Magnesita held an earnings call to discuss its performance in 1Q13. The company outlined its new strategic vision to be the leading provider of refractories and industrial minerals by expanding its minerals base, maintaining leadership in core markets, optimizing global production, and pursuing selective growth opportunities. Magnesita also discussed two recent acquisitions - DMR, a new plant in China, and Reframec, a leader in refractory services in Brazil - that will help achieve this strategy. Financial results for 1Q13 showed increases in revenue, gross profit, EBITDA, and a stable cash position and leverage despite challenges in steel markets.
2. New strategic view
Vision:
Be the best provider of refractories
solutions and industrial minerals,
leveraging and developing our minerals base
Expand industrialEnsure leadership Maintain a global lowGrow selectively and
Oneglobalorganization
Expand industrial
minerals base
Ensure leadership
in our core markets
Maintain a global low
cost production base
Grow selectively and
aggressively
Continue to develop high
quality, low cost raw
material sources to
support our current
businesses as well as
new businesses where
we can have a
sustainable competitive
advantage
Strive to keep offering
high quality and
innovative products,
unrivaled services and
cost performance
Optimize production
globally to improve
efficiency and support
growth
Develop global supply
chain management
Pursue long term growth
opportunities in selected
markets where we can
deliver superior value to
our customers and
shareholders
▪Meritocracy
▪Ethics
▪Profit
▪Management and Method
▪Agility and Transparency
▪Respect for Safety, Environment and Communities
▪Customer
▪People
Our values
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3. DMR (manufacturing unit in China)
Low cost production base: The plant is located in the city of Dalian, northeast China,
region which owns around 20% of world’s reserves of magnesite, making it
a highly strategic location for refractory production
New markets: This new plant will allow us to better serve geographies
Recent aquisitions Maintain a
global low
cost
production
base
Grow
selectively
and
aggressively
New markets: This new plant will allow us to better serve geographies
and segments where Magnesita has a marginal presence today
and where we want to expand sales in a selective way
Location: Dalian is an important export hub in China with
excellent logistics
Capacity: 50.000 tons/year
Closing: Expected to occur in ~60 days, after approval
of the Economic and Trade Bureau of Dalian Development Area,
in the People´s Republic of China.
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in the People´s Republic of China.
DMR external view
China
CHINA
4. Reframec (51% of equity)
Ensure leadership in our core markets: The Reframec acquisition reinforces
Magnesita's leadership in its core industrial markets in South America, as it
expands its services beyond the steel industry
Reframec: Leader in engineering, installation and repair services
Recent aquisitions Ensure
leadership
in our core
markets
Reframec: Leader in engineering, installation and repair services
for refractories used in cement production in Brazil
Closing: ~60 days. Post-close, Reframec will continue to operate
independently
4
Refractory assembly in rotary kiln
12. Debt and Leverage
Net debt / EbitdaEBITDA* LTMNet Debt
1,4x
Net debt / EbitdaEBITDA* LTMNet Debt
1.0591.0581.0311.002
907
2,6x
2,8x2,9x2,9x2,7x
907 1.4x1.4x1.4x
2,7x
Total Excluding Perpetual Bond
1Q134Q123Q122Q121Q12
Perpetual Bond
1Q12 1Q132Q12 4Q123Q12
*EBITDA excluding non recurring *EBITDA excluding non recurring
R$
2%
-14%
907
401373357350334
566536513486
907
401373357350334
Amortization Schedule (R$ million) Net Debt per currency
2018+
1.472
20172016201520142013Mar-13
Cash
Amortization
Perpetual Bond
12
-3%
EUR
Others
-2%
19%
80%
2%
13%
USD
104%
Dec-12
Mar-13
678
7880621530
964
508
13. The Company applied, from 2013 fiscal year, IFRS 11 - "Joint Arrangements" issued in May 2011, and
included as an amendment to the text of the CPC 19 (R2) - "Joint Venture". Thus, the method of
IFRS 11 – Joint arrangement
included as an amendment to the text of the CPC 19 (R2) - "Joint Venture". Thus, the method of
proportionate consolidation is no longer permitted, the Company ceased to consolidate jointly controlled
Krosaki Magnesite Refractories LLC (United States). Additionally, from January 1st, 2013, holdings in
Krosaki Magnesite Refractories LLC (40%) are being accounted by the equity method. For comparison
purposes, the balance sheet of December 31, 2012 and March 31, 2012 were adjusted in the Quarterly
Information Form (“Formulário ITR”) considering the change of accounting practice. In the 1Q13 Earnings
Release, the Company has decided not to make changes in the quarters of 2012 to not impact the reports
and analysis already disclosed to the market.
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14. Octavio Pereira Lopes
CEO and IRO
Eduardo Gotilla
Global Finance & IR Director
Daniel Domiciano Silva
Investor Relations contacts:
Daniel Domiciano Silva
Investor Relations
Phone: 55 11 3152-3202/3241
ri@magnesita.com
www.magnesita.com
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