Upload
magnesitari
View
400
Download
5
Embed Size (px)
DESCRIPTION
Citation preview
Magnesita Refratários S.A.Magnesita Refratários S.A.
JuneJune, 2013, 2013
Disclaimer
The material that follows is a confidential presentation of general background information about Magnesita Refratários S.A. and its consolidated subsidiaries (“Magnesita" or
the "Company") as of the date of the presentation. It is information in summary form and does not purport to be complete and is not intended to be relied upon as advice to
potential investors.
No representations or warranties, express or implied, are made as to, and no reliance should be placed on, the accuracy, fairness or completeness of the information
presented or contained in this presentation. Neither the Company nor any of its affiliates, advisers or representatives, accepts any responsibility whatsoever for any loss or
damage arising from any information presented or contained in this presentation. The information presented or contained in this presentation is current as of the date hereof
and is subject to change without notice and its accuracy is not guaranteed. Neither the Company nor any of its affiliates, advisers or representatives make any undertaking toand is subject to change without notice and its accuracy is not guaranteed. Neither the Company nor any of its affiliates, advisers or representatives make any undertaking to
update any such information subsequent to the date hereof. This presentation should not be construed as legal, tax, investment or other advice.
[Data in this presentation was obtained from various external data sources, and the Company has not verified such data with independent sources. Accordingly, the Company
makes no representations as to the accuracy or completeness of such data, and such data involves risks and uncertainties and is subject to change based on various factors].
This presentation contains forward-looking statements. Such statements are not statements of historical facts, and reflect the beliefs and expectations of Magnesita’s
management. The words "anticipates", "wishes", "expects", "estimates", "intends", "forecasts", "plans", "predicts", "projects", "targets" and similar words are intended to
identify these statements. Although the Company believes that expectations and assumptions reflected in the forward-looking statements are reasonable based on
information currently available to the Company's management, the Company cannot guarantee future results or events. You are cautioned not to rely on forward-looking
statements as actual results could differ materially from those expressed or implied in the forward-looking statements.
This presentation does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities, and neither any part of this presentation nor
any information or statement contained therein shall form the basis of or be relied upon in connection with any contract or commitment whatsoever.any information or statement contained therein shall form the basis of or be relied upon in connection with any contract or commitment whatsoever.
2
Summary
Industry overview
Company overview
Financial HighlightsFinancial Highlights
3
Refractory industry overview
Industry overview
What are refractories: Fireproof materials
consumed within various production processes,
providing heat, chemical and mechanical
resistance in industrial furnaces
Raw material: Minerals with high melting point,
Monolithic
1 ton of steel = ~10 kg of refractories
1 ton of cement
Types of refractories Consumption (average)
Refractories are crucial consumables for manufacturing processes with high temperatures
Refractories are continuously consumed during steel production…
Electric Arc Fumace Steel Refining
Facility
Iron Ore
STEEL LADLES
Volume: 70 tonnes
Life Expectancy: 1 month
…and cement production
Preheater Tower
CLINKER COOLER
Volume: 500 tonnes
Life Expectancy: 1 - 3 years
including magnesite, dolomite and alumina. Raw
material quality and assured supply are essential
Represents ~3% of COGS in steel manufacturing
and less than 1% in cement
Bricks
Pre castables, valves and slide gates
1 ton of cement = ~0.6 Kg of refractories
FumaceFacility
Continuos Casting
Basic Oxygen
Furnace
Recycled Steel
Direct Reduction
Coal Injection
Coal
Coke Oven
Limestone
Blast Furnace
NaturalGas
ELECTRIC ARC FURNACE
Volume: 120 tonnes
Life Expectancy: 1 month
BLAST FURNACE
Refractory Volume:
900 tonnes
Life Expectancy: 15 years
TORPEDO CAR
Volume: 200 tonnes
Life Expectancy: 2 years
CONVERTER
Volume: 800 tonnes
Life Expectancy: 6 months
CONTINUOUS CASTING
Volume: 25 tonnes
Life Expectancy: 10 hours
Source: Company
Life Expectancy: 1 - 3 years
PREHEATER TOWER
Volume: 1,000 tonnes
Life Expectancy: 5 - 10 years
ROTARY KILN
Volume: 250 tonnes
Life Expectancy: 10 months
4
Refractory: USD25 billion global industry
Source: Freedonia.estimates 2011 Source: Company estimates .
Main consumers worldwide Fragmented industry – Global market share (in USD)
RHI ~ 9%
SteelNon-ferrous
(aluminum, copper, nickel, silver, zinc)
Nonmetallic(cement, glass, lime)
Global players
Segment players
Vesuvius-~10%
Magnesita ~ 5%
~10%
Chineseplayers
~37%~15%
~15%
Refratechnik
Magnesita is a global player with a unique business model in the industry
Steel (aluminum, copper, nickel, silver, zinc)
Other
Regional players~10%
ShinagawaKrosakiANHQinghuaMagnezit
~13%
~60%~10%
RefratechnikSaint GobainCalderysMinteq
Small local players
ManufacturingOnly
MiningRefractorymanufacturing
ServicesFull (performance-based)
Different business model across the value chain… …lead to different margins levelsSource: Bloomberg
~16%
Fully Integrated
Only
CPP-Integrated
Higher margins; difficulty to replicate +-
IntegratedManufacturing
IntegratedServices 25,7%
Vesuvius
30,4%
21,6%
RHI Shinagawa
17,7%
Magnesita
17,4%
Krosaki
5
Gross Margin (2012)
Summary
Industry overview
Company overview
Financial HighlightsFinancial Highlights
6
Company overview
70 years expertise in refractories and industrial minerals
3rd largest player in the refractory sector worldwide, present in the main steel markets
1st in the steel and cement industries in Brazil and South America
Magnesita is a global leader in refractories solutions and industrial minerals
1st in the stainless steel industries in North America and Europe
Highest vertical integration level in the industry (~80%), fully self-sufficient in high-grade magnesite
Best, largest and lowest-cost magnesite mine in the world outside China.
Significant number of mineral rights in Brazil
Solid financial fundamentals
Magnesita in numbers
Revenues of R$ 2.46 billion in 2012
Production in 4 continents, supplying globally to more than 850 clients worldwide
6,500 employees
29 industrial facilities with a nominal capacity of 1.6 million tons/year of refractories
7
Business highlights
Enginering, assembly and
Refractory Solutions ServicesIndustrial Minerals
Magnesita leverages its competitive advantages throughout the whole value chain
Refractories with tailor made
UPSTREAM DOWNSTREAM
Details/description
Current: Talc, caustic magnesia and magnesia sinter
Development: Graphite and talc expansion
Enginering, assembly and
installation of refractories
Value-added services, including
spot contracts
Applications
Talc: Plastic, cosmetics, pharmaceuticals, food, ceramics, pulp and paper, etcCaustic magnesia: Fertilizers, abrasives, animal nutrition, etcSinter: refractories
formulations and shapes as
well as strong technical service
Two commercial models (CPP
and conventional)
Steel
Industrial (cement, non-
ferrous, non-metallic)
Steel
Industrial (cement, non-
ferrous, non-metallic)
Mining
Net revenues(2012)
R$ 148 million
(6% of the total revenues)
R$ 130 million
(5% of the total revenues)
Gross margin(2012)
11%43%
R$ 2.186 million
(89% of the total revenues)
31%
8
Experienced management team
Octavio Pereira Lopes - CEO� Successful as CEO of Equatorial and as a
Managing Director at GP Investments
Previous
experience
Joined Magnesita in 2007 as board
member and became CEO in 2012
Industry experience
Over 70 years of combined experience in the industry
Otto Levy Reis - VP Commercial
Vinícius Silva - VP Minerals
José Roberto Beraldo - CFO
Felipe Sommer- VP People and MGMT
Luis Rodolfo Bittencourt - VP R&D
Functional Team
Operational Team
� Solid financial background
� Senior roles and extensive
experience in global companies
� Over 70 years of combined
Industry Experience: +11 years
Joined Magnesita in 2008
Industry Experience: +27 years
27 years in Magnesita
Industry Experience: +3 years
Joined Magnesita in 2010
Joined Magnesita in 2012
Joined Magnesita in 2012
Peter Estermann - COO Global
Martin Bartmann - Global Supply Chain
Eduardo Moretti - COO China
� Over 70 years of combined
experience in the industry
� Close relationships with
key players and clients in the
industry
Industry Experience: +5 years
Joined Magnesita in 2008
Industry Experience: +17 years
Joined Magnesita in 2011
Industry Experience: +18 years
Joined Magnesita in 2009
Joined Magnesita in 2010
9
Global scale, with local presence in key markets, with an integrated supply chain
Valenciennes and Flaumontunits production (FRA)
Hagen-Halden, Oberhausen and Kruftunits production (DEU)
Chizhou unit production (CHN)
Taiyuan JV’s unit production (CHN)
Qingyang dolomite mine (CHN)
Sinterco Dolomite JV (BEL)
Unique global footprint
York unit production (USA)
Contagem
San Nicolás unit production (ARG)
York Dolomite Mine (USA)
Magnesite mine (Brumado - BRA)
Chromite mine (BRA)
Talc mine (BRA)
Taiwan JV’s unit production (CHN)
DMR unit production (CHN)
Sales OfficeRefractory productionMines
Sales per region 2012
Contagem units production (BRA)
Coronel Fabricianounit production (BRA)
Europe
Asia
NAM
22%
8%
18%49% SAM
Others
2%
10
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
New strategic visionO
ne
glo
ba
l o
rga
niz
ati
on
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
11
I – Ensure leadership in our core markets
Dolomitics in North America
Dolomitics in Western Europe
Our differentiated competitive position and leadership in core markets support our growth as they recover
~50% in stainless steel
Magnesita’s share* in core marketsMagnesita’s share* in core markets
Vertically integrated low-cost producer
Continuous investments in R&D and technology
Specialized technical assistance
Vertically integrated low-cost producer
Continuous investments in R&D and technology
Specialized technical assistance
Magnesita’s competitive advantages in its core marketsMagnesita’s competitive advantages in its core markets
~60% in stainless steel
South America
Long standing relationship with blue-chip customers
~50% in stainless steel
~20% in mini-millsLogistic advantages due to privileged locations
Captive CPP contracts with long-term alignment of
interests
Brand recognition and historical leadership
Logistic advantages due to privileged locations
Captive CPP contracts with long-term alignment of
interests
Brand recognition and historical leadership
~60% in stainless steel
~15% in mini-mills
~65% in steel
~60% in cement
*Company estimates
12
Pursue long term growth opportunities in select markets where we can deliver superior value
Access to high quality and low cost raw materials
Exposure to emerging markets
Global scale with an integrated supply chain
Best-in-class technical and R&D capabilities
Increasing reach of our sales force
Opportunities for diversification into non steel industries
Magnesita refractorysales (2012)
Refractories consumption - Global Market
Industrial
40%
Steel60%
Industrial16%
84%
II – Grow selectively and aggressively
Increasing reach of our sales force
Historically low exposure in several important markets
Crude Steel Production¹ (mln ton) and Magnesita’s share² (%)
Opportunities for geographic diversification in steel Opportunities for geographic diversification in cement
13812211880
16%
228204202
162
9.6%
363305293
226
Steel
Steel
84%
1%
North America Europe
140130123115
345328317327
Asia ex-China
3.0932.9472.7812.618
Cement Production¹ (mln ton) and Magnesita’s share² (%)
25% <5% <1%
North America Europe Asia
Source: ¹CRU and ²Company estimates
2017(f)2013(f)2012(e)
2009 2017(f)
2013(f)
2012(e)
2009
13111511298
2017(f)2013(f)2012(e)
2009
0.3%
60514738
2017(f)2013(f)2012(e)
2009
56434034
2017(f)
2013(f)
2012(e)
2009
2013(f)2012(e)
2009 2017(f)
65% 2.1%
CIS
2014(f)
2013(f)
2012(e)
2011 2014(f)
2013(f)
2012(e)
2011
Central & SouthAmerica
MEA
2014(f)
2013(f)
2012(e)
2011
133124116108
2014(f)
2013(f)
2012(e)
2011
338315295270
2014(f)
2013(f)
2012(e)
2011
<2% <1%
Central & SouthAmerica
Others
Source: ¹CW Group and ²Company estimates
13
Unlocking our internal expertise and the industrial minerals opportunity in Brazil
→ Initial portfolio of attractive mineral rights
→ 70 years of mining experience in Brazil (DBM, CCM, talc, etc)
→ Expertise in geology, research and environmental requirements
→ Knowledge of local stakeholders management
→ Dedicated team to prospect, analyze and develop business
Magnesita’s strategic positioning
III – Expand industrial minerals base
→ Dedicated team to prospect, analyze and develop business
→ Brazil is fertile; very favorable geography
→ It has been historically unexplored
→ Viewed as a reliable source (vs China)
The Brazilian opportunity
→ Attractive due to global unbalance of supply and demand
→ Minerals out of big players’ radar
→ Logistic is not predominant
→ Commercial development is necessary
→ US$2bi – US$10bi global markets
Focused 0pportunity set
Magnesita is very well positioned to occupy the “white space” in Brazil
→ US$2bi – US$10bi global markets
14
Our goal is to have at least one project moving to the next phase every 12 – 18 months
1.Preliminary5 to 10 analysis
2.DevelopmentGraphite
3.Installation 4.OperationalDBM, Talc, CCM
III – Expand industrial minerals base
Projects in development phase
Graphite project Talc expansion
5 to 10 analysis per year
Graphite Talc expansion
DBM, Talc, CCM
• Preliminary geological work • Market analyses • Low capex; high risk
• Complete geological work and reserve certification•Environmental license• Industrial project•Commercial development• Medium capex; medium risk
• Investment in the industrial plant•High capex; low risk
•Cash flow generation• Maintenance capex
Graphite project
Become self sufficient supplying our refractory business
Surplus to supply third parties, focusing on high end users
Positive outlook and growing demand from new applications
Restrictions from Chinese exports (~80% of global production)
Environmental license granted in March 2013
Talc expansion
Leader in Brazil, producing ~40kton/y
~50% gross margin
Low environmental license and geological risk
Commercial development underway
Project should double capacityover next 2 years
15
Sinterco Dolomite JV (Belgium)
31 million tonnes of reserves
Expected life: 30 years
York Dolomite Mine (PA-USA)
25 million tonnes of reserves
Expected life: 45 years
IV - Maintain a global low cost production baseOpportunities for further industrial and supply chain optimization
North American facility (PA-USA)
European facilities (3 in Germany and 2 in France) DMR facility (Dalian-China)
Brumado (Bahia-Brazil)
830 million estimated tonnes
of reserves (549 million measured)
Only mine to allow the economical production of 98.3%-grade DBM
Qingyang Dolomite Mine (China)
18 million tonnes of reserves
Expected life: 50 years
South American facilities
Asian facility (Chizhou-China)
production of 98.3%-grade DBM
Expected life: ~200 years
The mine is connected to the port
of Aratu by the FCA railway
South American facilities (MG-Brazil and Argentina)
Raw material flow
Finished product flow
Brumado has the highest quality of raw material in the world with more than 200 years of reserves
16
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.
17
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
18
Refractory assembly in rotary kiln
Summary
Industry overview
Company overview
Financial HighlightsFinancial Highlights
19
Revenues EBITDA and EBITDA margin (excl. non-recurring)
+6,2%+8,5%
Steady organic growth
Proven resilience in adverse market conditions
CAPEX funded comfortably with operational cash flow
14,5%18,7%17,7%
15,1%
Financial highlights (BRL mln)
2.464
2011
2.319
2010
2.276
2009
1.927
+6,2%
2012
373337
425340
2011
14,5%
20102009
+10,7%
2012
15,1%
44,6%48,7%
Magnesita¹CSNGerdauUsiminas
Operational Cash Flow and Capex
552
OCF CAPEX Brumado expansion
Gross margin Magnesita vs clients
2008 2009 2010 2011 2012
30,4%
22,6%
12,5%
-3,0%
30,0%
32,5%
14,4%
0,7%
34,2%
44,6%
17,6%
14,2%
32,5%
35,5%
16,7%
11,5%
37,5%
26,0%
34,2%
Source: Companies report (only parent company for Usiminas and CSN)¹Magnesita in 2011 was adjusted due to accounting reallocation
257
165
92
2012
342
171
120
51
2011
552
78
2010
365
37
2009
131
20
1Q13 Results
Steel production in Magnesita’s core markets (mln tonnes)
-8%
-5%
11,011,611,9
South America-9%
3%
21,220,723,2
United States
4%
-6%
41,439,743,9
EU-27
Despite the challenging scenario, results have improved in 1Q13
1Q134Q121Q12 4Q134Q121Q12 1Q134Q121Q12
+2%
+1%
18,8%
Revenues (BRL mln)
16,2%
Ebitda margin Ebitda LTMEBITDAEBITDA margin
EBITDA (BRL mln) EBITDA LTM (BRL mln)
21
+1%
1Q13
617,9
4Q12
611,1
1Q12
606,9116
8388
1Q134Q12
13,5%
1Q12
14,4%
401373358352337
4Q12
14,6%
1Q12
14,3%
1Q134Q12
16,2%15,1%
1Q13
14,6%
*E
BIT
DA
exc
lud
ing
no
nre
curr
ing
Debt and Leverage
Total Excluding Perpetual Bond
1.0591.058
2,6x2,8x2,9x2,9x2,7x
Net debt / EbitdaEBITDA* LTMNet Debt
2,7x
Net debt / EbitdaEBITDA* LTMNet Debt
Solid balance with no refinancing risk
Amortization Schedule (R$ million) Net Debt per currency
1.0591.0581.0311.002907
401373357350334
1Q134Q123Q122Q121Q12
*EBITDA excluding non recurring *EBITDA excluding non recurring
Perpetual Bond -14%BRL
566536513486
907
401373357350334
1,4x1,4x1,4x1,4x
1Q12 1Q132Q12 4Q123Q12
22
678
7880621530
964
508
1.472
2018+20172014 2015 20162013Mar-13
Perpetual Bond
Cash
Amortization 2%
80%
-14%BRL
USD104%
13%
19%
Others
EUR
-3%
-2%
Dec-12
Mar-13
Key messages
Global vertical integrated player with unique geographic position
Opportunities for growth and diversification into selected markets and industries
Focused on delivering superior returns to shareholders
markets and industries
Unique solution-based model (CPP) and performance-based applied R&D
Significant value of mineral reserves with opportunities to expand industrial minerals base
Strong management team and corporate governance practices
Solid financial fundamentals
23
Annex
24
Strong support from shareholders
Only common shares
2 independent board members
Listed in the Novo Mercado segment, which correspond to the best practices of corporate governance
Ownership structure Corporate Governance
GP 2 independent board members
Free float 58.8% (minimum required is 25%)
Tag-along rights to all shareholders
Quarterly results in English in accordance with
International Financing Report Standards (IFRS)
Shares included in the IGC (Index of Differentiated
Corporate Governance) and ITAG (Index of Tag Along)
58,8%
34,0%
7,2%
Free Float
Rhône
GP
Controlling Group
Latin America and worldwide leadership in Private Equity
Active management
Culture of promotion by merit
Proven track record in the Brazilian and global capital markets,
with various success cases
25
Investor Relations contacts:
Octavio Pereira Lopes CEO and IRO
Eduardo Gotilla Global Finance & IR Director
Daniel Domiciano SilvaInvestor Relations
Phone: 55 11 3152-3203/3241
26
Phone: 55 11 3152-3203/[email protected]
www.magnesita.com