3Q2011 Results BaoshanIron & Steel Co.,Ltd.

3Q2011 Results

Baoshan Iron & Steel Co.,Ltd.

October 2011

The following presentation distributed herewith includes forward-looking statements. All statements, other than statements of historical facts, that address activities, events

or developments that Baoshan Iron & Steel Co.,Ltd.(Baosteel) expects or anticipates will or may occur in the future are forward-looking statements.

Baosteel’s actual results or developments may differ materially from those indicated by these forward-looking statements as a result of various factors and uncertainties, including but not limited to price fluctuations, actual demand, exchange rate fluctuations, competition and other risks and factors beyond our control.

Disclaimer

I. Operation Results

II. Industry Dynamics

Production and Sales

unit：：：：million tons 3Q2010 2Q2011 3Q2011 YoY QoQ

Crude steel output 6.57 6.83 6.79 3.35% -0.59%

Sales of finished products 6.18 6.49 6.61 6.96% 1.85%

including：：：：domestic 5.49 5.72 5.86 6.74% 2.45%

export 0.69 0.77 0.75 8.70% -2.60%

Sales Breakdown of Finished Products

Note：：：：BNA included，，，，unit：：：：million tons

Income Statement Summary

unit：：：：billion Yuan 3Q2010 2Q2011 3Q2011 YoY QoQ

Revenue 51.21 57.15 56.18 9.71% -1.70%

Cost 48.29 54.57 54.95 13.79% 0.70%

Gross profit 4.90 4.67 3.04 -37.96% -34.90%

Gross margin％％％％ 9.57 8.18 5.41↓↓↓↓4.16

ppts

↓↓↓↓2.77

ppts

Operating profit 2.96 2.60 1.32 -55.41% -49.23%

Operating margin％％％％ 5.79 4.54 2.35↓↓↓↓3.44

ppts

↓↓↓↓2.19

ppts

Net profit 2.55 2.01 1.24 -51.37% -38.31%

Net profit margin％％％％ 4.98 3.52 2.21↓↓↓↓2.77

ppts

↓↓↓↓1.31

ppts

unit：：：：million tons

billion YuanSales Revenue YoY Cost YoY

Gross

marginYoY

CRC 2.43 14.5 5.5% 13.7 19.5% 5.46% ↓↓↓↓11.0 ppts

HRC 2.10 9.6 19.4% 9.1 24.6% 5.75% ↓↓↓↓3.9 ppts

Heavy plate 0.65 3.3 22.7% 3.6 30.4% -9.28% ↓↓↓↓6.4 ppts

Tube 0.40 2.9 10.7% 2.7 9.5% 6.13% ↑↑↑↑1.1 ppts

Stainless steel 0.35 4.7 10.2% 4.7 12.0% 0.38% ↓↓↓↓1.6 ppts

Special steel 0.23 2.8 9.6% 2.9 23.0% -5.26% ↓↓↓↓11.5 ppts

Others 0.47 2.3 30.1% 2.3 27.5% -0.44% ↑↑↑↑2.1 ppts

Total 6.61 40.1 12.4% 39.1 20.6% 2.68% ↓↓↓↓6.6 ppts

Gross Profit--Products

unit：：：：Yuan 3Q2010 2Q2011 3Q2011 YoY QoQ

EPS 0.15 0.11 0.07 -53.33% -36.36%

BVPS 5.84 5.98 6.04 3.42% 1.00%

Net CFO per share 0.23 0.16 0.02 -91.30% -87.5%

Gross margin% 9.53 8.08 5.34 ↓↓↓↓4.19 ppts ↓↓↓↓2.74 ppts

ROE(weighted)% 2.55 1.91 1.21 ↓↓↓↓1.34 ppts ↓↓↓↓0.70 ppts

Financial Highlights

Financial index unit 2011-6-30 2011-9-30 ChgChgChgChg％％％％

Solvency

Total debts/

total assets％％％％ 50.5 52.0 ↑↑↑↑1.5 ppts

Current ratio 0.9 0.9 0

Quick ratio 0.4 0.4 0

Financial index unit 2011-6-30 2011-9-30 ChgChgChgChg％％％％

Liquidity

Days of receivables day 5.0 7.0 40.0

Days of inventories day 76.0 75.0 -1.32

Cash conversion

cycleday 50.0 50.0 0

Solvency and Liquidity

I. Operation Results

II. Industry Dynamics

Domestic Economy

• GDP up 9.1% in Q3 YoY, while growth rate continues to slow down.

• 2011 GDP grow rate is expected to be 9%.

Data resource：wind

6810121416

1Q2001 3Q2002 1Q2004 3Q2005 1Q2007 3Q2008 1Q2010 3Q2011

GDP growth,YoY(%)

Demand and Supply Analysis--Supply

• Output of crude steel is 0.53 billion tons in Jan-Sep,up 10.7% YoY.

• Daily output is 1.9 million tons in September, down 5.2 thousand tons MoM.


Output of crude steel

0.35

0.42

0.49 0.50

0.57

0.63

0.53

0.1

0.3

0.5

0.7

2005 2006 2007 2008 2009 2010 Jan-Sep,2011

billion tons ..

Demand and Supply Analysis--Import & Export

• Export 37.15 million tons in Jan-Sep, up 9.5% YoY.

• Net export is 26.4 million tons in Jan-Sep, while it is expected to slow down in

Q4.

• Net export in 2011 is expected over 30 million tons.


Monthly net export

1.0

0.5 0.4

-0.2-0.3-0.20.1

0.5 0.6

1.2

1.6

1.9

1.61.4

1.7

2.8

3.6

4.2

3.2

1.51.7 1.7

1.5 1.5 1.5 1.5

3.4 3.4 3.5

3.1 3.2

2.8 2.9

-1.0-1.0-1.0-1.00.00.00.00.01.01.01.01.02.02.02.02.03.03.03.03.04.04.04.04.05.05.05.05.0

Jan-09 Sep-09 May-10 Jan-11 Sep-11

million tons ..

Demand and Supply Analysis--Demand(Real Estate )

• Investment in real estate is 2.5 trillion Yuan from Q1 to Q3, up 17.7% YoY.

• Affordable housing totally started 9.86 million sets by the end of September,

about 98% of the target.


New start area

0.00

0.05

0.10

0.15

0.20

0.25

Mar-09 Aug-09 Mar-10 Aug-10 Mar-11 Aug-11

billion s

quare

mete

rs ...

Investment

200

300

400

500

600

700

800

Mar-09 Jul-09 Nov-09 Apr-10 Aug-10 Dec-10 May-11 Sep-11

billio

n yuan ..

Demand and Supply Analysis--Demand(Automobile)

• Output and sales grew continually in Q3,13.46 and 13.63 million each in

Jan-Sep, up 2.75% and 3.62% YoY.

• Demand of automobile sheet is steady in Q4, output and sales of automobile is

expected up 3-5% YoY.


Output

35.20

14.1112.56

27.32

22.02

5.21

48.30

32.44

2.75

0.00

5.00

10.00

15.00

20.00

2003 2005 2007 2009 Jan-Sep,2011

million

0.00

10.00

20.00

30.00

40.00

50.00

output YoY%

Sales

34.21

15.5013.54

25.1321.84

6.70

46.15

32.37

3.62

0.00

5.00

10.00

15.00

20.00

2003 2005 2007 2009 Jan-Sep,2011

million

0.00

10.00

20.00

30.00

40.00

50.00

sales YoY%

Demand and Supply Analysis--Demand(Home Appliance)

• Effect of incentive policy of home appliance became weak, growth rate

slowed down in Q3.

• Refrigerator, washing machine and air-conditioner is expected up 12%,14%

and 25% each YoY.


Output of home appliance

7.43%9.32%

12.65%

7.18%5.49%

17.03% 18.19%

32.22%

0%

10%

20%

30%

40%

TV washing machine refrigerator air-conditioner

Sep,YoY Sep,Ytd,YoY

Demand and Supply Analysis--Demand(Machinery)

• Machinery industry grew steadily, while growth rate slowed down, which is

expected up 20% in 2011.

• Investment in power grid and water project is expected to increase in the

future. Attention should be paid to the growth of power system(UHV,smart

power grid), water system（water pump, electric machinery）.

Data resource：CMIF

Machinery industry growth,YoY

26.42%26.43%27.08%26.95%27.71%29.11%29.07%0%5%10%15%20%25%30%35%40%45%50%

Jan-Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2009 2010 2011

Demand and Supply Analysis--Demand(Ship Building)

• New received orders have been less than completion in the past 9 months,

down 10% compared with the end of 2010.

• Completion is expected 68 million tonnages in 2011, up 5% YoY.

• Over capacity will lead to more intensive competition next year.


Ship-building completion

8.41

7.35

6.136.44

4.20

5.43

7.38

4.574.23

6.13

3.694.21

0

2

4

6

8

10

12

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

In million tonnage ....

2006 2007 20082009 2010 2011

Steel Inventory

• Demand is lower than expected since September, inventory soared to 15.2 million

tons after the Nation Day.

• While recently inventory decreased, 14.87 million tons until 21st,Oct.,up 0.2% YoY.

Including: long product, up 10.5% and flat product down 7.9%.

unit：：：：

Million tons7-29 8-26 9-23 10-21

YoY

Chg in

volumn %

Rebar 5.33 5.43 5.77 5.93 0.68 12.95%

Wire 1.10 1.04 1.18 1.27 0 0%

HRC 4.30 4.30 4.45 4.63 -0.62 -11.81%

CRC 1.62 1.59 1.56 1.55 0.03 1.97%

Plate 1.50 1.48 1.48 1.48 -0.07 -4.52%

Long product 6.43 6.47 6.95 7.20 0.68 10.43%

Flat product 7.43 7.37 7.49 7.67 -0.65 -7.81%

Total 13.85 13.84 14.44 14.87 0.03 0.20%Data resource：Mysteel

Raw Material Inventory

• Iron ore inventory is still high, about 92.2 million tons in 25 main ports

until 21st,Oct.

• Including: 39.95 million tons from Australian, down 0.17% MoM;

• 21.98 million tons from Brazil, up 0.23% MoM;

• 11.40 million tons from India, up 0.80% MoM.

Data resource：Mysteel

Iron ore port inventory

1,0001,0001,0001,0001,5001,5001,5001,5002,0002,0002,0002,0002,5002,5002,5002,5003,0003,0003,0003,0003,5003,5003,5003,5004,0004,0004,0004,000

Jan-10 Mar-10 May-10 Jul-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11

Australian Brazil India

Raw Material Cost

•Vale and Rio Tinto agreed on the iron ore price based on the current

average level of indexes, down about 8%.

二级冶金焦价格二级冶金焦价格二级冶金焦价格二级冶金焦价格1,2001,3001,4001,5001,6001,7001,8001,9002,0002,1002,200

Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11太原上海

scrap pricescrap pricescrap pricescrap price2700

2900

3100

3300

3500

3700

3900

Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11Data resource：Mysteel

Platts(62% Fe)

2010-7-16, 1162010-7-16, 1162010-7-16, 1162010-7-16, 116

10-4-20, 18610-4-20, 18610-4-20, 18610-4-20, 186

2011-10-27,2011-10-27,2011-10-27,2011-10-27,120120120120

2011-9-7, 1832011-9-7, 1832011-9-7, 1832011-9-7, 1832011-3-15, 1652011-3-15, 1652011-3-15, 1652011-3-15, 1652011-2-15, 1932011-2-15, 1932011-2-15, 1932011-2-15, 193

100

110

120

130

140

150

160

170

180

190

200

Jan

Feb

Mar

Apr

May Jun

Jul

Aug

Sep Oct

Nov

Dec

2010年2011年2010

2011

Taiyuan Shanghai

Coke II

Steel Price

unit：：：：

Yuan/ton21-Oct Average 2010 WoW% MoM% YoY%

HRC 4320 4306 -7.7 -8.5 -1.1

CRC 5460 5580 -3.4 -5.5 -0.2

Plate 4500 4372 -4.3 -6.6 0.7

Wire 4330 4203 -8.6 -10.2 0.5

Rebar 4630 4276 -3.5 -5.5 4.3


• Iron ore price decreased since September, which weakened support of cost to the

steel price.

• Demand of most industries(except automobile) has been weak recently, caused

the decline of steel price.

Market Trend

3000

3400

3800

4200

4600

5000

5400

5800

6200

6600

Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11热轧3.0冷轧1.0螺纹20Ⅲ级 300040005000600070008000900010000

Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11冷轧1.0镀锌1.0彩涂0.476硅钢600


HR3.0

CR1.0

Rebar20III

CR1.0

Galvanized1.0

Prepainted0.476

silicon600

3Q2011 Results BaoshanIron & Steel Co.,Ltd.

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Transcript of 3Q2011 Results BaoshanIron & Steel Co.,Ltd.