Presentation

Apresentao Usiminas
2T11 - APIMEC
1Q15
Classification of the information: Public

Agenda

Usiminas
Profile

Market
Outlook

Usiminas and its

business units

Financial
Results

Company Profile

o The largest flat steel producer in Latin America

o Complete solution for products and services
o Steel company with the largest number of patents rights in Latin America
o Steel: Nominal production capacity of 9.5 million tons per year

o Iron ore: Production capacity of 12 million tons per year

Time Line

Operation
Start Up

Cosipa
privatization

Usiminas
privatization
Listing on
BOVESPA

Creation of
Solues
Usiminas

Listing on
LATIBEX
stock
exchange
section

1962 1991 1993 1994 2005

Listing on
ADR I on
the OTC
Market
(New York)

Selling of
Ternium stake

One CNPJ:
Usiminas
incorporates
Cosipa

2008
Acquisition
of iron ore
mines
Acquisition
of
Zamprogna

2009

Automotiva
Usiminas
Divestment

Joint Mining
Agreements
with MBL e
Ferrous
Agreement
with Porto
Sudeste

2010
Creation of
Minerao
Usiminas
Codeme
and Metform
partneship

2011

2012

2013 2014

Entrance of
Ternium/Tenaris
into Usiminas
Control Group
(New
shareholders
agreement)

Friables
Project
conclusion on
Mining
(increasing
the capacity
to 12 million
tons/year )

Shareholding Composition

Total Capital
1,013,786,190
Voting Capital
ON 49.84% 505,260,684

36,14%

PN 50.16% 508,525,506

29,45%
Grupo Nippon
Ternium/ Tenaris
Previdncia Usiminas
Free Float

6,75%

27,66%

Control Group: 63.86%

Usiminas shares are traded on BM&FBovespa (So Paulo), on the OTC Market (New York) and
on a LATIBEX exchange section(Madrid).
5

Complete Solution for Products and Services

Business Units

Steel Processing
Steel

Solues Usiminas

Capital Goods
Usiminas Mecnica

Ipatinga Plant
Cubato Plant

Mining

Unigal Usiminas

Minerao Usiminas

UPSTREAM

DOWNSTREAM

Strategically Located

Mining

Steel
Steel Processing
Capital Goods
7

Social and Environmental Initiatives

Usiminas Cultural Institute

So Francisco Xavier School

Invested over R$260 million, encouraging

around 2000 social projects

First educational institution in Brazil

to obtain ISO 9001

Mrcio Cunha Hospital

Reference center in healthcare all over Brazil

Xerimbabo Usiminas Project

Promotes protection and environmental education
free of charge for more than 2 million young people

Shares Quotation on BM&FBOVESPA

R$ - Up to 03/31/2015

25.13

24.44

22.21
18.26

21.93

21.41
21.50

21.78

17.53

10.45

11.80

11.62
10.55

12.40

8.81

12.30

10.12

6.72

10.52
4.97

6.15

5.05
2.59
2004

3.67

2005

2006

2007

2008

2009

2010

USIM3
Note: The prices are adjusted by removing the effects of events such as Bonus and Unfolding

2011

2012

2013

2014

2015

USIM5
9

Agenda

Usiminas
Profile

Market
Outlook

Usiminas and its

business units

Financial
Results

10

World Crude Steel Production in 2014

Million Tons

China
Japan

882.7
110.7

USA

88.3

India

83.2

South Korea
Russia
Germany

71
70.6

Turkey

34

Brazil

33.9

Ukraine

Excess of
Capacity
611

42.9

27

Source: World Steel Association Preliminary Figures

Capacity

Production

Consumption

2,248

1,637

1,681
11

World Crude Steel Production

2014

2003

20%

24%

European Union

18%

10%

8%

Europe Others
2%

2%

Others
North America

7%

South America
12%

3%
1%

Africa
China
Asia and Oceania*

23%
13%

50%

2% 4%

971 million of tons

1,636 million of tons

*Except China
Source: World Steel Association

12

Largest Producers in 2013

Thousand Tons

World Crude Steel Producers

1

ArcelorMittal

Nippon Steel & Sumitomo Metal Corporation

Hebei Steel Group

Baosteel Group

Wuhan Steel Group

POSCO

Shagang Group

Ansteel Group

9
10

Shougang Group
JFE

49

Usiminas

Source: World Steel Association/ Instituto Ao Brasil

Brazilian Flat Steel Producers

6,039

4,587
3,681

Usiminas

CSN

ArcelorMittal

94

34

Aperam

Gerdau

13

Steel Consumption per Capita

Kg per habitant

1980

2000

2013

34.1

97.9

515.1

160.0

817.7

1.057.4

610.5

600.5

516.4

United States

376.0

425.3

300.2

Germany

469.4

474.8

460.2

Spain

202.1

434.8

221.0

Brazil

100.6

92.6

131.4

Chile

56.4

96.7

155.3

120.2

141.5

158.1

151.7

132.9

216.9

China
South Korea
Japan

Mexico
World Average

Source: World Steel Association

14

Brazilian Flat Steel Market

Million Tons

22%
14%

11%
5%

12%

15%

7%

15.7

15.2

14.3
12.5

13%

14.5

13.1

14.3

14.9
13.6

13.8

15 14.5

14.3

13.6

11.9
10.2

2007

2008

2009
Production

Source: IABr / Usiminas Excludes Slabs

2010

2011
Consumption

2012

2013

2014

Imports
15

Steel Business Unit

Auto Industry
and Autoparts

Household
Appliances

Hot Rolled,
Cold Rolled and
Galvanized

Cold Rolled and

Galvanized

Agricultural and
Road Machinery

Heavy Plates and

Hot Rolled

Civil
Construction

Heavy Plates,
Hot Rolled,
Cold Rolled and
Galvanized

Oil and Gas

Pipelines

Heavy Plates and

Hot Rolled

Heavy Plates and

Hot Rolled

16

Agenda

Usiminas
Profile

Market
Outlook

Usiminas and its

business units

Financial
Results

17

Flat Steel Production

Thousand tons

Nominal capacity: 9.5 million / year

Galvanized
Slab Caster

Slabs
Placas

Heavy Plates

Hot Coils
Laminados a
Quente

Cold Coils

EG
Eletrogalvanizados

HDG

Ipatinga Plant

5,000

1,000

3,600

2,500

360

Cubato Plant

4,500

1,000

4,400

1,200

Nominal
Capacity

9,500

2,000

8,000

3,700

360

1,050

1,900

4,200

2,200

350

1,020

Optimized
Rolling
Capacity

1,050
-

18

Sales Volume
Steel Business Unit Thousand tons

1,437

1,456

12%

15%

1,401
24%

1,247
19%

88%

1Q14

85%

2Q14
Exports

76%

81%

3Q14

4Q14

1,256

12%

88%

1Q15

Domestic Market
19

Exports Main Markets

Steel Business Unit

1Q15

4Q14

3%

2%
5% 1%

7%

3%

6%

5%

7%

40%

5%

45%

5%
7%

34%
25%

USA

Argentina

India

Panama

Venezuela

Taiwan

Colombia

Mexico

Others

Chile

20

COGS
Steel Business Unit

1T15

4T14
4.1% 5.2%
2.2%

5.0%

3.0%

-4.1%

20.5%

20.2%

9.5%

8.9%

9.8%

9.6%

14.8%

14.9%
11.9%

10.4%
10.0%

14.9%

14.2%

15.2%

Labor (direct and indirect)

Iron Ore and Pellets

Coal and Coke

Other Raw Materials

Energy and Fuels

Spare Parts

Depreciation

Inventories Variation

Structural Expenses

Others

21

Adjusted EBITDA and EBITDA Margin

Steel Business Unit R$ Million

17%

16%
13%

13%
11%

477

457

343

337

268

1Q14

2Q14

3Q14
Adjusted EBITDA

4Q14

1Q15

Adjusted EBITDA Margin

22

Investments
Steel Business Unit

Heavy Plates

Hot dip galvanized

Hot Rolled

Placas

Electrogalvanized

Cold Rolled

Capacity increase to generate finished products

7.2 million t
(2010)

9.7 million t
(2014)

23

Investments
Steel Business Unit

CLC Technology (Accelerated Cooling Process for Heavy Plates)

Start up in 2010
Meets the requirements of
Petrobrs, focused on presalt, besides the
shipbuilding sector

Galvanizing Line
Start up in 2011
Double the capacity to 1
million t /year
Higher expertise in ultraresistant steel production
(dual phase)
24

Investments
Steel Business Unit

Hot Strip Mill

Start up in 2012
Capacity to process 2.3 million
tons / year
Improving products portfolio
(beams, ultra resistant wheels,
higher grades APIs)

Pickling Line

Start up in 2013
Capacity to process 1.7 million
tons / year
Better thickness tolerance,
flatness and surface controls
of materials for wheels, beams
and compressors
25

Investments in progress
Steel Business Unit

Coke Plant Revamp - Ipatinga

o Met coke with adequate specifications for pig iron production in the blast furnace process

o Reduction of particle emissions, gases and volatile substances

o Coke gas to be used in the operational
facilities of Ipating Mill and electric energy
production
o Coke plant total capacity of 1,1 million
tons/year
o Start up scheduled for the 2Q15

26

Description
Mining Business Unit

Located in Serra Azul/Minas Gerais state

4 mining sites, acquired from J. Mendes in February, 2008

Reserves of 2.6 billion tons of iron ore

It has 20% of voting shares of MRS Logistica, being part of the Control Group

Retroarea in Itagua Port

Shareholder Composition

Production Capacity
Lump
2 million

70%

Sinter Feed
4 million
30%

Pellet Feed
6 million
27

Location
Mining Business Unit

Igarap

So Joaquim
De Bicas

Minerita
MUSA
Central
MUSA
Oeste

Arcelor
Mittal

MUSA
Leste

Ferrous
(Santanense)

MMX

Comisa

Emicon

MUSA
Pau de Vinho

Ferrous

MBL

Itatiaiuu

Minerao Usiminas
28

Investments
Mining Business Unit

Friables Project
Increased capacity from 8 million to 12 million tons / year of iron ore
Iron ore with better quality, higher concentration of iron content and
lower impurity level
Two iron ore processing plants

29

Sales Volume
Mining Business Unit Thousand tons

1,767
1,457

509

171

1,238

1,161

199

1,139

298

297

39

91

960

989

1,039

1,122

1,048

1Q14

2Q14

3Q14

4Q14

1Q15

Exports

Sales to 3rd parties-Domestic Market

Sales to Usiminas
30

Adjusted EBITDA and EBITDA Margin

Mining Business Unit R$ million

51%

37%
33%

27%

11%

175
67
1Q14

2Q14

11

24

3Q14

4Q14

Adjusted EBITDA

43
1Q15

Adjusted EBITDA Margin

31

Description
Solues Usiminas - Steel Processing

9 industrial units in different Brazilian states:

MG, SP, RS, ES, BA and PE

Processing capacity of 2 million tons of

steel/year

Recife

Net Revenue of R$2,3 billion in 2014

Betim
Santa Luzia

Serra

Campo Limpo Paulista

Taubat
Guarulhos
So Paulo

Porto Alegre

32

Description
Usiminas Mecnica - Capital Goods

Facilities in Ipatinga/Minas Gerais state and in Cubato/So Paulo state

Market Segments: Steel Structures, Shipbuilding and Offshore, Oil and Gas, Industrial
Assembly and Equipment, Foundry and Railcars

Net Revenue of R$794 million in 2014

Steel Structure

Braslia 3rd Bridge

33
33

Agenda

Usiminas
Profile

Market
Data

Usiminas and its

business units

Financial
Results

34

Adjusted EBITDA and EBITDA Margin

Consolidated R$ million

21%
18%
12%

12%

14%

655
549

357

1Q14

2Q14
Adjusted EBITDA

3Q14

380
302

4Q14

1Q15

Adjusted EBITDA Margin

35

Cash Position and Debt Profile

Consolidated R$ million

Duration: R$ : 31 months
US$:29 months

2,621

1,256
1,531

1,599

1,723

1,357
330

605

523
1,333

821
68

1,365
1,027

926

1,076
753

118
3

390

114

Cash

2015

2016

2017
Foreign Currency

2018

2019

2020 on

Local Currency

36

Cash and Indebtedness

Consolidated - R$ million

6,835

6,708

6,658

7,149
6,702
2.9

2.1
1.8

1.7

1.7

2,914

2,894

3,057

2,852

2,621

1Q14

2Q14

3Q14

4Q14

1Q15

Cash

Gross Debt

Net Debt/Adjusted Ebitda (x)

37

Capex
Consolidated - R$ million

343

261
238
11
29

8
28

268
10
16

24
21

232
10
25
298

198

1Q14

225

242

2Q14

3Q14

Others

197

Mining

4Q14

1Q15

Steel

38

Working Capital
Consolidated R$ billion

3.0

3.1

2.8
2.4

1Q14

2Q14

3Q14

4Q14

2.7

1Q15
39

Working Capital Steel Inventories

Consolidated - Thousand tons
Inventory
Days

1059.0
995
883

886

933

66

61

57

64

67

1Q14

2Q14

3Q14

4Q14

1Q15
40

Income Statement
Per Business Unit R$ million

Income Statement per Business Units - Non Audited - Quarterly

R$ million

Mining
1Q15

Net Revenue

Steel
Processing

Steel*

4Q14

1Q15

4Q14

1Q15

Capital Goods

4Q14

1Q15

4Q14

Adjustment
1Q15

Consolidated

4Q14

1Q15

4Q14

118

87

2.556

2.457

540

574

211

190

(744)

(723)

2.680

2.585

Domestic Market

118

87

2.230

2.033

536

573

211

190

(744)

(723)

2.350

2.160

Exports

327

424

(2.316)

(2.364)

(527)

(573)

COGS

(111)

Gross Profit (Loss)

Operating Income
(Expenses)

(100)
(12)

(15)

(4)

EBIT

(9)

(16)

Adjusted EBITDA

43

24

Adj.EBITDA Margin

36%

27%

(185)

(176)

241

93

13

(152)

(66)

(24)

(17)

88

27

(11)

(16)

(2)

337

268

(4)

(6)

14

13%

11%

-1%

-1%

26

14

(18)

(16)

7%

2%

331

425

702

685

(2.437)

(2.527)

(42)

(38)

(41)

(36)

(11)
-

11
-

244
(208)
35
380
14%

58
(101)
(43)
302
12%

*Consolidates 70% of Unigal

Note: All intercompany transactions are made at arms length basis

41

Income Statement
Per Business Unit R$ million

Income Statement per Business Units - Non Audited - Annual

R$ million

Mining
2014

Net Revenue

Steel*

2013

2014

Steel Processing
2013

2014

2013

Capital Goods
2014

2013

Adjustment
2014

Consolidated

2013

2014

2013

743

1,136

10,929

11,336

2,341

2,464

794

972

(3,065)

(3,079)

11,742

12,829

Domestic Market

617

1,024

9,327

10,185

2,333

2,443

786

960

(3,065)

(3,079)

9,998

11,533

Export Market

126

112

1,602

1,151

21

12

1,744

1,296

(503)

(503)

(10,076)

(10,570)

(922)

2,861

2,869

Gross Profit (Loss)

240

633

852

767

Operating Income
(Expenses)

(92)

(124)

(260)

(567)

EBIT

148

509

592

200

(43)

Adjusted EBITDA

277

582

1,546

1,151

(4)

COGS

Adj.EBITDA Margin

37%

51%

14%

10%

(2,271)
70
(113)

0%

(2,229)

(716)

235

78

51

(198)

(54)

(72)

37

25

(21)

90

50

4%

6%

(204)
5

1,037

(11,355)
1,476

(514)

(956)

(199)

(205)

523

520

(6)

(23)

1,863

1,806

6
1%

(210)

(10,705)

16%

14%

*Consolidates 70% of Unigal

Note: All intercompany transactions are made at arms length basis

42

Cristina Morgan C. Drumond

Head of IR
cristina.drumond@usiminas.com
Phone: 55-31-3499-8772
Fax: 55-31-3499-9357

Leonardo Karam Rosa

Diogo Dias Gonalves

Renata Costa Couto

IR Manager
leonardo.rosa@usiminas.com
Phone: 55-31-3499.8550

IR Manager
diogo.goncalves@usiminas.com
Phone: 55-31-3499-8710

IR Analyst
r.couto@usiminas.com
Phone: 55-31-3499-8619

www.usiminas.com/ri

ADR
Level I
Declarations relative to business and perspectives of the Company, operating
and financial results and projections, and references to the growth of the
Company constitute mere forecasts and were based on Managements
expectations in relation to future performance, these expectations are highly
dependent on market behavior, on Brazils economic situation, on the industry
and on international markets, and are therefore subject to change.