BEFESA BEFESA First Quarter 2015 Earnings Presentation 26 th May 2015
BEFESA Forward-looking Statement This presentation contains forward-looking statements and information relating to Befesa and its affiliates that are based on the beliefs of its management as well as assumptions made and information currently available to Befesa and its affiliates. Such statements reflect the current views of Befesa and its affiliates with respect to future events and are subject to risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievements of Befesa and its affiliates to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others: changes in general economic, political, governmental and business conditions globally and in the countries in which Befesa and its affiliates does business; changes in interest rates; changes in inflation rates; changes in prices; decreases in government expenditure budgets and reductions in government subsidies; changes to national and international laws and policies that support renewable energy sources; inability to improve competitiveness of our renewable energy services and products; decline in public acceptance of renewable energy sources; legal challenges to regulations, subsidies and incentives that support renewable energy sources and industrial waste recycling; extensive governmental regulation in a number of different jurisdictions, including stringent environmental regulation; our substantial capital expenditure and research and development requirements; management of exposure to credit, interest rate, exchange rate and commodity price risks; the termination or revocation of our operations conducted pursuant to concessions; reliance on third- party contractors and suppliers; acquisitions or investments in joint ventures with third parties; unexpected adjustments and cancellations of our backlog of unfilled orders; inability to obtain new sites and expand existing ones; failure to maintain safe work environments; effects of catastrophes, natural disasters, adverse weather conditions, unexpected geological or other physical conditions, or criminal or terrorist acts at one or more of our plants; insufficient insurance coverage and increases in insurance cost; loss of senior management and key personnel; unauthorized use of our intellectual property and claims of infringement by us of others intellectual property; our substantial indebtedness; our ability to generate cash to service our indebtedness changes in business strategy and various other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or targeted. Befesa and its affiliates does not intend, and does not assume any obligations, to update these forward-looking statements. 2
BEFESA Business Business Zinc Business Non-Zinc Business Introduction Financials Q&A Appendix Outlook Highlights Performance Performance Rafael Pérez Head of Strategy & Investor Relations 3
BEFESA Business Business Zinc Business Non-Zinc Business Introduction Financials Q&A Appendix Outlook Highlights Performance Performance Javier Molina Chief Executive Officer 4
BEFESA Befesa 1Q 2015 Highlights Good 1Q 2015 in Steel & Alu segments with total revenues of €187m, up 19% YoY. Higher commodity prices and Bernburg contribution. Strong consolidated 1Q EBITDA of €37 million, up 33% YoY. Margins at 20% above 18% of 1Q 2014. Solid and stable financing position at 3 levels (Zinc, Non-Zinc, Corporate) with total leverage at x3,8 (1) Strategic growth project in Korea moving forward according to plan. Turkey and the Gulf growth initiatives also moving on. Ongoing implementation of cost reduction and productivity improvement in line with expectations 5 (1) Assuming LTM as of March 31 st 2015 Consolidated EBITDA of 149,6 M€
BEFESA Business Business Zinc Business Non-Zinc Business Introduction Financials Q&A Appendix Outlook Highlights Performance Performance Asier Zarraonandia Managing Director of Zinc Business 6
BEFESA Zinc Business Performance Volume in crude steel impacted by more standstills plants during the quarter than previous year Operational Performance Highlights � EAF Throughput � Crude steel dust deliveries in line with - 141.535 tons of crude steel dust treated in 1Q expectations 2015 ( -10% vs 1Q 2014 and -9% vs 4Q 2014) � Good throughput levels mainly driven by good � WOX Sales performance of our Western European - 47.715 tons of WOX sold in 1Q 2015 ( -7% vs 1Q plants 2014 and -14% vs 4Q 2014) � Increase in stainless steel throughput y/y, but � Stainless Steel Throughput: still weak volumes in stainless steel - 19.924 tons of stainless steel dust treated in 1Q � No extraordinary stoppages apart from 2015 ( +20% vs 1Q 2014 and -31% vs 4Q 2014) annual standstills 7
BEFESA Zinc Prices & Hedging Zinc prices during the start of 2015 maintained the upward trend seen during 2H 2014 ending the quarter above 1.900 €/t 2.200 Zinc Prices 2012: 2013: 1Q 2014: 2Q 2014: 1.703 €/t 1.700 €/t 1.550 €/t 1.500 €/t During the 1Q 2015 zinc prices traded on average slightly above 1Q � 2.000 2014 ($2.080/t vs $2.030/t), but approx. $150/t below 4Q 2014 average level. 1.800 Lower LME Zinc average price compared to 4Q 2014 more than � offset by a favorable €/$ FX rate. US Dollar appreciated against Euro (1,13 in 1Q 15 vs 1,25 in 4Q 14, on average) 1.600 Attractive zinc fundamentals with world consumption of zinc, driven H2 ‘14 & H1 ‘15: � Floor @ 1.300 €/t by China, outpacing world production resulting in a deficit in 2014. 1.560 €/t 1.400 1Q 1Q 4Q 1Q % Var. % Var. 2014 2015 2014 2015 1.200 Befesa H2 ‘15 & H1 ‘16: Blended Zinc 1.524 1.847 +21% 1.789 1.847 +3% Floor @ 1.250 €/t 1.000 Price (€/t) LME Zinc Daily Cash Settlement Price (€/t) Zinc Hedging Price through Swaps (€/t) Avg. LME Zinc Hedging Price through Options (€/t) 1.482 1.847 +25% 1.789 1.847 +3% Zinc Price (€/t) Avg. 1Q 2015 ~ €1.850/t 2.000 1.800 Hedging Strategy 1.600 €1.675/t Hedging strategy focused on ensuring min. business earnings to meet � 2014 & 2015 1.400 our financial obligations and benefit from recovering zinc prices YTD Average 1.200 Hedging closed for full year 2015 and 2016 through options with � 1.000 floor @ 1.300 €/t for 1H’15 and 1.250 for 2H’15 and full year of 2016. LME Zinc Daily Cash Settlement Price (€/t) Avg LTM LME Zinc Daily Price (€/t) 8 Source: London Metal Exchange; Company data
BEFESA Business Business Zinc Business Non-Zinc Business Introduction Financials Q&A Appendix Outlook Highlights Performance Performance Javier Molina Chief Executive Officer 9
BEFESA Aluminum Performance Good performance mainly driven by stronger secondary alu volumes as well as salt slag volumes mainly driven by new plant in Germany Operational Performance � Salt Slag/SPLs Recycled Highlights - 116.275 tons of salt slag/SPL recycled in 1Q 2015 � Strong secondary aluminum volumes ( +12% vs 1Q 2014 and -4% vs 4Q 2014) over the 1Q thanks to contribution from new plant in Bernburg (operations started in Dec ‘14) � Secondary Aluminum Alloys � Good salt slag and SPLs volumes over the 1Q 2015 versus same period of 2014 - 37.449 tons of alloys produced in 1Q 2015 ( +10% vs 1Q 2014 and +23% vs 4Q 2014) 10
BEFESA 2015 Growth Strategy – Aluminum and IES Good ramp up in the Bernburg plant with start of operations in early Dec’14. Persian Gulf Project Progressing … Starting Detailed Engineering. New Secondary Aluminum Plant in Bernburg (Germany) � Installed capacity to produce 90.000 tons of aluminum alloys per year from the recycling of aluminum residues � Major customers of the aluminum alloys produced come from the automobile and packaging industries � Most important business partner for Bernburg is the US-American aluminum- producer Novelis , with their existing rolling mill and their planned recycling plant in Nachterstedt (in Saxony-Anhalt, Germany) SPL in the Persian Gulf � JV to develop a new salt slag/SPL recycling plant � Negotiations of supply contracts ongoing. Financing through local bank loans; DD / bankability in process Industry Environmental Solution (IES) Growth � Good progress in business development activities to grow in new areas and geographies in the industrial cleaning activities 11
BEFESA Business Business Zinc Business Non-Zinc Business Introduction Financials Q&A Appendix Outlook Highlights Performance Performance Wolf Lehmann Chief Financial Officer 12
BEFESA Business Business Zinc Business Non-Zinc Business Introduction Financials Q&A Appendix Outlook Highlights Performance Performance Zinc Financial Highlights 13
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