2018 BUSINESS YEAR RESULTS PRESENTATION 28 FEBRUARY 2019
2018 BUSINESS YEAR RESULTS PRESENTATION DISCLAIMER This document may contain forward-looking information and statements about ACERINOX, S.A., its subsidiaries and/or its management. These forward-looking statements include financial projections and estimates and their underlying assumptions, and statements regarding the intent, belief or current expectations or forecasts of ACERINOX, S.A. and/or its management, as well as statements regarding future performance, plans, objectives, operations, business, strategy, capital expenditures, results of operations, markets and products. These forward-looking statements or forecasts may also include assumptions regarding future economic and other conditions, such as future nickel or chrome prices and, in general, are subject to risks, uncertainties and variables beyond ACERINOX’s control that can adversely affect them. These forward-looking statements and information do not constitute historical facts and can generally be identified by the use of terms such as “expects”, “anticipates”, “believes”, “plans”, “estimates” and similar expressions. ACERINOX, S.A. believes they all are reasonable but are not a guarantee of future performance, prices, results of operations, benefits or dividend payout policies. ACERINOX, S.A. future financial condition, financial ratios, business, results of operations and dividends could differ materially from those expressed or implied in or projected by such forward-looking statements, information and forecasts. All forward-looking statements included herein are based on information available on the date hereof. Except as required by applicable law, ACERINOX, S.A. does not undertake any obligation to publicly update or revise any forward-looking statements and information, even in the event of new information being published or new events occurring. Investors, holders of ACERINOX, S.A. securities and shareholders in ACERINOX, S.A. are cautioned not to place undue reliance on the forward-looking statements and information, which speak only as of the date they were made. All subsequent oral or written forward-looking statements or information attributable to ACERINOX, S.A. or any of its members, directors, officers, employees or any persons acting on its behalf are expressly qualified in their entirety by this cautionary statement. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. None of the Company or any of its affiliates, advisors or representatives shall have any liability whatsoever for any loss arising from any use of this document, or its contents, or otherwise arising in connection with this document. Moreover, this document nor any part of it constitutes a contract, nor may it be used for incorporation into or interpretation of any contract or other type or agreement. The points contained in this disclaimer must be taken fully into account by all persons or entities obliged to take decisions or to draw up or to publish opinions on securities issued by ACERINOX, S.A., in particular, by the analysts and investors reading this document. All the aforesaid persons are invited to consult the public documentation and information that ACERINOX, S.A. reports to or files with the bodies responsible for supervising the main securities market and, in particular, with the Spanish National Securities Market Commission (CNMV in its Spanish initials). 2
2018 BUSINESS YEAR RESULTS PRESENTATION ACCIDENT RATE EVOLUTION T a r g e t : z e r o a c c i d e n t s 9 . 5 7 . 5 5 . 8 5 . 4 5 . 0 3 . 3 3 . 3 2 . 6 2 . 2 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 • A c c i d e n t r a t e = t o t a l n o . i n j u r i e s a n d i l l n e s s e s * 2 0 0 , 0 0 0 / n o . w o r k e d h o u r s 3
2018 BUSINESS YEAR RESULTS PRESENTATION 2018: MAIN FINANCIAL FIGURES 2018 2017 Variation Solid results in a very Net Sales 5,011 4,627 8% volatile environment EBITDA 480 489 -2% Results before Taxes and 310 299 4% Quick reaction to Minorities market corrections 237 234 1% Results after Taxes and Minorities 552 609 -9% Net Financial Debt Strong cash 1.15 1.25 -8% Net Financial Debt / EBITDA generation and Net Financial Debt / Equity 26% 31% -16% balance sheet 171 181 -6% Free Cash Flow 191 200 % 25 151 154 140 20 % 150 126 124 119 118 101 103 101 15% 103 106 % 15 89 12% 100 11% 12% 79 11% 11% 10% 11% 10% 9% 9% % 10 58 9% 9% 9% 53 8% 41 41 41 50 5% 5% 5% 4% 5% 4% Quarterly EBITDA evolution (mill €) 0 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 4 2014 2015 2016 2017 2018
2018 BUSINESS YEAR RESULTS PRESENTATION FOURTH QUARTER PERFORMANCE Q4 MARKET HIGHLIGHTS Q4 ACERINOX HIGHLIGHTS • Robust margins in US • Strong apparent demand correction X • X Weak margins in Europe and Asia • Downtrend in raw material prices X X • Inventory adjustment of €22 million • High inventory levels X • Adjusted production to market • Europe • Well managed working capital • X Ineffective provisional • Strong cash generation safeguards measures • Significant debt reduction • High import pressure X • Effective cost control • Historically low base price X • US • Seasonal slowdown • Stable base prices • Asia • New players X • Oversupply X • Historically low prices X 5
2018 BUSINESS YEAR RESULTS PRESENTATION FOURTH QUARTER PERFORMANCE MELTING PRODUCTION EBITDA 1 8 0 154 668 151 1 6 0 639 617 1 4 0 118 Thousand tons 1 2 0 516 1 0 0 Million € 8 0 22 Inventory adjustment 6 0 4 0 58 2 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 NET FINANCIAL DEBT FREE CASH FLOW (Before dividends) 114 114 666 667 609 552 537 Million € Million € -11 Q1 Q2 Q3 Q4 Q417 Q1 Q2 Q3 Q4 6 -46
2018 BUSINESS YEAR RESULTS PRESENTATION FULL YEAR PERFORMANCE FY MARKET HIGHLIGHTS FY ACERINOX HIGHLIGHTS • • X Market volatility NAS strong performance • • X Asian overcapacity Tough environment in Bahru X • Input cost pressures Stainless X • • Reduction of imports in the US Acerinox Europa and Columbus X • Strong demand in the US affected by low prices • • X Ineffective provisional safeguard Managed the business in relation to measures in Europe market conditions • • X Increased import pressure into Strong cash generation • Europe Cost and working capital control • • Low stainless steel prices in Europe Debt reduction X • and Asia Solid results: • Best year of the decade in net profit • Second best year in EBITDA • Focus on shareholder returns 7
2018 BUSINESS YEAR RESULTS PRESENTATION FULL YEAR PERFORMANCE MELTING PRODUCTION EBITDA 2,519 489 2,475 Inventory adjustment 22 Thousand tons 2,440 329 Million € 286 480 2,320 15 16 17 18 15 16 17 18 NET FINANCIAL DEBT FREE CASH FLOW (Before dividends) 711 620 609 181 171 552 Million € Million € 111 15 16 17 18 15 16 17 18 8 -50
2018 BUSINESS YEAR RESULTS PRESENTATION FULL YEAR PERFORMANCE EBITDA (22) (14) 70 (65) 22 489 480 Inventory Price increase of Sales EBITDA EBITDA Currency Business adjustment energy and volume 2017 2018 actions to NRV consumables 9
2018 BUSINESS YEAR RESULTS PRESENTATION FULL YEAR PERFORMANCE CASH FLOW (87) (66) (155) 480 326 (128) 171 43 F i n a n c i a l W o r k i n g E B I T D A O p e r a t i n g C F a f t e r C A P E X F C F D i v i d e n d s c h a r g e s C a p i t a l C a s h F l o w & t r e a s u r y d i v i d e n d s T a x & s h a r e s o t h e r 10
2018 BUSINESS YEAR RESULTS PRESENTATION FULL YEAR PERFORMANCE NET FINANCIAL DEBT / EBITDA NET FINANCIAL EXPENSES 2.48 44 1.88 30 1.25 1.15 19 2 2015 2016 2017 2018 2015 2016 2017 2018 OPERATING EXPENSES PERSONNEL +1% +1% 634 629 3 9 6 3 9 2 2017 2018 2017 2018 11
2018 BUSINESS YEAR RESULTS PRESENTATION RESTRUCTURING OF BAHRU STAINLESS NON CASH MEASURES: • Impairment in the investment value of the Holding Company: EUR 155 mill • Capital Increase: USD 332 mill. NO IMPACT IN THE CONSOLIDATED RESULTS 12
2018 BUSINESS YEAR RESULTS PRESENTATION CAPITAL ALLOCATION CAPEX RETURN TO SHAREHOLDERS 0.50 173 173 ( * ) S c r i p d i v i d e n d 0.45 0.45 0.44 144 94 2015 2016 2017 2018 2016 (*) 2017 2018 2019 CAPEX IN PROGRESS: • Coil build up line - NAS DIVIDEND INCREASE 11% • Ladle furnace - Acerinox SHARE BUYBACK PROGRAMME: • Ladle furnace - Columbus PHASE I: 2% • Slitter line - Columbus 13
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