Tata Steel (Thailand) Plc. welcomes Media Team - Presentation: Operating Results of Q1 FY20 (April - June)
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Tata Steel (Thailand) Plc.
welcomes Media Team
Presentation:
Operating Results of Q1 FY20 (April – June)
August 15, 2019
Disclaimer
Statements in this presentation describing the Company’s performance may be “forward
looking statements” within the meaning of applicable securities laws and regulations.
Actual results may differ materially from those directly or indirectly expressed, inferred or
implied. Important factors that could make a difference to the Company’s operations
include, among others, economic conditions affecting demand/supply and price conditions
in the domestic and overseas markets in which the Company operates, changes in or due
to the environment, government regulations, laws, statutes, judicial pronouncements
and/or other incidental factors.
2
Contents
• Corporate Citizenship
• Update on Business Environment and Markets
• Q1 FY20 Performance
• Business Outlook
3
Corporate Citizenship: CSR Mission
Relationship with Community & Government Agencies Religion, Culture & Education Promotion
• SCSC: Support building repair of Nong Nam Yen Community and • NTS: Cooperated with Bowin
attended Takuan Mini Marathon Charity Run for restoring the Takuan Police Station for “7
Temple and supporting poor students in Rayong Province. Dangerous Days Activity” by
supporting Tata Drinking
Water for 600 people who
. drove during Songkran
Festival in Chonburi Province.
• NTS: Relocated “Grow Smart
with Tata Steel Book Corner”
at Bann Surasak School,
Chonburi.
Health & Safety Awareness Environment Conservation
• SISCO: Arranged “Road Safety • NTS: Joined with CSR-DPIM
Training Course” for 500 people in Network to build a Temporary
Bang Khamot Community, Dam at Suphanburi Province.
Saraburi Province.
• NTS : Supported Tata Drinking • TSTH: Arranged “Employees’
Water for 1,200 people & Birthday” Activity by planting
participated in “World Day 500 trees at Bangkrachao,
. Against Drug Abuse 2019” . Samutprakarn Province.
activity at Sriracha District,
Chonburi Province.
• SISCO: Shared knowledge
• SISCO: Arranged the Elderly
of Waste Management for
Health Promotion Campaign by
500 people in Bang
providing knowledge and skill for
Khamode Community,
making balm to 700 people in
Saraburi Province.
Bang Khamode Community,
Saraburi Province.
4
Contents
• Corporate Citizenship
• Update on Business Environment and Markets
• Q1 FY20 Performance
• Business Outlook
5
Iron ore prices soar, Graphite electrode price stable
Iron Ore Price
USD/T
Iron ore,62% Fe,China,$/t, CFR ex-Australia
• Iron ore prices hit their
140
2017
highest level in five years
120 2018 • Prices remain elevated
2019
100
and volatile after Brazil’s
dam disaster in Jan’2019
80
60
40
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Graphite Electrode Price (Chinese Source) 2017
2018
30,000
2019 • Graphite electrode price
25,000 was stable in H2 2018,
20,000 and has started to
15,000 weaken in 2019
10,000
5,000
-
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source : SBB, Metal Expert 6Iron ore price saw steep increase in recent months
• Supply restrictions supporting global Iron Ore prices though finished steel demand
remains muted, thereby adversely impacting profitability of steel companies
• International scrap price remain strong on the back of high priced billets
7 Source: TSL China Desk
78
China steel: Production remain strong; PMI shrank
PMI China Crude Steel Production (Million Ton)
53.0 120
Thousands
52.5
51.9 110
52.0
51.5 51.5 51.4 51.5
51.5 51.2 51.3 100
51.0 50.8
50.5 85 90
50.5 50.3 50.2
50.0 79 89 88
76 49.7 80
50.0 83
81 80 81 80 81 71 80 50.1 49.4 49.4
49.5 78
75 70
72 73 49.5
49.0 49.4
65 49.2 60
48.5
48.0 50
• In Jan-Jun 2019 China’s crude steel output totaled 492 MT, up 9.9% year on year.
• Steel PMI in negative zone (Rebar & Wire Rod production rates remain high
in China
Note: The above data is from Blast Furnace production route only
• Risk of high exports from China if domestic demand slows down
Source: TSL China Desk & Mysteel
9Chinese Wire rod prices well below last year level in
spite of high raw material price
China Domestic WR (US$/VAT)
• Average price almost 60 USD pmt lower than last year
10 Source: TSL China Desk & Mysteel
10Thailand Economy
• Q1CY19 GDP growth hit a 4-year low of +2.8% YoY - due to decline in external demand which
led to a contraction in goods & services exports and a further contraction in public
investment. GDP growth forecast for CY19 is 3.3-3.5%
• Private investment increased by 4.4%, supported by the continual expansion of investment in
machinery and equipment. Meanwhile, the investment in construction decelerated
• Political uncertainty and rising uncertainties from global trade may impact the direction and
disbursement of public investments, delaying business investment plans and fall in
consumer spending
• Thai Baht continues to be the strongest currency in Asia
Thailand GDP Growth (%) Thailand Investment (%)
4.9
4.6 10.0 Private Investment
4.3
3.9 4.0
3.7 Public Investment
3.4 3.2
2.8
5.5
4.9
4.0 4.2 4.4
3.0 3.2 3.8
3.1
2.5 2.4
-0.1 -0.1
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
-1.1
2017 2018 2019 2017 -1.6 2018 2019
-6.0
-6.9
Source : NESDB, Krungsri Research 11Contents
• Corporate Citizenship
• Update on Business Environment and Markets
• Q1 FY20 Performance
• Business Outlook
12Volume improved over PY from domestic sales
Unit : ‘000 Ton Good
Total sales Dom. Rebars + Cut & bend
305 299 181
282 166
140
Q1FY19 Q4FY19 Q1FY20 Q1FY19 Q4FY19 Q1FY20
Dom. Wire Rods Export
49
82 83
39
75 36
Q1FY19 Q4FY19 Q1FY20 Q1FY19 Q4FY19 Q1FY20
13Improved Value added products sales
Unit : ‘000 Ton Good
Seismic Rebar High Tensile Rebar
24
9 9 19
18
4
Q1FY19 Q4FY19 Q1FY20 Q1FY19 Q4FY19 Q1FY20
Dom. Cut & Bend
14 13 13
Q1FY19 Q4FY19 Q1FY20
14Spread management & tight operations
resulted in improved financials Unit : Million THB Good
Revenue from sales EBITDA
5,443 5,483 5,420 254
216
29
Q1FY19 Q4FY19 Q1FY20 Q1FY19 Q4FY19 Q1FY20
Profit (Loss) before tax Profit (Loss) after tax
75
44 56
32
(117)
(93) Q1FY19 Q4FY19 Q1FY20
Q1FY19 Q4FY19 Q1FY20
15Apr'18 Apr'18
May'18 May'18
Jun'18 Jun'18
Jul'18 Jul'18
Aug'18 Aug'18
Sep'18 Sep'18
Oct'18 Oct'18
Nov'18 Nov'18
Dec'18 Dec'18
Jan'19 Jan'19
SP Yield (%)-SCSC
Feb'19 Feb'19
Mar'19 Mar'19
Graphite Electrode EAF (Kg/t)-SISCO
Apr'19 Apr'19
May'19 May'19
Jun'19
Good
Jun'19
Good
Apr'18
Apr'18
May'18
May'18
Jun'18
Jun'18
Jul'18 Jul'18
Aug'18 Aug'18
Continuously improving operational KPIs
Sep'18 Sep'18
Oct'18 Oct'18
Nov'18 Nov'18
Dec'18 Dec'18
Jan'19 Jan'19
WR Yield (%)-SISCO
Feb'19 Feb'19
SP Power (Kwh/t)-SCSC
Mar'19 Mar'19
Apr'19 Apr'19
May'19 May'19
Jun'19 Jun'19
Good
Good
16Update on transaction with HBIS
• T S Global Holdings Pte. Ltd. (“TSGH”) and Hebsteel Global Holding Pte., a
wholly owned subsidiary of HBIS Group Co. Ltd. ("HBIS") had entered into a
share purchase agreement on 28th Jan 2019 to form a new company in
which 70% equity shares were to be held by HBIS and balance 30% by
TSGH. This was subject to necessary regulatory approvals.
• HBIS could not obtain necessary approvals from the Hebei Government
within stipulated period of time.
• Both parties have decided not to extend the long stop date and to terminate
the relevant definite agreements in relation to the transaction.
17Contents
• Corporate Citizenship
• Update on Business Environment and Markets
• Q1 FY20 Performance
• Business Outlook
18Business outlook
• Global steel demand is expected to remain weak due to broader economic
weakness and trade barriers among the global economies
• Raw material (Iron ore and Coal) prices expected to soften towards end of
CY2019 due to improved supplies
• Steel prices are expected to find support from elevated raw material costs
• Steel export from China expected to remain at last year level (~ 70 MT)
• New Government in place in Thailand. High expectations to kick start new
investments
• Demand from Retail segment & developers remains healthy
19Thank you for your attention
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