Presentation

Apresentao Usiminas
2T11 - APIMEC
2Q15
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

Timeline

Operation
Start Up

Cosipa
privatization

1962 1991 1993 1994 2005

Usiminas
privatization
Listing on
BOVESPA

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

Selling of
Ternium stake

Creation of
Solues
Usiminas

Listing on
LATIBEX
stock
exchange
section

Joint Mining
Agreements
with MBL e
Ferrous

One CNPJ:
Usiminas
incorporates
Cosipa

2008
Acquisition
of iron ore
mines
Acquisition
of
Zamprogna

2009

Automotiva
Usiminas
Divestment

2010
Creation of
Minerao
Usiminas
Acquisition
of Codeme
and Metform
stake

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

PN 50.16%

508,525,506

6.75%
27.66%

Free Float
Previdncia Usiminas

36.14%

Ternium / Tenaris
Grupo Nippon
29.45%

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

Promotes protection and environmental education

free of charge for more than 2 million young
people

Reference center in healthcare all over

Brazil

Xerimbabo Usiminas Project

Agenda

Usiminas
Profile

Market
Outlook

Usiminas and its

business units

Financial
Results

World Crude Steel Market in 2014

Million Tons

China
Japan

882.7
110.7

USA

88.3

India

83.2

South Korea

71

Russia

70.6

Germany

42.9

Turkey

34

Brazil

33.9

Ukraine

Source: World Steel Association

27

Excess of Capacity
583

Capacity

Production

2,248

1,665
10

World Crude Steel Production

2014

2003

20%

24%

European Union

18%

10%
2%

8%

Europe (Others)
2%

Others
North America

7%

South America
12%

3%
1%

Africa
China
Asia and Oceania*

23%
13%

50%

2% 4%

971 million tons

1,665 million tons

*Except China
Source: World Steel Association

11

Crude Steel Consumption per Capita

Kg per habitant

1980

2000

2014

34

98

531

160

818

1,166

611

601

573

United States

376

425

376

Germany

469

475

512

Spain

202

435

246

Brazil

101

93

140

Chile

56

97

178

120

142

215

152

133

217

China
South Korea
Japan

Mexico
World Average

Source: World Steel Association

12

Flat Steel Consumption Markets

Auto Industry
and Autoparts

Household
Appliances

Agricultural and
Road Machinery

Hot Rolled,
Cold Rolled and
Galvanized

Cold Rolled and

Galvanized

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

13

Agenda

Usiminas
Profile

Market
Outlook

Usiminas and its

business units

Financial
Results

14

Flat Steel Production

Thousand Tons

Nominal capacity: 9.5 million tons / 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
-

15

Sales Volume
Steel Business Unit Thousand Tons

1,456
15%
12%

1,401
15%
24%

1,247
24%
19%

1,256

1,275

12%
19%

12%
33%

88%
67%

88%
85%

85%
76%

81%
76%

88%
81%

2Q14

3Q14

4Q14

1Q15

Exports

2Q15

Domestic Market
16

Exports Main Markets

Steel Business Unit

1Q15

6%

2Q15

1%
5% 2%

4% 4%
8%

28%

7%
45%

18%

34%

USA
Mexico
Venezuela
Others

12%

Argentina
Taiwan
Chile

26%

Turkey
USA
Italy
Others

Argentina
Vietnam
South Korea

17

Cost of Goods Sold - COGS

Steel Business Unit

1Q15

2Q15

3.0%

5.0%
-4.1%

2.7%
-1.0%
3.9%
10.0%

20.2%

9.5%

19.1%

8.9%
9.8%

14.8%

13.7%
11.1%

11.9%

14.9%
15.4%

15.2%

Labor (direct and indirect)

Other Raw Materials
Depreciation
Others

Iron Ore and Pellets

Energy and Fuels
Inventories Variation

16.2%

Coal and Coke

Spare Parts
Structural Expenses

18

Adjusted EBITDA and EBITDA Margin

Steel Business Unit R$ Million

16%
13%

13%
11%
9%

457
343

337
268
206

2Q14

3Q14

Adjusted EBITDA

4Q14

1Q15

2Q15

Adjusted EBITDA Margin

19

Investments
Steel Business Unit

Heavy Plates

Hot dip galvanized

Hot Rolled

Slabs

Electrogalvanized

Cold Rolled

Capacity increase to generate finished products

7.2 million t
(2010)

9.7 million t
(2014)

20

Investments
Steel Business Unit

CLC Technology (Accelerated Cooling Process for Heavy Plates)

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

Galvanizing Line
Start up in 2011
Double the capacity to 1
million tons /year
Higher expertise in ultraresistant steel production
(dual phase)
21

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
22

Investments
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 Started up on May 2015

23

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
24

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
25

Logistics
Mining Business Unit

Minerao
Usiminas

40 Km

MODAL Cargo
Terminal

60 Km

TCS - Sarzedo
Cargo Terminal

IPATINGA Plant

CUBATO Plant

Sepetiba/Itagua
Port
Export
26

Retroarea in Itaguai Port

Mining Business Unit

27
27

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

28

Sales Volume
Mining Business Unit Thousand Tons

1,457
171

1,238

1,206

297

199

1,161
39

989

1,039

1,122

1,048

1,071

2Q14

3Q14

4Q14

1Q15

2Q15

Exports

Sales to 3rd parties-Domestic Market

1,139
91

135

Sales to Usiminas
29

Iron Ore Price PLATTS (62% Fe CFR China)

US$/ton

103
90
74

2Q14

3Q14

4Q14

62

58

1Q15

2Q15
30

Adjusted EBITDA and EBITDA Margin

Mining Business Unit R$ million

37%

33%
27%

11%
67
11

2Q14

3Q14

Adjusted EBITDA

24

4Q14

43
(6)

1Q15

-5%
2Q15

Adjusted EBITDA Margin

31

Impairment of Assets
Mining Business Unit

In function of the significant iron

ore price decrease, the Company
registered an impairment of
R$985 million in the value of its
mining rights (R$868 million in
Minerao Usiminas S.A. and
R$117
million
in
Usinas
Siderrgicas de Minas Gerais S.A.).

-56%

135
91
60

The value in use of the Mining

Unit was updated to reflect the
managements best estimates on
future iron ore prices, based on
market projections.

2013

2014

1H15

Iron Ore Price - PLATTS (62% Fe CFR China)

32

Description
Solues Usiminas - Steel Processing

8 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

Taubat
Guarulhos
So Paulo

Porto Alegre

33

Description
Usiminas Mecnica - Capital Goods

Facilities in Ipatinga/Minas Gerais state, Congonhas/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 Structures

Braslia 3rd Bridge

34
34

Agenda

Usiminas
Profile

Market
Data

Usiminas and its

business units

Financial
Results

35

Adjusted EBITDA and EBITDA Margin

Consolidated R$ million

18%
12%

12%

14%
8%

549
357

380
302
227

2Q14

3Q14
Adjusted EBITDA

4Q14

1Q15

2Q15

Adjusted EBITDA Margin

36

Comparing Adjusted and CVM 527 EBITDA

Consolidated R$ Thousand

2Q15
EBITDA -Instruction CVM 527

1H15

(755,210)

(401,331)

Equity in the Results of Associate and Subsidiary

Companies

(33,991)

(45,962)

Joint Subsidiary Companies proportional EBITDA

31,361

68,987

985,046

985,046

227,206

606,740

Impairment of Assets
Adjusted EBITDA

37

Cash Position and Debt Profile

Consolidated R$ million

2,889

Duration: R$: 38 months

US$: 31 months

2,294
1,313
1,584

1,788

603
585

1,577

569
310

999

1,761
998
66

1,186

932
534

259
Cash

2015

2016

2017

2018

Local Currency

319
3

316
2019

2020

12

40

12
2021

40
2022 on

Foreign Currency
38

Cash and Indebtedness

Consolidated - R$ million

6,708

7,149

6,835

7,605

6,702

4,528

4,716

3,814

3,778

3,850

2,894

3,057

2,852

2,621

2,889

2Q14

3Q14

4Q14

1Q15

2Q15

Cash

Gross Debt

Net Debt
39

Capex
Consolidated - R$ million

261
8
28

343
24
21

268
10
16

232
10
25

226
15
19

197

192

1Q15

2Q15

298

225

242

2Q14

3Q14

4Q14
Others

Mining

Steel
40

G&A Evolution
Consolidated - R$ million

5.2%
4.6%
4.1%

128

2Q14

4.0%

3.8%

112

3Q14

G&A

134

122

4Q14

1Q15

108

2Q15

G&A/Net Revenues
41

Working Capital
Consolidated R$ billion

3.1

2.8
2.4

2Q14

3Q14

4Q14

2.7

2.7

1Q15

2Q15
42

Working Capital Steel Inventories

Thousand Tons

Inventory
days
995

932

911

883

886

61

57

64

67

64

2Q14

3Q14

4Q14

1Q15

2Q15

43

Income Statement
Per Business Unit R$ million
Income Statement per Business Units - Non Audited - Quarterly
R$ million

Mining
2Q15

Net Revenue
Domestic Market
Exports
COGS

1Q15

1Q15

2Q15

1Q15

2Q15

1Q15

540

230

211

(538)

(744)

2,677

2,680

109

118

1,764

2,230

475

536

230

211

(538)

(744)

2,040

2,350

636

327

637

331

(122)

(111)

(985)

Adj.EBITDA Margin

2Q15

476

(15)

Adjusted EBITDA

1Q15

2,556

(37)

EBITDA Margin (CVM 527)

2Q15

Consolidated

2,401

Operating Income (Expenses)

EBITDA (CVM 527)

1Q15

Elimination and
Adjustment

118

(12)

EBIT

2Q15

Capital Goods

109

Gross Profit

Impairment of Assets

Steel
Processing

Steel*

(2,317)
84
(133)

(2,316)

(464)

(527)

(194)

(185)

241

12

13

36

26

(152)

(28)

(24)

(16)

(18)

525

702

(14)

(42)

(2,571)

(2,437)

105

244
(208)

(214)

(985)

(1,035)

(9)

(50)

88

(16)

(11)

20

(13)

(41)

(1,094)

35

(981)

50

206

339

(9)

(4)

26

14

(46)

(755)

354

-898%

42%

(6)

43

-5%

36%

9%
206
9%

13%

-2%

-1%

337

(9)

(4)

13%

-2%

-1%

11%
26
11%

7%
14
7%

-28%

11

(11)

227
8%

13%
380
14%

*Consolidates 70% of Unigal

Note: All intercompany transactions are made at arms length basis

44

Income Statement
Per Business Unit R$ million

R$ million

Mining
1H15

Net Revenue
Domestic Market
Export Market
COGS
Gross Profit
Operating Income (Expenses)
Impairment of Assets
EBIT
EBITDA (CVM 527)
EBITDA Margin (CVM 527)
Adjusted EBITDA
Adj.EBITDA Margin

Steel
Processing

Steel*

1H14

1H15

1H14

1H15

Capital Goods

1H14

1H15

1H14

Elimination and
Adjustment
1H15

Consolidated

1H14

1H15

1H14

227

548

4,957

5,795

1,016

1,158

440

390

(1,283)

(1,643)

5,357

6,249

227

413

3,994

5,141

1,011

1,152

440

382

(1,283)

(1,643)

4,390

5,445

135

963

654

968

803

(233)
(6)

(284)
264

(4,633)

(5,178)

(990)

(1,099)

(379)

(347)

324

617

25

59

61

43

(286)

(157)

(52)

(63)

(34)

(22)

(52)

(77)

(985)

(1,043)

187

38

460

(931)

262

545

-410%

48%

37
16%

1,227
(56)

1,514
(129)

(5,008)

(5,395)

349

854
(317)

(422)

(985)

(27)

(4)

28

21

(54)

(128)

(1,058)

537

933

(13)

15

40

34

(43)

(59)

(401)

1,186

11%

16%

-1%

1%

9%

9%

-7%

19%

242

543

934

(13)

15

40

34

(1)

(20)

607

1,205

44%

11%

16%

-1%

1%

9%

9%

11%

19%

*Consolidates 70% of Unigal

Note: All intercompany transactions are made at arms length basis

45

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.