Downloaded 35 times
![2
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 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.
Disclaimer](https://image.slidesharecdn.com/magnesitainstitutionalapril2013eng-130627111534-phpapp02/85/Magnesita-institutional-april2013_eng-2-320.jpg)
More Related Content
Similar to Magnesita institutional april2013_eng
Magnesita institutional april2013_eng
- 1. 11 Magnesita Refratários S.A InstitutionalPresentation April 2013
- 2. 2 The material thatfollows 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 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. Disclaimer
- 3. 33 Index Industry and Companyoverview Company Strategy Financial Highlights
- 4. 4 What is arefractory? Refractories are crucial for manufacturing processes with high temperatures Fireproof materials consumed within various production processes, retaining physical and chemical characteristics when exposed to extreme conditions Provides heat, chemical and mechanical resistance in industrial furnaces and other equipments in iron and steel production and kilns in cement and lime production Raw material quality and assured supply are essential ~US$ 25 billion industry globally Represents ~3% of COGS in steel manufacturing *Source: Industrial Minerals Magazine, December 2010. Others 5% Steel 70% Cement 7% Glass 4% Chemical 4% Non-ferrous 5% Ceramic 5% Bricks Valves and slide gates Monolithic Magnesite Application: steel, cement and other industrial sectors Dolomite Application: mini mills and stainless steel Alumina Application: steel, cement and other industrial sectors 1 ton of steel = ~10 kg of refractories 1 ton of cement = ~0.6 Kg of refractories Vesuvius 10.5% RHI 9.2% Magnesita 5.9% Shinagawa; 5.0% Krosaki + Tata 4.8%Saint- Gobain 3.4% Others 61.2% *Company estimates. Main raw material families Main consumers worldwide* Fragmented industry*Product overview Types of refractories Consumption (average)
- 5. 5 Electric Arc Fumace SteelRefining Facility Continuos Casting Basic Oxygen Furnace Recycled Steel Direct Reduction Coal Injection Iron Ore Coal Coke Oven Limestone Blast Furnace Natural Gas 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 STEEL LADLES Volume: 70 tonnes Life Expectancy: 1 month Source: Company Steel industry: represents approximately 85% of Magnesita’s refractories revenues Refractories are continuously consumed during steel production… What is a refractory?
- 6. 6 … which AlsoHappens During Cement Production Rotary Kiln Preheater Tower PREHEATER TOWER Volume: 1,000 tonnes Life Expectancy: 5 - 10 years ROTARY KILN Volume: 250 tonnes Life Expectancy: 10 months CLINKER COOLER Volume: 500 tonnes Life Expectancy: 1 - 3 years Cement industry: represents approximately 10% of Magnesita’s refractories sales Clinker Cooler Source: Company What is a refractory?
- 7. 7 Magnesita Overview 70 yearsexpertise 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 1st in the stainless steel industries in North America and Europe Highest vertical integration level in the industry (close to 80%) Best, largest and lowest-cost magnesite mine in the world outside China. Significant number of unexplored mineral rights in Brazil Solid financial fundamentals Magnesita is a global leader in refractories solutions and industrial minerals 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 28 industrial facilities with a nominal capacity of 1.6 million tons/year of refractories
- 8. 88 Business segments highlights Netrevenues (2012) R$ 148 million (6% of the total revenues) R$ 130 million (5% of the total revenues) Gross margin (2012) 11%43% Details/ description Current: Talc, caustic magnesia and magnesia sinter Development: Graphite and talc expansion Assembly and installation of refractories Other adjacent services inside steel mills, including spot contracts Refractory Solutions Services Applications Talc: Plastic, cosmetics, pharmaceuticals, food, ceramics, pulp and paper, etc Caustic magnesia: Fertilizers, abrasives, animal nutrition, etc Sinter: refractories Industrial Minerals Magnesita leverages its competitive advantages throughout the whole value chain Refractories with tailor made formulations and shapes as well as strong technical service Two commercial models (CPP and conventional) R$ 2.186 million (89% of the total revenues) 31% Steel Industrial (cement, non- ferrous, non-metallic) Steel Industrial (cement, non- ferrous, non-metallic) Mining UPSTREAM DOWNSTREAM
- 9. 9 Global scale, localpresence Products and services breadth and depth Access to high-quality materials Global scale, local presence Products and services breadth and depth Relationship with clients Technology Key drivers Fully Integrated Manufacturing Only CPP-Integrated Higher margins; difficulty to replicate +- Access to high-quality materials Integrated Manufacturing Technology, local presence Integrated Services Mining Refractory manufacturing Services Full TCO (performance -based) *Source: Bloomberg 17,4% ShinagawaKrosaki 17,7% RHI 21,6% Vesuvius 25,7% Magnesita 30,4% Gross margin in 2012* (%) Business segments highlights Magnesita’s unparalleled business model delivers higher margins than other players
- 10. 1010 Sales Office Refractory production Mines Uniqueglobal footprint 28 industrial facilities in 4 continents, with a nominal capacity of 1.6 million tons of refractories/year Global scale, with local presence in key markets, with an integrated supply chain Sales per region 2012 York unit production (USA) Contagem units production (BRA) Coronel Fabriciano unit production (BRA) San Nicolás unit production (ARG) Valenciennes and Flaumont units production (FRA) Hagen-Halden, Oberhausen and Kruft units production (DEU) Chizhou unit production (CHN) Taiyuan JV’s unit production (CHN) York Dolomite Mine (USA) Qingyang dolomite mine (CHN) Sinterco Dolomite JV (BEL) Magnesite mine (Brumado - BRA) Chromite mine (BRA) Talc mine (BRA) Europe Asia NAM 22% 8% 18% 49% SAM Others 2% Taiwan JV’s unit production (CHN)
- 11. 11 Ownership structure andcorporate governance practices Only common shares 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) Listed in the Novo Mercado segment, which correspond to the best practices of corporate governance Ownership structure Corporate Governance 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 58,8% 34,0% 7,2% Free Float Rhône GP Controlling Group
- 12. 1212 Index Industry and Companyoverview Company Strategy Financial Highlights
- 13. 1313 Our strategy A newstrategic vision sustained by four pillars Vision: Be the best provider of refractories solutions and industrial minerals, leveraging and developing our minerals base 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 III-Expand industrial minerals base I-Ensure leadership in our core markets IV-Maintain a global low cost production base II-Grow selectively and aggressively ▪ Meritocracy ▪ Ethics ▪ Profit ▪ Management and Method ▪ Customer ▪ People ▪ Agility and Transparency ▪ Respect for Safety, Environment and Communities Our values Oneglobalorganization
- 14. 1414 I - Ensureleadership in our core markets Vertical integrated low-cost producer Continuous investments in R&D and technology Specialized technical assistance Logistic advantages due to privileged locations Captive CPP contracts with long-term alignment of interests Brand recognition and historical leadership South America Dolomitics in North America Dolomitics in Western Europe Long standing relationship with blue-chip customers Our differentiated competitive position and leadership in core markets support our growth as they recover ~50% in stainless steel ~20% in mini-mills Magnesita’s share* in core marketsMagnesita’s competitive advantages in its core markets ~60% in stainless steel ~15% in mini-mills ~65% in steel ~60% in cement *Company estimates
- 15. 1515 II - Growselectively and aggressively 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 a integrated supply chain Best-in-class technical and R&D capabilities Increasing reach of our sales force Historically low exposure in several important markets Source: ¹CRU and ²Company estimates Crude Steel Production¹ (mln ton) and Magnesita’s share² (%) Opportunities for diversification into non steel industries Magnesita refractory sales (2012) Refractories consumption - Global Market Opportunities for geographic diversification in steel Opportunities for geographic diversification in cement 138122118 80 2017(f)2013(f)2012(e)2009 16% 228204202 162 2012(e)2009 2017(f)2013(f) 131 11511298 2009 2017(f)2012(e) 2013(f) 9.6% 0.3% 605147 38 2017(f)2013(f)2012(e)2009 56 434034 2013(f) 2017(f)2012(e)2009 363 305293 226 2012(e)2009 2017(f)2013(f) 70% Steel 30% Industrial Industrial 16% 84% Steel 65% 2.1% 1% North America Europe CIS 140130123115 2012(e)2011 2014(f)2013(f) 345328317327 2014(f)2012(e) 2013(f)2011 Central & South America MEA Asia ex-China 2014(f) 3.093 2013(f) 2.947 2012(e) 2.781 2011 2.618 Cement Production¹ (mln ton) and Magnesita’s share² (%) 133124116108 2012(e)2011 2014(f)2013(f) 338315295270 2014(f)2012(e) 2013(f)2011 25% <5% <1% 60% <1% North America Europe Asia Central & South America Others Source: ¹CW Group and ²Company estimates
- 16. 16 III - Expandindustrial minerals base 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 → Brazil is fertile; very favorable geography → It has been historically unexplored → Viewed as a reliable source (vs China) Brazil’s opportunity Magnesita is very well positioned to occupy the “white space” in Brazil Magnesita’s strategic positioning → 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
- 17. 1717 1.Preliminary 5 to 10analysis per year 2.Development Graphite Talc expansion 3.Installation 4.Operational DBM, Talc, CCM III - Industrial minerals strategy Our goal is to have at least one project per year moving to the next phase • 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 Projects in development phase Graphite 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
- 18. 1818 Sinterco Dolomite JV(Belgium) 31 million tonnes of reserves Expected life: 30 years Brumado (Bahia-Brazil) 830 million estimated tonnes of reserves (549 million measured) Only mine to allow the economical production of 98.3%-grade DBM Expected life: ~200 years The mine is connected to the port of Aratu by the FCA railway York Dolomite Mine (PA-USA) 25 million tonnes of reserves Expected life: 45 years Qingyang Dolomite Mine (China) 18 million tonnes of reserves Expected life: 50 years IV - Maintain a global low cost production base Opportunities for further industrial and supply chain optimization North American facility (PA-USA) European facilities (3 in Germany and 2 in France) South American facilities (MG-Brazil and Argentina) Asian facility (Chizhou-China) Raw material flow Finished product flow Brumado has the highest quality of raw material in the world with more than 200 years of reserves
- 19. 1919 Index Industry and Companyoverview Company Strategy Financial Highlights
- 20. 2020 Revenues Financial highlights (BRLmln) EBITDA and EBITDA margin (excl. non-recurring) Gross margin vs clients 2.464 2011 2.319 2010 2.276 2009 1.927 +6,2% +8,5% 2012 Steady organic growth Proven resilience in adverse market conditions CAPEX funded comfortably with operational cash flow 373337 425 340 2011 14,5% 2010 18,7% 2009 17,7% +10,7% 2012 15,1% 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% 48,7% 26,0% 34,2% Magnesita¹CSNGerdauUsiminas Operational Cash Flow and Capex 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 OCF CAPEX Brumado expansion
- 21. 2121 1.0581.0311.002 907957 373357350334336 4Q2012 2,8x 3Q2012 2,9x 2Q2012 2,9x 1Q2012 2,7x 4Q2011 2,9x Indebtedness and Leverage(BRL mln) Net debt / EbitdaEbitda LTM*Net Debt 957 373357350334336 1,4x1,4x 2,7x2,9x 4Q2012 536 3Q2012 513 2Q2012 486 1,4x 1Q2012 907 4Q2011 Net debt / EbitdaEbitda LTM*Net Debt 19,0% Others 0,9% EUR 16,4% USD 63,7% BRL 852 820 7879101 16 234 510 201620152014 2018+ 1.362 20172013Dec/12 Cash position Perpetual bond Solid balance sheet with no refinancing risk *EBITDA excl. non-recurring *EBITDA excl. non-recurring Net debt & leverage Net debt excluding Perpetual Bond & leverage Amortization schedule Debt per currency
- 22. 22 Strong management teamand corporate governance practices Global vertical integrated player with unique geographic position Opportunities for growth and diversification into selected markets and industries Unique solution-based model (CPP) and performance-based applied R&D Key Messages Focused on delivering superior returns to shareholders Significant value of mineral reserves with opportunities to expand industrial minerals base Solid financial fundamentals
- 23. 23 Investor Relations contacts: OctavioPereira Lopes CEO and IRO Eduardo Gotilla Global Finance & IR Director Daniel Domiciano Silva Investor Relations Manager Phone: +55 11 3152-3202/3241 ri@magnesita.com www.magnesita.com