SHAREHOLDERS GENERAL MEETING BUSINESS YEAR 2018 CHIEF EXECUTIVE - PowerPoint PPT Presentation

SHAREHOLDERS’ GENERAL MEETING BUSINESS YEAR 2018

CHIEF EXECUTIVE OFFICER’S REPORT BERNARDO VELÁZQUEZ HERREROS Shareholders’ General Meeting Business Year 2018 Madrid, 11 April 2019

1 INTRODUCTION CEO’s REPORT Results after taxes and minority interests Million Euros 98 83 80 77 58 53 16 7 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2017 2018

2 RESULTS CEO’s REPORT NET SALES Highest + 8.3% 10 years € 5,011 M turnovers in the higher than 2017 last Result after taxes +1.3% EBITDA € 237 M and minority € 480 M interests With respect to 2017 Debt -9.4% 1.15 no. times € 552 M With respect to 2017 Debt / EBITDA ratio - 89% € 2 M In financial expenses With respect to 2017

2 RESULTS CEO’s REPORT And in our melt shops we have produced 2.44 millon tons.

2 RESULTS CEO’s REPORT We have processed 1.75 million tons of cold rolling, the best result of our history.

2 RESULTS CEO’s REPORT We judge these results to be positive as they were obtained at a context of great volatility in which we had to quickly react to changes in the market and adapt our business trying to alleviate the classical tendency of our sector in order to take advantage of the opportunities surged in the first half of the year and to assure cash generation and debt reduction.

3 GLOBAL ECONOMY CEO’s REPORT Stainless steel is a basic material used as raw material in numerous industries, what makes of it a good indicator of economy’s performance.

3 GLOBAL ECONOMY CEO’s REPORT EUROPE GDP EVOLUTION INDUSTRIAL PRODUCTION INDEX 3.1% 2.5% 2.4% 1.1% 2.2% 1.8% 1.4% -1.1% 1 Q 2 Q 3 Q 1 Q 2 Q 3 Q 4 Q 4 Q EUROPEAN ECONOMY SLOWDOWN WITH A WEAKER FINISHING THE YEAR IN NEGATIVE GROWTH

3 GLOBAL ECONOMY CEO’s REPORT CHINA GDP EVOLUTION INDUSTRIAL PRODUCTION INDEX 6.8% 6.8% 6.6% 6.7% 6.5% 6.0% 6.4% 5.7% 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q PROGRESSIVE WEAKENING OF CHINESE ECONOMY DOWNWARD EVOLUTION

3 GLOBAL ECONOMY CEO’s REPORT UNITED STATES GDP EVOLUTION INDUSTRIAL PRODUCTION INDEX 3.1% 3.0% 2.9% 5.1% 4.3% 2.6% 3.4% 3.4% 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q STRENGTH OF THE NORTH AMERICAN ECONOMY OUR PRODUCTION TAKES ADVANTAGE OF THE GOOD NOURISHED BY PROTECTIONIST MEASURES, TRADE SHAPE OF NORTH AMERICAN ECONOMY NEGOTIATIONS AND FISCAL POLICIES

4 RAW MATERIALS: NICKEL CEO’s REPORT +3,045 $/T From 2 January to 31 December 2018 7 June 2 January 1 5 , 7 5 5 $ / t 1 2 , 7 1 0 $ / t Aver ag e p rice in cash /thr ee mon ths 17.000 P r e c i o s m e d i o s c o n t a d o / t r e s 16.000 15.000 m e s e s U S D / t . 14.000 US D/t . 13.000 31 December 1 0 , 6 6 0 $ / t 12.000 11.000 10.000 -5,090 $/T 9.000 8.000 M N D E F M A J JL AG S O

5 STAINLESS STEEL MARKET CEO’s REPORT  A VERY POSITIVE FIRST HALF WITH AN UPWARD TREND IN PRICES AND STOCKS REPLENISHMENT  DRASTIC REDUCTION OF INVENTORIES IN THE SECOND HALF, SPECIALLY IN THE FOURTH QUARTER

5 STAINLESS STEEL MARKET CEO’s REPORT CHINA HOLDS THE 52% OF STAINLESS STEEL GLOBAL PRODUCTION INDONESIA 5%

5 STAINLESS STEEL MARKET CEO’s REPORT 21 countries of the 22 countries manufacturing stainless steel have implemented protective measures ANTI-DUMPING Countries with protectionist measures: OTHER MEASURES Germany, Austria, Belgium, Bulgaria, Cyprus, Croatia, Denmark, Slovakia, Slovenia, Spain, Estonia, Finland, France, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxemburg, Malta, Netherlands, Poland, Portugal, United Kingdom, Czech Republic, Romania, Sweden, Turkey, India, Japan, China, Malaysia, South Korea, Indonesia, Thailand, Taiwan, Vietnam, USA, Mexico, Chile, Brazil

5 STAINLESS STEEL MARKET CEO’s REPORT 6 Factories in 4 continents Present in 5 Selling in more continents than 80 countries More than 12,000 Customers in the world 1 2 USA EU Imposition of trade barriers to Safeguard measures steel imports

5 STAINLESS STEEL MARKET CEO’s REPORT 8 March -Section 232 of the Trade Expansion Act of 1962 25% Tariffs Implementation of provisional safeguard measures on 18 July 16% reduction of imports 7% increase of imports to Europe 1 February 2019. The definitive safeguard measures enter into force

6 ACERINOX RESULTS CEO’s REPORT North American Stainless Acerinox Europa SAU Roldán S.A. EBITDA EBITDA EBITDA +35.3% -50.1% +62.7% Compared with 2017 Compared with 2017 Compared with 2017

6 ACERINOX RESULTS:EBITDA CEO’s REPORT 154 480 480 480 151 million Euros million Euros million Euros 118 22 (1.8% less than in 2017) (1.8% less than in 2017) (1.8% less than in 2017) Inventory adjustment Million Euros 58 1 Q 2 Q 3 Q 4 Q

7 ACERINOX PRODUCTION CEO’s REPORT L O N G P R O D U C T M E L T S H O P H O T R O L L I N G C O L D R O L L I N G ( H o t r o l l i n g ) 6 6 8 , 0 7 1 5 7 7 , 4 7 0 4 6 1 , 5 6 5 6 4 , 6 0 2 1 s t Q u a r t e r 6 3 9 , 2 3 2 5 6 0 , 7 9 9 4 7 0 , 5 5 7 6 9 , 6 6 5 2 n d Q u a r t e r 6 1 6 , 6 6 9 5 2 4 , 4 6 6 4 4 2 , 7 3 7 6 0 , 6 8 2 3 r d Q u a r t e r 5 1 6 , 6 4 1 4 5 7 , 7 3 8 3 7 7 , 4 7 0 5 9 , 6 7 9 4 t h Q u a r t e r Acerinox production, 2.44 million tons, represents a 4.8% of world production.

8 FINANCIAL BALANCE CEO’s REPORT The measures adopted have enabled us to obtain 171 million euros in free cash flow, after making investments for the amount of €155 million.

9 SHAREHOLDERS CEO’s REPORT THE VALUE OF CONFIDENCE 11% Shareholders remuneration 0.50€ Remuneration per share 2% Buy-Back Program

10 INVESTMENTS IN FIXED ASSETS CEO’s REPORT North American Stainless  ZM6 cold roller  Bright annealing (BA) line The implementation of tariffs has facilitated, without a doubt, its penetration in the market.

10 INVESTMENTS IN FIXED ASSETS CEO’s REPORT Acerinox Europa  ZM-7 cold roller  AP-5 annealing and pickling line  Complete remodeling of AP-3 line These new investments will contribute to improve the quality of our products while reducing manufacturing costs and emissions.

11 TOTAL INVESTMENT IN FIXED ASSETS CEO’s REPORT Million Euros 1 4 4 8 8 3 3 Estas nuevas inversiones como 1 4 5 3 otras acometidas, contribuirán a 1 mejorar nuestra calidad y A C E R I N O X N A S C O L U M B U S B A H R U R O L D A N A C E R I N O X T O T A L E U R O P A S A U S . A . costes, así como la reducción de emisiones .

12 STAINLESS STEEL APPLICATIONS CEO’s REPORT CONSTRUCTION AEROESPATIAL IND. ARCHITECTURE +5.5% TRANSPORT APPLIANCES MEDICAL IND. HEALTHCARE FOOD IND. … Growth of stainless steel in 2018

12 STAINLESS STEEL APPLICATIONS CEOS’s REPORT -35% Less carbon emissions per manufactured ton than the world average of stainelss steel manufacturers Source: ISSF

13 COST OF CONSUMABLES CEO’s REPORT The increase in prices of the main consumables and energy implied a 65 million euros overrun if we compare them with 2017 prices.

14 COST OF ENERGY CEO’s REPORT Compared to the average of The high cost of electricity in similar industries in France and Spain puts in risk the viability Germany, it implies an almost of Spanish industry 40% overrun. Source: AEGE

15 EXCELLENCE PLANS CEO’s REPORT EXCELLENCE PLANS (2009-2018) Goal: € 50M V Excellence Plan: 2017-2018 55 % Goal: € 67M IV Excellence Plan: 2015-2016 74 % Goal: € 60M III Excellence Plan: 2013-2014 88 % Goal: € 90M II Excellence Plan: 2011-2012 59 % Goal: € 133M I Excellence Plan: 2009-2010 73 % Annual recurrent saving of 27 million euros

16 EXCELLENCE 360º CEO’s REPORT PRODUCTION PRODUCTION SUPPLY CHAIN SUPPLY CHAIN EXCELLENCE 360º EXCELLENCE 360º 2019 - 2023 2019 - 2023  Reliability  Quality  Productivity  Optimization of processes  Anticipation RAW MATERIALS RAW MATERIALS  Supply chain control SALES SALES  Logistics  Increase of sales  Agile management  Reputation

16 EXCELLENCE 360º CEO’s REPORT Recurrent annual savings of 125 million euros Recurrent annual savings of 125 million euros at the end of it at the end of it Data Analytics Sensorization EXCELLENCE 360º  The customer in the center of business: Collaboration Manteinance  Reliance of deliveries  Time reduction  Chain visibility  Integration from strategic to operative planning Inspection through R+D+I Artificial Vision  Integral optimization of business  Advanced planning Commercial Predictive Quality

17 ANNUAL REPORT CEO’s REPORT ANNUAL REPORT 2018

18 ACCIDENTS RATE CEO’s REPORT Zero-accidents goal 9.5 7.5 5.4 5.8 5.0 3.3 3.3 2.6 2.2 2010 2011 2012 2013 2014 2015 2016 2017 2018 Accidents rate = Total no. injuries and illnesses * 200,000 / No. hours worked

19 CORPORATE SOCIAL RESPONSIBILITY CEO’s REPORT Environmental investments and € 103,982,581 expenses Human capital 6,709 people Training hours received 368,243 hours Investment in R+D+i € 9,547,000

20 ACKNOWLEDGEMENT CEO’s REPORT 1970-2019 49 YEARS OF COMMON HISTORY

THANK YOU VERY MUCH FOR YOUR ATTENTION