)

Thailand 66 250.000 200.000 3,8

Malaysia 26 220.000 --- 8,4

Singapore 5 120.000 --- 25,5

Indonesia 243 125.000 20.000 0,5

Vietnam 90 90.000 12.000 1,0

Philippines 100 30.000 --- 0,3

Burma 53 --- 0,1

Laos 7 --- 0,1

Brunei 0 --- 0,1

Cambodia 15 --- 0,1

Total ASEAN countries 605 845.000 232.000 1,5

Total flat consumption of SS (Mt/year)

10.000

ASEAN Countries

ASEAN ZONE STAINLESS STEEL MARKET


Data referred to year 2009

• Development of a new integrated 1 million mt/year stainless steel mill in Malaysia in phases.

• Current investment for phases 1 & 2:

680

400,000310ZM-2 + AP-2 + Finishing linesPHASE II

240,000370ZM-1 + AP-1 + Finishing linesPHASE I

PRODUCTION (mt/year)EQUIPMENTS (000,000 US$)

STRATEGIC PLAN 2008 - 2020Bahru Stainless


Strategic Location at the seaside

Competitive costs

Strong and growing local markets in Malaysia and Singapore

Developed commercial presence in the region of Acerinox

Malaysia: Stable and developed country, with good infrastructure

Unique geographic distribution of the group within the stainless steel sector

Consolidate the presence in the region with the highest consumption andgrowth of the world

Guarantee of success due to best available technology and the accumulated experience in the group, in addition to the competitive cost factors of the region

Cost reduction in the group due to economy of scale benefits

Bahru Stainless: Main advantages

STRATEGIC PLAN 2008 - 2020

CREATING VALUECREATING VALUE


BAHRU STAINLESS. GENERAL PLANT LAY-OUT: PHASE I


BAHRU STAINLESS. GENERAL PLANT LAY-OUT: PHASE II


BAHRU STAINLESS. GENERAL PLANT LAY-OUT: PHASE III


BAHRU STAINLESS. GENERAL PLANT LAY-OUT: PHASE IV


0

250

500

750

1,000

1,250

1,500

1,750

2,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Estimated CAGR : +6%

Consumption Production

ASEAN MARKET AND FORECASTED DEVELOPMENT‘000 Mt


1.41.20.80.2

1.10.90.70.2

1.01.00.5

CONSUMPTION AMERICA

CONSUMPTIONASIA + OCEANIA

CONSUMPTIONEUROPE + AFRICA

13.27.22.5

1.01.00.6

Melting Hot Rolling Cold Rolling Long Prod.

Melting Hot Rolling Cold Rolling Long Prod.

Melting Hot Rolling Cold Rolling

Melting Hot Rolling Cold Rolling

PRODUCTION CAPACITY OF THE GROUP AND WORLD CONSUMPTION PER AREASMillion Mt.


Risk mitigation:

Commercial

Financial

Strategic

Operational

Proximity to markets

Global supplier for global customers

Excellence through cultural and technical exchange

Unique benchmarking opportunity

WHY GLOBAL?


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