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ArcelorMittal Tubular Products Iasi SA

Cost analyses and profitability by product

where our money goes ( what are cost) .from what products we are gaining more money ( profitability ) . • We are in business to make profit • Are critical for all business decision to know two essential elements: . Why we need to know….

Direct Production 1. Indirect Production Cost: Fixed Production Support 3. Structure of EBITD EBITD EBITDA Depreciation & Impairement Production cost + SGA Other Cost Industrial production cost + SGA Logistic cost Variable cost Fixed Cost Steel Input Price VCC Salary Cost R&M POH SGA 1. Indirect Production Cost: Fixed Production Structure 3 . Direct Production Cost: Fixed (by Cost: Variable (by procces) elements) 2.

. finishing . rolling. direct in prod. Energy consumption All energy consumed Electricity . slings. methane gas. rolls. paint. scarfing tools.Cumulative yield loss from sidering scrap recovery slitting.Variable Cost All materials used to support Coolant. compressed air … Yield loss All metal loses cost con. process steam. testing . Raw material cost Costs of specific grade / Cost of coils type of raw material used in process 4 . production and delivery of pipes labels. Tools from coil to final pipe blades. etc Auxiliary materials All parts of process in direct contact with product Slitting knifes . packing materials.

5 . the overall operations of the but which support plant. Therefore these costs are the production not specific to a particular operations directly. production process or step and All cost occurred only during Production support hence need to be allocated to transforming raw material costs are specific the process using a logical in finished product and support allocation methodology applied particular processes. consistently. Structure of Total Cost SGNA All cost occurred no matter if production run or not Indirect allocable to cost center or prod line – need keys of allocations Direct allocable to cost Fix cost center or prod line Fixed Cost Support Fixed Cost Structure Salary & Wages Support production Support overall Repairs & Maintenance operations directly operations of plant as shared service Property taxes Production Planning Insurance Laboratory analysis Rental & Quality Inspections Central departments Variable cost Fixed Production Fixed Production Structure Support Cost: Costs: are other indirect fixed These are costs not costs which are incurred for the directly linked to the plant as a whole and support production process.

& EBITDA VCC CF TCT Line Direct Indirect wise (salaries+c Salaries controlable controlable to €/to €/to €/to OI/(OE) €/to €/to €/to €/to €/to €/to €/to ost) €/to €/to €/to €/to €/to SRR60 20.625 122 31 91 27 11 53 17 7 5 4 10 46 31 54 86 Presurres pipes 9.270 195 38 157 48 11 98 17 7 5 4 10 91 38 76 114 EN 10219 4.797 90 31 59 30 10 19 17 7 5 4 10 12 31 56 87 6 .626 83 40 42 26 11 5 17 7 5 4 10 (1) 40 54 94 Micropilling pipes 251 208 47 161 38 15 108 17 7 5 4 10 101 47 69 116 Other steel product & NCQ 1.Line-wise Profitability MRF 2013 2013 St. var FC FC EBITDA Line SGA SGA SGA Cost non SGA Cost Shipment Spread VCC Contrib.473 126 33 92 41 10 41 17 7 5 4 10 34 33 68 102 EN 10217 & 10255 13.071 90 42 48 43 9 (4) 17 7 5 4 10 (11) 42 69 110 Micropilling pipes 64 221 52 169 78 15 76 17 7 5 4 10 69 52 110 162 Other steel product & NCQ 584 (46) 27 (73) 36 9 (118) 17 7 5 4 10 (125) 27 62 88 Total 82.355 79 25 53 29 9 16 17 7 5 4 10 9 25 54 79 S235JRH 17.818 91 27 64 31 10 23 17 7 5 4 10 16 27 58 85 EN 10219 17.729 76 26 51 29 9 13 17 7 5 4 10 6 26 55 80 EN 10217 & 10255 2.961 147 34 113 43 10 60 17 7 5 4 10 53 34 70 104 Presurres pipes 8.244 62 27 36 24 10 3 17 7 5 4 10 (4) 27 50 77 S355JRH 11.850 (56) 28 (85) 24 10 (118) 17 7 5 4 10 (125) 28 50 79 R220 19.590 125 32 92 39 10 44 17 7 5 4 10 37 32 66 98 Victaulic pipes 1.929 85 32 53 38 9 6 17 7 5 4 10 (1) 32 64 96 S235JRH 3.514 114 31 83 26 10 47 17 7 5 4 10 40 31 53 83 Victaulic pipes 1.478 136 35 101 31 13 57 17 7 5 4 10 50 35 61 95 Micropilling pipes 634 219 33 185 36 14 135 17 7 5 4 10 129 33 67 100 EN 10219 29.121 72 32 39 25 10 5 17 7 5 4 10 (2) 32 51 84 S235JRH 17.794 81 29 52 36 9 7 17 7 5 4 10 0 29 61 91 S355JRH 1.101 136 34 102 52 13 38 17 7 5 4 10 31 34 81 115 Micropilling pipes 4.082 78 25 53 29 9 15 17 7 5 4 10 8 25 54 79 HDG coil DX51 273 148 41 106 33 10 64 17 7 5 4 10 57 41 59 100 Other steel product & NCQ 898 (29) 27 (56) 31 9 (96) 17 7 5 4 10 (103) 27 57 84 SRR200 42.596 80 32 48 25 10 13 17 7 5 4 10 6 32 52 84 EN 10217 & 10255 11.476 97 27 70 32 10 28 17 7 5 4 10 21 27 58 86 Presurres pipes 380 101 25 76 32 9 35 17 7 5 4 10 28 25 58 83 Victaulic pipes 278 131 29 103 36 11 55 17 7 5 4 10 48 29 64 93 Green house 1.

900 105 36 69 23 8 39 14 6 4 3 0 25 36 44 80 Victaulic pipes 1.300 (58) 28 (87) 21 7 (115) 14 6 4 3 0 (128) 28 42 70 R220 23. var & Shipment Spread VCC Contrib.390 133 37 97 39 11 47 14 6 4 3 0 34 37 63 100 EN 10217 & 10255 20.320 112 43 69 28 9 32 14 6 4 3 (2) 16 43 51 94 7 .790 121 38 83 28 9 45 14 6 4 3 0 32 38 51 89 Micropilling pipes 2.310 145 37 108 40 11 57 14 6 4 3 0 43 37 65 102 Presurres pipes 9.440 82 34 49 22 8 19 14 6 4 3 (0) 5 34 44 78 S235JRH 8.730 97 28 69 33 12 23 14 6 4 3 (0) 10 28 59 87 Victaulic pipes 1.870 117 36 80 24 8 48 14 6 4 3 0 35 36 46 82 Presurres pipes 14.230 356 281 75 25 8 42 14 6 4 3 0 28 281 47 328 Other steel produc t & NCQ 1.100 122 41 81 23 8 50 14 6 4 3 (0) 36 41 45 86 Micropilling pipes 480 173 43 130 34 11 85 14 6 4 3 (0) 71 43 59 102 Galvanized Tubes 1.000 111 30 81 38 13 30 14 6 4 3 (0) 16 30 65 95 Green house 4.990 83 28 55 31 11 13 14 6 4 3 0 (1) 28 56 84 EN 10219 13.760 79 31 48 30 8 10 14 6 4 3 0 (4) 31 52 83 S355JRH 690 96 43 53 34 9 10 14 6 4 3 (0) (4) 43 57 100 Other steel produc t & NCQ 630 (58) 28 (87) 30 8 (125) 14 6 4 3 0 (139) 28 52 81 Total 100.000 239 146 94 25 9 60 14 6 4 3 (0) 46 146 48 194 EN 10219 20.050 89 38 51 23 8 20 14 6 4 3 (0) 6 38 45 82 Magnelis 1.790 97 35 62 26 9 27 14 6 4 3 (9) 4 35 50 84 EN 10217 & 10255 10.720 187 40 146 43 12 91 14 6 4 3 0 77 40 69 110 EN 10219 2.975 72 24 47 30 11 6 14 6 4 3 (0) (7) 24 55 79 HDG coil DX51 1.720 92 28 63 33 12 19 14 6 4 3 (0) 5 28 58 86 Presurres pipes 4.810 65 28 37 21 7 9 14 6 4 3 0 (5) 28 42 70 S355JRH 10.840 114 51 63 23 8 31 14 6 4 3 0 17 51 45 96 EN 10217 & 10255 18.340 112 35 77 36 10 30 14 6 4 3 0 17 35 60 95 Victaulic pipes 2.735 93 26 67 21 7 38 14 6 4 3 (16) 8 26 42 68 S235JRH 7.080 160 30 129 33 12 85 14 6 4 3 0 71 30 58 89 Magnelis 330 122 31 90 33 12 45 14 6 4 3 0 32 31 59 90 Outsourced 4. EBITDA VCC CF TCT Line Direct Indirect Line wise (salaries+ Salaries controlable controlable OI/(OE) to €/to €/to €/to €/to €/to €/to €/to €/to €/to €/to cost) €/to €/to €/to €/to €/to SRR60 25.350 113 28 85 0 0 85 14 6 4 3 (52) 20 28 14 42 Galvanized Tubes 770 356 275 81 34 12 34 14 6 4 3 0 21 275 60 335 Other steel produc t & NCQ 565 (58) 28 (87) 30 11 (127) 14 6 4 3 0 (141) 28 54 83 SRR200 45.250 124 35 88 41 11 36 14 6 4 3 (0) 22 35 66 102 Micropilling pipes 8.180 194 39 154 29 10 115 14 6 4 3 0 101 39 53 92 Colour Coated Tubes 4.Line-wise Profitability BP 2014 2014 FC FC EBITDA SGA SGA SGA Cost non SGA Cost St.450 84 34 50 31 9 10 14 6 4 3 (0) (4) 34 54 88 S235JRH 1.

84kt) (10.08kt) (10.86kt) (7.000 139 150 128 Sales ( Mt ) 120 121 ( Eur/MT ) 113 8.33kt) (6.000 111 137 105 106 102 106 94 104 84 100 6.18kt) (4.95kt) (10.12kt) Avg Avg Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Act '11 Act '12 Act '13 Act '13 Act '13 MRF '13 BP '14 BP '14 BP '14 BP '14 8 . - (3.000 31 33 34 33 33 33 33 27 .93kt) (4.000 72 66 59 54 64 50 52 54 49 50 46 2.000 161 10.000 102 98 91 88 85 82 83 4.2kt) (7. Transformation Cost SWT EN 10217&10255 Sales TCT VCC Spread Fixed Cost 12.7kt) (4.

21kt) (11.72kt) (10.000 122 Sales ( Mt ) ( Eur/MT ) 12. - (7.86kt) Avg Avg Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Act '11 Act '12 Act '13 Act '13 Act '13 MRF '13 BP '14 BP '14 BP '14 BP '14 9 .000 42 40 35 30 32 31 30 2.000 28 27 30 . Transformation Cost HSS EN 10219 Sales TCT VCC Spread Fixed Cost 150 16.97kt) (7.000 135 14.000 80 65 65 64 63 72 72 66 49 48 6.000 44 43 50 56 57 44 4.27kt) (14.000 101 93 87 100 82 83 10.21kt) (8.000 78 77 80 76 74 74 74 70 8.8kt) (11.83kt) (8.84kt) (16.51kt) (7.

76kt) (5. - (4.58kt) (4.16kt) (4.47kt) (21.000 51 52 4.85kt) (4.47kt) (5.000 62 54 41 54 30 30 29 2.45kt) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Act 2013 Act 2013 Act 2013 MRF 2013 BP 2014 BP 2014 BP 2014 BP 2014 Act 2013 Act 2013 Act 2013 MRF 2013 BP 2014 BP 2014 BP 2014 BP 2014 R220 Lines Sales TCT VCC Spread Fixed Cost Sales TCT VCC Spread Fixed Cost 131 135 135 103 120 130 135 150 103 103 6.84kt) (9.000 59 63 74 52 63 62 55 50 48 53 47 2.44kt) (4.000 6.13kt) (10. Transformation Cost SRR60 SRR200 Sales TCT VCC Spread Fixed Cost Sales TCT VCC Spread Fixed Cost 102 120 12.000 76 90 4.000 91 87 Sales ( Mt ) Sales ( Mt ) 85 ( Eur/MT ) 81 90 96 96 116 114 100 15.05kt) (10.000 120 Sales ( Mt ) Sales ( Mt ) 98 95 ( Eur/MT ) ( Eur/MT ) 83 83 94 87 75 77 90 83 83 88 94 8.56kt) (5.000 ( Eur/MT ) 4.39kt) (11.36kt) (5.84kt) (6.000 35 29 33 33 34 35 33 27 25 27 27 27 26 31 22 . .75kt) (4.31kt) (10.16kt) (20.94kt) (6. .86kt) (5.48kt) (20.53kt) (21.95kt) (10. - (3.000 94 87 87 104 100 78 83 81 98 49 90 92 58 69 60 80 78 10.000 127 125 98 103 118 20.000 81 79 75 73 68 64 71 45 76 76 60 48 46 42 58 55 58 41 2.000 30 34 33 33 33 32 36 34 34 38 37 36 36 31 28 31 30 .75kt) (23kt) (17.17kt) (18. . .000 56 5.44kt) (6.97kt) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Act 2013 Act 2013 Act 2013 MRF 2013 BP 2014 BP 2014 BP 2014 BP 2014 Act 2013 Act 2013 Act 2013 MRF 2013 BP 2014 BP 2014 BP 2014 BP 2014 10 .98kt) (8.35kt) (10.000 91 85 85 10.000 85 78 89 74 72 79 78 88 60 6.69kt) (22.4kt) (5.

From line wise cost . fix cost will vary for each product ( wiil not be same fix cost/ Mt for full range) 11 . we can have product wise cost going forward following next steps : 1. Based on throughput ( Mt/ Hour) of each size in that particular line . Product wise cost and profitability Key concept : variable cost will charge fully on each product at it is collected . fix cost will be consider as fix cost per available hour and will be distributed to each product based on hourly productivity of that product in that particular line . Variable cost will go in full product-wise 2.

19.63 24.18 22. .82 23.24 35. 20. . 26. 21.94 54.18 22. . . Mix of product . 19.40 43. 20. . .54 38.04 36.33 31.55 140X140 .5 12 14 24 30 O. .48 31. 32.13 21.40 140X80 . .43 34.06 13.50 18. 24.61 159 .99 23.16 36.8 .89 28. .12 .12 .18 22.5 3 3.43 34.29 43.83 36.57 50. - 70X70 .49 45.66 32. - 76.21 24.12 .59 36.76 44. 24. 24.37 50. - 50x50 10. .19 27.29 40.56 37.41 28.48 21. - 114. .15 28.51 54.47 45.82 32.92 66.22 28.40 38. . - 60x40 10.50 49.19 27. .03 32.49 33.01 16.95 .12 .72 56. 22.35 19.80 44. - 152.3 11.88 26.95 .51 22.89 14.50 38.46 27.74 14.71 41.38 35.24 20.33 40.02 34.69 61.73 27.19 27.10 21.13 23.14 177. 29. . - 101.06 .59 22. 22.87 29.18 49.69 133 . - 100X50 .82 15. . - 80X80 . . - 80x40 12. .19 27.65 30.28 59.32 45. .97 27. 32.94 53.14 45.55 12.21 26.55 12. .83 24.79 16.55 90x90 .57 51.48 26. 21.46 30.96 54.89 29.82 59.40 139.97 .7 .97 47.50 18.89 14. 34.56 40.62 18. 23. 27. - 60X60 12.15 45.45 27.62 18.69 .01 16.97 .60 38.19 34.08 42.87 29.09 30. 22.5 4 5 6 8 10 R max (mm) 4.08 39.77 37. 24. .43 37. .28 43.41 24.46 33.82 15.5 6 7 8 9.14 31. .44 28.41 27. .59 42.35 100X80 . .96 41. .77 42.06 160X80 .35 29.1:6 Wall (mm) 2 2.02 100x100 .24 .56 38.20 .14 43.48 26.59 25.49 36.79 16.3 .82 15. 24.3 .48 26.60 38.13 21. 19. .74 42. .42 44.35 127 .52 62.36 12 150x150 . - 100X40 . 35. 19.75 34. .02 37.75 48.19 27.64 34.42 44.80 37.30 52.87 61.64 .00 44.52 .24 20.30 33.37 50.D.72 30.72 180x100 . 30.91 200X100 . . - 90X50 .01 16.09 . .22 30.95 .98 33.97 120X120 .13 21.54 44. .13 23.94 44.86 31.39 29.31 18.57 50.9 . .45 150X100 .03 24. 27. . - 100X60 .41 24. .35 48.00 40.21 38. 24.16 36.48 26.35 120x60 .87 61.50 18.12 168. 31.96 54.16 34.80 29.18 22. . .47 . - 80x60 .31 18.26 17.66 39.43 19.24 20.7 . .00 37.88 58.56 26. - 108 . - 88.73 45.90 34. 23.24 15. 19.47 45.32 29.1 14.80 44.85 43.4 .56 28.54 35.13 23. .29 36. . 25.(mm)BxH to/hour 60.74 14.41 24.95 50.13 36.53 45.76 120X80 .08 .31 22.72 193. 36.28 69.38 .6 .83 34.42 44. - 70X50 12. .85 43. .89 17.03 32.38 25.18 25.03 27.16 32.13 21. .

5/8 (219.S235 50 300 300 400 31 101 1.750 45 288 6 220 HSS S235 219.373 560 28.462 475 23.00 532 26.791 475 23.S235 15 100 100 400 28 30 1.2 .6 .250 52 (1.00 654 9.4) 42.3 .000 31 (417) (8) 220 Micropilling EN 10219 S355 6.125 45 116 8 3xU HSS S235 (42.158 520 26.000 98 1.3) 168.900 32 25 2 3xU Victaulic S235 (42.417 460 23.7) 150x150 / 200x100 x 8- SRR HSS S355 50 300 300 423 35 19 1.872) (57) 220 Pressures CTD S235 8.3 x 5 .S235 15 100 100 400 34 55 1.00 527 26.3 x 3.3) 60.4 x 2.5 .S235 50 300 300 400 29 27 1.750 46 959 19 (193.product wisse Extra S355 23 Extra DX 185 Raw Order Actual Min Fixed Index Ebitda Price Steel material Conversion Ebitda Cost Value Sales Contribu EBITDA EBITDA Line wise Product Type Type SPECIFICATION Quantity Campaign Campaign price Cost EUR/MT Cost correctors Cost EUR EUR/MT EUR tion EUR EUR/MT MT MT MT EUR/MT of volume EUR/MT (guidance) EUR/MT EUR/MT 3xU Pressures CTD S235 (42.750 44 (2.00 458 6.875 460 6.00 467 7.00 489 7.00 516 25.275 51 (54) (4) (51) 40x40/50x30/60x20 x 1.6 .S235 15 100 100 400 30 38 1.00 469 23.4 x 2.1) x 5.622 475 23.S235 50 300 300 400 34 30 1.4 x 2 .S235 50 150 150 400 29 39 1.842 57 SRR Victaulic S235 (60.3) 60.250 51 (3.750 31 DX51 (55) (4) SRR Pressures CTD S235 (168.627 33 220 Victaulic S235 5. Order specifications profitability analyses AMTP Iasi HRC Eur/Mt 400 Cost Analysses .S235 50 150 150 400 30 39 1.00 477 23.5 3xU Sendzimir DX51DZ 15 100 100 585 34 35 1.6 .500 32 648 13 S355 SRR Micropilling EN 10219 S235 (168.6 .3) x 5.009 475 7.7) x 3.00 552 27.599 485 24.S235 50 300 300 400 33 82 1.000 86 2.3 x 4.S355 50 150 150 423 39 66 1.3 .545) (31) SRR Pressures CFS S235 (60.852 490 24.3) 168.4) 42.3 x 2.2 .795 485 24.5/8 (168.S235 50 150 150 400 34 118 1.00 463 23.00 456 22.349) (67) 13 .00 468 23.329 485 7.1/4 (139.805 650 9.1 x 6.4) 42.

8 2 80 82 2.3 .3 OD 60.9 OD 33.3 OD 26.5 77 3 70 69 60 60 59 58 53 50 51 OD 21.3 OD 48.5 86 1.7 OD 42. TCT 3XU HSS OD & Wt influencess (Euro/Mt) 120 110 109 100 97 98 90 1.

TCT 220 HSS OD & Wt influencess (Eur/Mt) 130 126 120 110 110 105 100 3 [mm] 5 [mm] 90 91 8[mm] 87 85 80 81 77 72 70 67 66 60 OD 114 OD 139 OD 168 OD 219 .

130 TCT SRR HSS OD & Wt influencess (Eur/Mt) 120 118 110 100 95 92 2 [mm] 90 90 3 [mm] 80 5 [mm] 77 69 70 7 [mm] 70 67 10 [mm] 63 59 58 60 60 50 55 51 50 49 48 40 OD 60 OD 76 OD 88.25xTCT) . For S355 TCT are ~ 25% more ( 425 +30 +1.9 OD 114 OD 140 OD 168 OD 178 OD 193 S235 . 425 Euro/Mt .