Presentation

Apresentao Usiminas
2T11 - APIMEC
2Q16
Classification of the information: Public

Agenda

Usiminas
Profile

Market
Outlook

Usiminas and its

business units

Financial
Results

Company Profile

Complete solution for products and services

Steel company with the largest number of patents rights in Latin America
Largest Research Center in the steel sector in Latin America
First Brazilian steel company to have its quality system certified by ISO 9001 in 1992
First Brazilian steel company and second in the world to achieve the ISSO 14001 environmental

management certificate in 1996

Founded of the most enduring environmental education project of the private sector since 1984

Timeline

Operation
Start Up

1962

Cosipa
privatization

1991

Usiminas
privatization
Listing on
BOVESPA

1993

Listing on
LATIBEX
stock
exchange
section

1994

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

2005

Creation of
Solues
Usiminas
One CNPJ:
Usiminas
incorporates
Cosipa

2008

Acquisition
of iron ore
mines
Acquisition
of
Zamprogna

2009

Selling of
Ternium stake
Joint Mining
Agreements
with MBL e
Ferrous

Automotiva
Usiminas
Divestment

2011

2013

2010

Creation of
Minerao
Usiminas
Acquisition
of Codeme
and Metform
stake

2012

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

Temporary
shutdown
of the
primary
areas in
Cubato

2014

2015

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

2016

R$ 1 billion
capital
increase

Shareholding Composition

Total Capital
1,253,079,108
Voting Capital
56.28%

43.71%

705,260,684

547,740,661

Outros
23.19%

Grupo Nippon
21.10%

Grupo de Controle (63,86%)

*
*

Free Float: 54.25%

*

Grupo TT
19.76%
Grupo
Nippon
11.31%

Grupo Ternium/
Tenaris
19.81%

Grupo de Controle: 45.75%

Previdncia
Usiminas
4.84%

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

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

Shares Quotation on BM&FBOVESPA

R$/share - Up to 06/30/2016

24.44

25.13
21.78
18.26

21.93
21.41

22.21

17.53
11.62

11.80

12.40

12.30

10.55

8.81

10.45

6.72

10.12

10.52
5.08

6.15
2.59
2004

5.05

3.67

2005

2006

2007

2008

2009

2010

2011

2012

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

2013

2014

4.02 4.09
1.55

1.81

1.97

2015

1Q16

2Q16

USIM5
8

Agenda

Usiminas
Profile

Market
Outlook

Usiminas and its

business units

Financial
Results

World Crude Steel Market in 2015

Million Tons

China
Japan

803.8
105.2

India

89.6

USA

78.9

Russia

71.1

South Korea

69.7

Germany

42.7

Brazil

33.2

Turkey

31.5

Ukraine

Source: World Steel Association

22.9

Excess of Capacity
704

Capacity
2,351

Production
1,647
10

Brazilian Flat Steel Market

Million Tons

22%
14%

11%
5%

12%

15%

15%

7%

6%

15.7
12.5

13%

15.2
14.5

14.3
13.1

14.3
13.6

14.9

14

15.0 14.8

14.3
13.5

13.4
12.1

11.9

10.9

10.2

9.0

2007

2008

2009

Production
Source: Instituto Ao Brasil / Usiminas Excludes Slabs

2010

2011

2012

Consumption

2013

2014

2015

2016p

Imports
11

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

12

Agenda

Usiminas
Profile

Market
Outlook

Usiminas and its

business units

Financial
Results

13

Flat Steel Capacity of Production

Thousand Tons

Galvanized
Slab Caster

Slabs
Placas

Heavy Plates

Hot Coils
Laminados a
Quente
3,600

Ipatinga Plant

5,000

1,000

Cubato Plant

4,500*

1,000**

Nominal
Capacity

9,500*

2,000*

1,900

Optimized
Rolling
Capacity

* Temporary shutdown of the primary areas of Cubato

** Temporary shutdown of the rolling mills

Cold Coils

EG
Eletrogalvanizados

HDG

2,500

360

1,200

8,000

3,700

360

1,050

4,200

2,200

350

1,020

2,100 **
2.300

1,050
-

14

Sales Volume
Steel Business Unit Thousand Tons

1,275
1,179
33%

1,205

27%
36%

67%

2Q15

903

899

16%

13%

84%

87%

1Q16

2Q16

73%
64%

3Q15

4Q15
Domestic Market

Exports

15

Exports Main Markets

Steel Business Unit

1Q16
2%
5%
2%
5%
6%

2Q16
6%
25%

2%

8%

27%

9%

7%

9%

10%
20%

21%
19%

19%

Argentina
India

Germany
Italy

USA
Taiwan
Portugal

Spain

Belgique

Mexico

Others
16

Cost of Goods Sold - COGS

Steel Business Unit

1Q16

2Q16

3.4%
6.6%

2.5%
5.5%

18.9%

18.8%

6.9%

8.0%
7.2%
8.3%
13.1%
9.5%

17.3%

8.9%
10.0%

12.6%

9.2%
11.0%

10.8%

11.5%

Other Raw Materials

Labor (direct and indirect)

Coal and Coke

Iron Ore and Pellets

Structural Expenses

Energy and Fuels

Depreciation

Spare Parts

Inventories Variation

Others

17

Adjusted EBITDA and EBITDA Margin

Steel Business Unit R$ Million
9%
206
31
6
46
3%
72
1

50
3%

(37)

1
(42)

1Q16

2Q16

(6)
(82)
-4%

(52)
(2)
(179)
-8%

2Q15
Assets Sale/
Write-off

3Q15
Sales of Surplus
Electric Energy

4Q15

Adjusted EBITDA

Adjusted EBITDA
Margin

18

Adjusted EBITDA and EBITDA Margin

Steel Business Unit R$ Million - Without asset sale and energy

7%
5%
169

1%

91

11
(77)
(125)
-4%
-6%

2Q15

3Q15
Adjusted EBITDA

4Q15

1Q16

2Q16

Adjusted EBITDA Margin

19

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

20

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
21

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
22

Retroarea in Itaguai Port

Mining Business Unit

23

Sales Volume
Mining Business Unit Thousand Tons

1,206
135
974

775
41

787

344

670
12

177
16

17

658

614

593

4Q15

1Q16

2Q16

1,071
734

2Q15

3Q15
Sales to Usiminas

Sales to 3rd parties - Domestic Market

Exports
24

Iron Ore Price PLATTS (62% Fe CFR China)

US$/ton

58

2Q15

56

55

3Q15

47

48

4Q15

1Q16

2Q16
25

Adjusted EBITDA and EBITDA Margin

Mining Business Unit R$ million

21
21%
10

-5%
(6)

(3)

(4)
(12)
-11%

(24)
-27%

(102)

2Q15

3Q15

Sales of Surplus Electric Energy

-119%
4Q15
Adjusted EBITDA

1Q16

2Q16

Adjusted EBITDA Margin

26

Adjusted EBITDA and EBITDA Margin

Mining Business Unit R$ million - Without asset sale and energy

24%
(16)

(8)
-8%

(28)

-15%

24

(103)
-32%

2Q15

3Q15

-120%
4Q15

Adjusted EBITDA

1Q16

2Q16

Adjusted EBITDA Margin

27

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$1.9 billion in 2015

Betim
Santa Luzia

Serra

Taubat
Guarulhos
So Paulo

Porto Alegre

28

Adjusted EBITDA and EBITDA Margin

Steel Processing - R$ million

3.3%

14
0.7%
3
(1)

(4)

-0.2%

(9)
-1%

-2%
2Q15

3Q15
Adjusted EBITDA

4Q15

1Q16

2Q16

Adjusted EBITDA Margin

29

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$869 million in 2015

Steel Structures

Braslia 3rd Bridge

30
30

Adjusted EBITDA and EBITDA Margin

Capital Goods - R$ million

12%
11%
10%

6%
5%

26
23

24

2Q15

3Q15
Adjusted EBITDA

4Q15

1Q16

10

2Q16

Adjusted EBITDA Margin

31

Agenda

Usiminas
Profile

Market
Data

Usiminas and its

business units

Financial
Results

32

Adjusted EBITDA and EBITDA Margin

Consolidated R$ million

8%
227
41
4

52
3%
(2)
(11)
-3%

(1)
(50)

72

68
3%

(41)

1
(44)

1Q16

2Q16

(65)

(250)
-10%
2Q15
Assets Sale/
Write-off

3Q15
Sales of Surplus
Electric Energy

4Q15

Adjusted EBITDA

Adjusted EBITDA
Margin

33

Adjusted EBITDA and EBITDA Margin

Consolidated - R$ Million Without asset sale and energy

8%
5%

182
1%

111

20
(52)
-2%
(199)

-9%
2Q15

3Q15
Adjusted EBITDA

4Q15

1Q16

Adjusted EBITDA Margin

2Q16
34

Adjusted EBITDA and EBITDA Margin

Business Units R$ million

2,650
111
102

638
6

41

277

798
60

604

439

463

Adjust

50

44

1,819

(20)
2010

90

1,863

582

1,264
112

1,806

2011

1,546
1,151

291
28

87
378
(11)(68)
2012

Capital Goods

282
(23)
2013

Steel Processing

-4(6)
2014

(89)
2015

Mining

119

18
17
9 96 (21)
1H16

Steel
35

Comparing Adjusted and CVM 527 EBITDA

Consolidated R$ Thousand

EBITDA Breakdown
Consolidated (R$ thousand)
Net Income (Loss)

2Q16

1Q16

2Q15

1H16

1H15

(123,357)

(151,377)

(780,798)

(274,734)

(1,016,178)

(18,675)

(15,360)

(319,383)

(34,035)

(397,454)

(114,621)

(101,553)

317,273

318,086

60,620

49,796

Equity in the Results of Associate and Subsidiary

Companies

(36,655)

(51,845)

(33,991)

(88,500)

(45,962)

Joint Subsidiary Companies proportional EBITDA

44,212

45,597

31,361

89,809

68,987

8,030

985,046

7,637

985,046

51,578

227,206

119,362

606,740

Income Tax / Social Contribution

Financial Result
Depreciation, Amortization
EBITDA - Instruction CVM - 527

Impairment of Assets
Adjusted EBITDA

(393)
67,784

40,629
304,342
(755,210)

(216,174)

401,529

635,359

610,772

110,416

(401,331)

36

Cash Position and Debt Profile

Consolidated R$ million

Duration:

2,713

R$: 29 months
US$: 27 months

225

1,871
1,618

1,710

523
2,488

590
1,334

1,003
68

1,029

1,187
935

810

491

538

Cash

2016

2017

2018

2019

Local Currency

318

15
0
14

13
13-

33
33

2020

2021

2022

2023 on

Foreign Currency

The renegotiation of debt is expected to be completed in 9/12/16 and this debt profile will be changed
accordingly.

37

Cash and Indebtedness

Consolidated - R$ million
7,974

7,705

7,473

7,282

5,577

4,584

5,681

5,546

7,073

4,360

871*
2,889

2,397

2Q15

3Q15
Gross Debt

Net Debt

2,024

1,736

1,842

4Q15

1Q16

2Q16

Cash

Capital Increase

* This amount doesnt include R$181.2 million of CSN's subscription in the Capital Increase, which were held by Court until the end of
the 2Q16. On July 19th, this amount was credited into the Usiminas account, totalizing RS1.050 billion of capital increase (ON and PN).

38

CAPEX
Consolidated - R$ million

1,643
112

555
981
64

1,110
52
94
784
50
112

317

976

964
622

600

120
5 10
106
2012

2013
Others

2014
Mining

2015

1H16
Steel
39

G&A Expenses
Consolidated - R$ million

4.5%
4.0%

108

2Q15

4.2%

4.4%

4.2%

109

101

3Q15

4Q15
G&A

90

86

1Q16

2Q16

G&A/Net Revenues
40

Working Capital
Consolidated R$ billion

2.7
2.4

2Q15

3Q15

2.3

4Q15

2.2

2.1

1Q16

2Q16
41

Working Capital Steel Inventories

Thousand Tons

Inventory
turnover
(days)

911

747
639

484

439

64

57

48

48

44

2Q15

3Q15

4Q15

1Q16

2Q16
42

Gross Profit, EBIT and Net Income

Consolidated - R$ million

105

(41)

(110)

(67)

(151)
(320)

(781)
(1,094)

(123)
(293)

(441)

(1,042)

(1,627)

(2,226)

USD/BRL

2Q15

3Q15

3.103

3.972

4Q15
3.904

1Q16

2Q16

3.558

3.210

End of period

Gross Profit

EBIT

Net Income
43

Gross Profit, EBIT and Net Income

Consolidated - R$ million

1,476
1,037
523

520

173

208

17

(38)
(275)
(614)

(3,685)
(3,725)
2013

2014
Gross Profit

2015
EBIT

1H16
Net Income
44

Income Statement
Per Business Unit R$ million

Income Statement per Business Units - Non Audited - Quarterly

R$ million

Mining
2Q16

Net Revenue

Steel
Processing

Steel*

1Q16

2Q16

1Q16

2Q16

Capital Goods

1Q16

2Q16

1Q16

Adjustment
2Q16

Consolidated

1Q16

2Q16

1Q16

101

106

1,778

1,739

432

431

155

170

(438)

(405)

2,028

2,041

Domestic Market

77

56

1,570

1,476

432

431

155

170

(438)

(405)

1,796

1,728

Exports

25

50

207

263

232

313

(105)

(1,780)

(1,786)

(398)

(410)

374

372

(2,025)

(2,081)

(3)

(47)

(64)

(33)

COGS
Gross Profit (Loss)

(80)
21

Operating Income (Expenses)

(39)

(53)

(220)

(188)

EBIT

(18)

(52)

(223)

(235)

Adjusted EBITDA
Adj.EBITDA Margin

21
21%

(12)
-11%

50
3%

46
3%

(141)

(152)

34

21

14

17

(27)

(25)

(10)

(15)

(4)

(63)

14

10

(27)

3%

1%

6%

5%

2
(31)
6
-

(41)

(296)

(280)

(293)

(320)

68
3%

52
3%

*Consolidated 70% of Unigal

Note: All intercompany transactions are made at arms length basis

45

Income Statement
Per Business Unit R$ million

Income Statement per Business Units - Non Audited

R$ million

Mining
1H16

Net Revenue
Domestic Market
Exports
COGS
Gross Profit (Loss)

1H15

1H16

1H15

1H16

Capital Goods

1H15

1H16

1H15

Adjustment
1H16

Consolidated

1H15

1H16

1H15

207

227

3,517

4,957

863

1,016

325

440

(843)

(1,283)

4,069

5,357

133

227

3,046

3,994

862

1,011

325

440

(843)

(1,283)

3,524

4,390

471

963

546

967

(233)

(3,567)

(4,633)

(808)

(990)

1,227

(4,107)

(5,008)

(6)

(50)

74
(186)
22

Operating Income (Expenses)

(92)

(1,037)

(408)

EBIT

(70)

(1,043)

(458)

Adjusted EBITDA
Adj.EBITDA Margin

Steel
Processing

Steel*

9
4%

37
16%

96
3%

(293)

(379)

324

55

25

32

61

(286)

(52)

(52)

(26)

(34)

746
(97)

(56)

(38)
(576)

(1,407)
(1,058)

38

(27)

28

(94)

(54)

(613)

543

17

(13)

18

40

(21)

(1)

119

11%

2%

1%

6%

9%

349

3%

607
11%

*Consolidated 70% of Unigal

Note: All intercompany transactions are made at arms length basis

46

Positive Agenda

Financial
Standstill agreement with the main creditors extended until September 12th;
Approximately 75% of total debt renegotiation concluded;
Capital Increase duly approved for R$1 billion;
CAPEX and Working Capital under control.
Industrial and Commercial
Cubato Reconfiguration and workforce restructuring;
Increases in prices in domestic market;
Increases in sales volume in domestic markets and exports.
Strategic
Goals for 2016;
Long term plans.

47

Cristina Morgan Cavalcanti

Head of IR
cristina.morgan@usiminas.com
Phone: 55-31-3499-8772

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.