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Magnesita conf call_presentation_3_q11_final_eng
- 1. 1 Earnings call –3Q11 November 10,2011
- 2. 2 Highlights Growth in refractorysolutions • YTD, refractory volume grew 8.1% while ex-China steel market grew 6.2% • Minerals recovered vs. 2Q11 but still below potential when compared to 3Q10 • Services was flat vs. 2Q11 but below 3Q10 due to completion of spot contract Record high operating cash flow generation •R$ 461 million YTD operating cash flow •R$ 118.7 million EBITDA with a margin of 21.1% vs. 17.7% in 2Q11 and 19.0% in 3Q10 •R$ 148 million working capital reduction vs. 3Q10 (47-day shorter cash conversion cycle) Gross margin trending up • 31.7 % of gross margin vs. 31.4% in 2Q11 • 32.2% vs. 31.1% in refractory solutions (performance improvement while pressured by raw materials) Vertical integration projects on track • Brumado - in progress, financing postponed until november, start-up in 1Q12 • Graphite – acquisition of surface rights, enviromental license expected by 1Q12, start-up in 4Q12
- 3. 3 Net revenues andrefractory volume R$ '000 Quarter % Year-to-date % 3Q11 2Q11 3Q10 QoQ YoY 9M11 9M10 Refractory solutions Volume (t) 262,891 294,434 255,940 (10.7) 2.7 835,124 772,888 8.1 Revenues 496,708 526,424 494,111 (5.6) 0.5 1,518,900 1,482,393 2.5 Minerals Volume (t) 172,235 145,984 180,746 18.0 (4.7) 448,347 721,012 (37.8) Revenues 28,157 19,844 35,876 41.9 (21.5) 82,475 89,206 (7.5) Services Revenues 36,604 36,749 40,550 (0.4) (9.7) 118,402 116,593 1.6 TOTAL Revenues 561,469 583,017 570,537 (3.7) (1.6) 1,719,777 1,688,192 1.9
- 4. 4 Refractory solutions bysector Net revenue by sector R$ million +4.1% 3Q11 434.3 2Q11 457.7 3Q10 417.2 2Q11 68.7 3Q10 62.4 76.9 -18.9% 3Q11 9M10 +3.7% 9M11 1,312.51,265.8 9M11 -4.7% 206.4 9M10 216.6 Steel Industrial
- 5. 5 Regions 1M11 Total NorthAmerica 1 14 Europe 1 8 Asia 1 4 South America 1 34 TOTAL 4 60 New CPP contracts Number of contracts CPP contracts Number of contracts Refractory Solutions - CPP 35% of revenues from the steel sector 605959595652 47 424036 31272624 4Q11 3Q11 2Q11 1Q11 4Q10 3Q10 2Q10 1Q10 4Q09 3Q09 2Q09 1Q09 2008 Before 2008 60 24 Total 4Q11 1 3Q11 0 2Q11 01Q113 2010 16 2009 14 2008 2 Before2008
- 6. 6 Gross margin byproduct line Gross margin % Quarter YTD 3Q11 2Q11 3Q10 9M11 9M10 Refractory solutions 32.2 32.1 35.6 32.6 36.3 Minerals 50.6 51.9 38.5 46.3 40.2 Services 10.4 11.3 13.8 11.8 15.2 TOTAL 31.7 31.4 34.2 31.8 35.0
- 7. 7 Cash generation andnet income Net income R$ million EBITDA R$ million, % Cash flow from Operations R$ million +9% +12% 3Q11 34.4 2Q11 30.8 3Q10 31.6 2.2 x 4.6 x 3Q11 188.4 2Q11 85.8 3Q10 41.3 +9% +15% 3Q11 118.7 21.1 2Q11 103.2 17.7 3Q10 108.5 19.0 R$ 461 million YTD
- 8. 8 Working capital andcash conversion cycle 47 -day shorter cash convesion cycle vs. 3Q10 Cash conversion Days Working capital R$ million R$ 148 million reduction vs. 3Q10 (additional R$ 43 million over 2Q11 at constant currency) 747.7 -16% 3Q11 adj 3Q11 787.7 2Q11 790.6 1Q11 805.2 4Q10 832.6 3Q10 935.4 139146146153161 193 135 145 129129129 154 6976 65564840 3Q11 adj3Q112Q111Q114Q103Q10 Suppliers Inventories Cash conversion cycle
- 9. 9 Indebtedness R$ million Net Debt/EBITDA 3.0x Indebtedness 2.1 x 2.1 x 1,894 1,636 1,757 1,444 854 900 3Q10 2Q11 3Q11
- 10. 10 Financing Nov/11 Environmental LicenseConcluded Start-up Mar/12 (1) According to Industrial Minerals Investment: R$ 220 million through 2012 Financing: 80% at attractive rates Production: increase in capacity by 120 ktpa Magnesite (Brumado-BA) Graphite (Almenara-MG) Description Milestone Deadline Timetable Financing Jun/12 Environmental License Mar/12 Start-up Dec/12 Investment: R$ 80 million through 2012 Financing: 80% at attractive rates Production : capacity of 40 ktpa Description Milestone Deadline Timetable Verticalization projects remain “on track”