2Q14

Results
Apresentao
Usiminas
2T11 - APIMEC
Information Classification: Public

Agenda

Company
Clique para
Profile
editar oand
texto
Market
mestre Data

Usiminas and its

Business Units

Financial
Results
2

Time Line and Shareholder Composition

36.14%

29.45%

Control Group:
63.86% of Voting Capital

2013

Nippon Group

2012

Ternium/ Tenaris

2011

Usiminas Pension Fund

6.75%

Free Float

2009

27.66%

2008
2005
1994
1991
1956
Foundation
of Usiminas
1962Operation
Start Up

Privatization
of Usiminas:
1991
Cosipa: 1993
Listing on
BOVESPA

Listing on
ADR I - NY

Listing on
Latibex

2010

Aquisition of
J, Mendes
iron ore
mines
Aquisition of
Zamprogna

Foundation
of Solues
Usiminas due
to the
consolidation
of the
companies
Rio
Negro, Dufer
, Fasal and
Zamprogna,
Usial and
Usicort
Single CNPJ:
Cosipa is
incorporated
by Usiminas

Creation of
Minerao
Usiminas
Partnership
with Codeme
and Metform

Selling of
Ternium
shares
Joint Mining
and
Cooperation
Agreements
with MBL and
Ferrous
Commercial
Agreements
with MMX to
explore Pau
de Vinho and
to use the
Southest Port
Negociation
with
J, Mendes
concluded

Entrance of
Ternium/
Tenaris
into Usiminas
Control Group

Sale of
Automotiva
Usiminas

New
shareholders
agreement
signed among
Nippon
Group,
Ternium /
Tenaris and
Usiminas
Pension Fund
until 2031
Environmental
remediation
of the
retroarea in
Itagua/RJ

Strategically Located

Mining
Steel
Steel processing
Capital Goods

Complete Solution of Products and Services

Business Units

DOWNSTREAM

Steel Processing

Capital Goods

Steel

Mining

Solues Usiminas

Usiminas Mecnica

UPSTREAM

Ipatinga
Cubato

Minerao Usiminas

Unigal Usiminas

World Crude Steel Production in 2013

Million tons

China
Japan

779.0
110.6

USA

87.0

India

81.2

Russia

69.4

South Korea

66.0

Germany

42.6

Turkey

34.7

Brazil

34.2

Ukraine

32.8

Source: World Steel Association

Excess of
Capacity
530
Excess of
Production
132

Capacity

Production

Consumption

2,137

1,607

1,475
6

Flat Steel Brazilian Market

Production (million tons)

3.9
3.6

4Q12

1Q13

3.8

2Q13

3.8

3Q13

3.8

4Q13

Apparent Consumption (million tons)

3.8
3.5

3.5

3.4

3.4

1Q14

2Q14e

4Q12

1Q13

Source: IABR

Million tons

3.5

3.5

4Q13

1Q14

2Q14e

Imports (thousand tons)

2.8

3.1

Monthly Basis

608

3.3
2.7

2.6

2.6

0.9

1.0

1.1

1.1

1.0

1.0

1.1

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

Source: INDA

3Q13

3.6

Source: Usiminas. Excluding Slabs.

Inventories in the Distribution Network

2.6

2Q13

4.0

335

319

324

4Q12

1Q13

2Q13

Source: Usiminas

3Q13

562
426

440

4Q13

1Q14

2Q14
7

Agenda

Company
Profile and
Market Data

Usiminas and its

Business Units

Financial
Results
8

Steel Business Unit

Flat steel production

Installed Nominal Capacity : 9.5 million tons / year

Galvanized
Slab Caster

Slabs

Heavy Plates

Hot Coils

Cold Coils

EG

Ipatinga Plant

5,000,000tons

1,000,000tons

3,600,000tons

2,500,000tons

Cubato Plant

4,500,000tons

1,000,000tons

4,400,000tons

1,200,000tons

Nominal
Capacity

9,500,000tons

2,000,000tons

8,000,000tons

3,700,000tons

360,000tons

1,050,000tons

1,900,000tons

4,200,000tons

2,200,000tons

350,000tons

1,020,000tons

Optimized
Rolling
Capacity

360,000tons

HDG

1,050,000tons

Steel Business Unit

Everyday steel application

Auto Industries

Autoparts

Agricultural
Machines

Household
Appliances

Cold Rolled and

Galvanized (EG and HDG)

Hot Rolled

Heavy Plates and Hot

Rolled

Cold Rolled and

Galvanized (EG and HDG)

Civil Construction

Ship-Building

Pipelines

Pressure Vessels

Heavy Plates, Hot and Cold

Rolled and Galvanized (EG
and HDG)

Heavy Plates

Heavy Plates and Hot

Rolled

Heavy Plates

10

Steel Business Unit

Sales Volume - Thousand tons

1,572

1,565

144

112

1,492

1,437

1,456

169

220

1,299

1,268

1,236

4Q13

1Q14

2Q14

193

1,428

2Q13

1,453

3Q13

Domestic Market

Exports

Total
11

Steel Business Unit

Domestic Market

2Q14

1H14

Auto Industry
31%

36%

31%

38%

Industry in General
Household Appliances

8%

18%
7%

7%

17%

Civil Construction

7%
Distribution

12

Steel Business Unit

COGS 2Q14

1Q14

-7.0%

4.9%

2Q14
4.8%
3.7%
-1.3%
8.0%

18.9%

3.7%

18.9%

8.1%

9.6%
9.5%
24.8%

22.0%

8.8%
9.7%

9.0%
11.8%

16.7%

15.5%

Labor (direct and indirect)

Iron Ore and Pellets

Coal and Coke

Others Raw Materials

Energy and Fuels

Spare Parts

Depreciation

Structural Expenses

Inventories Variation

Others
13

Steel Business Unit

Adjusted EBITDA and Adjusted EBITDA Margin (Quaterly) - R$ million

17%

16%

13%
11%

10%
7%

7%
4%
2%

1%

477

457

1Q14

2Q14

376
308

289
201

100
1Q12

178
57

2Q12

3Q12

20
4Q12

1Q13

Adjusted EBITDA

2Q13

3Q13

4Q13

Adjusted EBITDA Margin

14

Steel Business Unit

Adjusted EBITDA and Adjusted EBITDA Margin (Annualy) - R$ million

16%

16%

10%
1,819

4%

1,151
934

2%
463
277

2010

2011

Adjusted EBITDA

2012

2013

1H14

Adjusted EBITDA Margin

15

Steel Business Unit

Investments in progress

Reform of the Coke Plant # 2 - Ipatinga

Metallurgical coke with adequate specifications for iron ore reduction in the blast furnance process

Coke gas to be used in the operational facilities of Ipating Mill

Start up scheduled for the 4Q14

16

Mining Business Unit

Description
Located in Serra Azul/MG

4 mining sites, acquired from J. Mendes Group in February, 2008

Reserves of 2.6 billion tons of iron ore
Has 20% of voting shares of MRS Logistica, being part of the Control Group
Retroarea in Itagua Port
Production capacity of 12 million tons/year
Shareholder Composition:

Igarap

So Joaquim
De Bicas

Minerita
MUSA
Central

70,0%

MUSA
Oeste

Arcelor
Mittal

30,0%

MUSA
Leste

Ferrous
(Santanense)

MMX MUSA
Pau de Vinho

Com
isa

Emicon

Ferrous

MBL
Itatiaiuu

Minerao Usiminas
17

Mining Business Unit

Logistics

40 Km

Mining
Business
Unit

60 Km

MODAL

TCS

IPATINGA Mill

Rack

CUBATO Mill/Port

Sepetiba/Itagua
Port
Export
18

Mining Business Unit

Production - Thousand tons

2,036
1,621

1,618

1,564

1Q14

2Q14

1,213

2Q13

3Q13

4Q13

19

Mining Business Unit

Sales Volume - Thousand tons

2,212
168
1,830
0

1,359

787

1,767
996

1,457

509

171

166
206

298

297

987

1,043

1,048

960

989

2Q13

3Q13

4Q13

1Q14

2Q14

Sales to Usiminas

Sales to 3rd parties - Domestic Market

Exports

Total
20

Mining Business Unit

Adjusted EBITDA and Adjusted EBITDA Margin (Quarterly) - R$ million

Price in Platts decreased 15% and the exchange rate apreciated 6% in the quarter.

53%
49%

47%

51%

33%

181
119

175

139
67

2Q13

3Q13

Adjusted EBITDA

4Q13

1Q14

2Q14

Adjusted EBITDA Margin

21

Mining Business Unit

Adjusted EBITDA and Adjusted EBITDA Margin (Annualy) - R$ million

67%

62%
49%

638

604

51%

44%

582
439
242

2010

2011

Adjusted EBITDA

2012

2013

1H14

Adjusted EBITDA Margin

22

Mining Business Unit

Retro Area in Itaguai Port

23
23

Steel Processing
Solues Usiminas

Solues Usiminas
10 industrial units in different states in
Brasil: MG, SP, RS, ES, BA and PE

Recife

Processing capacity of 2 million tons/year

Camaari

Net Revenue of R$1,146 million in the 1H14

Betim
Santa Luzia

Serra

Campo Limpo Paulista

Taubat
Guarulhos So Roque
Guarulhos Bonsucesso

Porto Alegre

24

Capital Goods
Usiminas Mecnica

Located in Ipatinga/MG
Market Segments: Steel Structures, Shipbuilding and Offshore, Oil and Gas, Industrial
Assembly and Equipment, Foundry and Railcars
Net Revenue of R$390 million in the 1H14

Oil Platform

Braslia 3rd Bridge

25

Agenda

Company
Profile and
Market Data

Usiminas and its

Business Units

Financial
Results
26

Consolidated
Gross Profit, EBIT and Net Income - R$ million

520
455

437

376
336
226

207

163

142

222
168

334

200
129

115
47

-16

-22

-44
4Q12

1Q13 -123

2Q13

3Q13

4Q13

1Q14

2Q14

-283

Gross Profit

EBIT

Net Income
27

Consolidated
Adjusted EBITDA and Adjusted EBITDA Margin (Quaterly) - R$ million

21%
17%

18%

16%

14%
10%
7%

7%

7%
4%

655
538

514

3Q13

4Q13

549

441
313
190

1Q12

232

226
150

2Q12

3Q12

4Q12

Adjusted EBITDA

1Q13

2Q13

1Q14

2Q14

Adjusted EBITDA Margin

28

Consolidated
Adjusted EBITDA and Adjusted EBITDA Margin (Annualy) - R$ million

20%

19%

2,650

14%
11%
1,806

5%
1,264

1,205

697

2010

2011

Adjusted EBITDA

2012

2013

1H14

Adjusted EBITDA Margin

29

Consolidated
Cash Position and Debt Profile - R$ million

Debt Profile

2,894

Duration:

R$: 36 months
US$: 35 months

1,096

1,430

1,406

482

571

1,439
359

1,798
456
239

679
949

835

1,080

2014

797
47
751

101
2
99

2019

2020

392

218
Cash

1,070

2015

2016

2017

Local Currency

2018

8
0
8
2021 on

Foreign Currency

30

Consolidated
Cash and Indebtedness R$ million

8,016
7,499
6,903
2.9

2.3

4,736

1.9

3,990

2Q13

3,469

3Q13

Cash

4Q13

Gross Debt

6,658

6,708

1.7

1.7

2,914

2,894

1Q14

2Q14

Net debt / Adjusted EBITDA (x)

31

Consolidated
Capex R$ million

3,192
81
41
2,490
276
365
1,642
112

3,070

555

981
64
317

1,849

499
18
57
424

976
600
2010

2011

Others

2012

Mining

2013

Steel

1H14

Total
32

Consolidated
Working Capital - R$ billion

3.0

3.1

2.8

2.7
2.6

2.5
2.2

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

33

Consolidated
Working Capital - Steel Inventories - Thousand tons

1,072
1,031

1,059

1,028

995

903

916

54

51

52

59

65

66

61

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

Inventory
Days

34

Income Statement Quarterly

Per Business Unit R$ million

Mining

R$ million

Steel*

Steel
Processing

Capital Goods

Adjustment

Consolidated

2Q14

1Q14

2Q14

1Q14

2Q14

1Q14

2Q14

1Q14

2Q14

1Q14

2Q14

1Q14

203

346

2,918

2,877

596

562

221

169

(831)

(812)

3,106

3,142

179

234

2,566

2,575

595

557

213

169

(831)

(812)

2,723

2,723

23

112

352

302

384

420

(131)

(153)

(2,639)

(2,539)

(570)

(529)

(196)

(151)

764

750

(2,772)

(2,623)

Gross Profit

72

192

278

339

26

33

25

18

(67)

(63)

334

520

Operating Income
(Expenses)

(35)

(41)

(61)

(96)

(32)

(31)

(6)

(16)

(134)

(183)

EBIT

36

151

218

242

(7)

19

(66)

(62)

200

336

Adjusted EBITDA

67

175

457

477

12

25

(2)

(18)

549

655

33%

51%

16%

17%

1%

2%

11%

5%

18%

21%

Net Revenue
Domestic Market
Exports
COGS

Adj.EBITDA Margin
*Consolidates 70% of Unigal

Note: All intercompany transactions are made at arms length,

35

Income Statement Semi-Annually

Per Business Unit R$ million

R$ million

Mining

Steel*

Steel
Processing

Capital Goods

Adjustment

Consolidated

1H14

1H13

1H14

1H13

1H14

1H13

1H14

1H13

1H14

1H13

1H14

1H13

548

471

5,795

5,563

1,158

1,185

390

524

(1,643)

(1,305)

6,249

6,439

Domestic Market

413

397

5,141

4,906

1,152

1,172

382

524

(1,643)

(1,305)

5,445

5,696

Export Market

135

74

654

657

13

803

743

COGS

(284)

(176)

(5,178)

(5,297)

(1,099)

(1,066)

(347)

(499)

1,514

1,182

(5,395)

(5,856)

Gross Profit

264

295

617

266

59

119

43

26

(129)

(122)

854

583

Operating Income
(Expenses)

(77)

(53)

(157)

(274)

(63)

(97)

(22)

(36)

(317)

(458)

EBIT

187

242

460

(8)

(4)

22

21

(10)

(128)

(120)

537

126

Adjusted EBITDA

242

263

934

467

15

49

34

(20)

(27)

1,205

755

Adj.EBITDA Margin

44%

56%

16%

8%

1%

4%

9%

1%

19%

12%

Net Revenue

*Consolidates 70% of Unigal

Note: All intercompany transactions are made at arms length,

36

Final Message

Continuous Process of development

2012 2013
Costs
CAPEX
Working Capital

2013 2015
Productivity and operational efficiency
Development of labor force
Focus on the domestic market: greater integration
with customers and development of new products
Leverage reduction
Focus on the core business

37

ADR
Level I

Cristina Morgan C. Drumond

Head of IR
cristina.drumond@usiminas.com
Phone: 55-31-3499-8772
Fax: 55-31-3499-9357

Leonardo Karam Rosa

Diogo Dias Gonalves

Renata Costa Couto

IR Manager
leonardo,rosa@usiminas,com
Phone: 55-31-3499-8550

IR Manager
diogo.goncalves@usiminas.com
Phone: 55-31-3499-8710

IR Analyst
r.couto@usiminas.com
Phone: 55-31-3499-8619

www,usiminas,com/ri

Declarations relative to business perspectives of the Company, operating and

financial results and projections, and references to the growth of the
Company constitute mere forecasts and were based on Managements
expectations in relation to future performance, These expectations are highly
dependent on market behavior, on Brazils economic situation, on the
industry and on international markets, and are therefore subject to change,