Third quarter 2018 results “Solid operational results despite
challenging market conditions”
Luxembourg, October 30, 2018 - Aperam (referred to as
“Aperam” or the “Company”) (Amsterdam, Brussels, Luxembourg, Paris:
APAM and NYRS: APEMY), announced today results for the three month
period ending September 30, 2018
Highlights
- Health and Safety: LTI
frequency rate of 2.1x in Q3 2018 compared to 1.8x in Q2 2018
- Steel shipments of 467 thousand
tonnes in Q3 2018, a 8% decrease compared to steel shipments of 508
thousand tonnes in Q2 2018 and 2% lower versus Q3 2017
- EBITDA of EUR 123 million in Q3
2018, compared to EUR 150 million in Q2 2018 and up from EUR 107
million in Q3 2017
- Net income of EUR 72 million in
Q3 2018, compared to EUR 80 million in Q2 2018 and EUR 53 million
in Q3 2017
- Basic earnings per share of EUR
0.87 in Q3 2018, compared to EUR 0.94 in Q2 2018 and EUR 0.65 in Q3
2017
- Cash flow from operations
amounted to EUR 64 million in Q3 2018, compared to EUR 101 million
in Q2 2018 and EUR 67 million in Q3 2017
- Free cash flow before dividend
and share buy-back of EUR 15 million in Q3 2018, compared to EUR 62
million in Q2 2018 and EUR 40 million in Q3 2017
- Cash returns to shareholders
amounted to EUR 48 million in Q3 2018, consisting of EUR 15 million
of share buy-back and EUR 33 million of dividend
- Net financial debt of EUR 64
million as of September 30, 2018, compared to EUR 20 million as of
June 30, 2018
Strategic initiatives
- Disciplined and value
accretive M&A: The Form CO notification for acquisition of
VDM Metals has been filed on 23rd October 2018 with the EU
Commission (DG Competition)
- Leadership Journey®2
(Phase 3 - Transformation Program Target EUR 150 million
annualized gains by 2020): Gains reached EUR 30 million
annualized at end Q3 2018 with good progress on all pillars
|
Prospects
- EBITDA in Q4 2018 is expected
to decrease versus Q3 2018
- Net financial debt to remain at
low levels in Q4 2018
Timoteo Di Maulo, CEO of Aperam, commented:
“Our continuously improving operations in Brazil
and self-help measures in Europe enabled Aperam to deliver solid
third quarter results and compensating the pressure from record
high imports into Europe.”
“The application of Section 232 in the USA and
the inadequate provisional EU safeguard measures have caused
temporary turmoil in the European stainless steel market. Going
forward, we expect definitive safeguard measures to be finalised
promptly. In the meantime, our solid balance sheet and self-help
focus will help us to withstand an extremely challenging market
environment.”
Financial Highlights (on the basis of financial information
prepared under IFRS)
(in millions of Euros, unless otherwise stated) |
Q3 18 |
Q2 18 |
Q3 17 |
9M 2018 |
9M 2017 |
Sales |
1,123 |
1,218 |
1,024 |
3,557 |
3,373 |
EBITDA |
123 |
150 |
107 |
414 |
421 |
Operating income |
88 |
115 |
70 |
309 |
311 |
Net income |
72 |
80 |
53 |
237 |
217 |
Free cash flow before dividend and share buy-back |
15 |
62 |
40 |
73 |
79 |
|
|
|
Steel shipments (000t) |
467 |
508 |
477 |
1,492 |
1,441 |
EBITDA/tonne (EUR) |
263 |
295 |
224 |
277 |
292 |
Basic earnings per share (EUR) |
0.87 |
0.94 |
0.65 |
2.80 |
2.78 |
Diluted earnings per share (EUR) |
0.87 |
0.73 |
0.64 |
2.46 |
2.45 |
Health & Safety results
Health and Safety performance based on Aperam
personnel figures and contractors’ lost time injury frequency rate
was 2.1x in the third quarter of 2018 compared to 1.8x in the
second quarter of 2018.
Financial results analysis for the three-month period ending
September 30, 2018
Sales for the third quarter of 2018 were EUR
1,123 million, compared to EUR 1,218 million for the second quarter
of 2018. Steel shipments decreased from 508 thousand tonnes in the
second quarter of 2018, to 467 thousand tonnes in the third quarter
of 2018.
EBITDA was EUR 123 million for the third quarter
of 2018 compared to EUR 150 million for the second quarter of 2018.
The sequential decline was mostly due to the normal seasonal
slowdown in Europe during the summer months. Record high imports
into Europe and input price increases were additionally weighing on
margins. However, the improved operating performance versus the
previous year’s third quarter result demonstrates Aperam’s strong
focus on operational excellence as well as the ongoing recovery in
the operations in Brazil continue to lend meaningful support to
earnings. Phase 3 of the Leadership Journey® - the Transformation
Program - continued to progress over the quarter with an annualized
contribution of EUR 30 million to EBITDA. Aperam confirms the
target of phase 3 of the Leadership Journey® of realizing an
annualized EBITDA contribution of EUR 150 million between 2018 to
2020.
Depreciation and amortisation was EUR 35 million
for the third quarter of 2018.
Aperam had an operating income for the third
quarter of 2018 of EUR 88 million compared to an operating income
of EUR 115 million for the previous quarter.
Net interest expense and other financing costs
for the third quarter of 2018 were EUR 7 million. Realized and
unrealized foreign exchange and derivative losses were EUR 2
million for the third quarter of 2018.
Income tax result for the third quarter of 2018
was an income tax expense of EUR 7 million.
The Company recorded a net income of EUR 72
million for the third quarter of 2018.
Cash flows from operations for the third quarter
of 2018 were positive at EUR 64 million, despite a working capital
increase of EUR 74 million mainly due to temporary higher
inventory. CAPEX for the third quarter was EUR 49 million.
Free cash flow before dividend and share
buy-back for the third quarter of 2018 amounted to EUR 15
million.
During the third quarter of 2018, the cash
returns to shareholders amounted to EUR 48 million, consisting of
EUR 15 million of share buy-back and EUR 33 million of dividend.
Total cash returned to shareholders during the first nine-months of
the year 2018 amounted to EUR 166 million consisting of EUR 70
million of share buy-back and EUR 96 million of dividend. This
completes Aperam’s share buyback program with in aggregate
1,800,000 shares bought under this Program.
During the third quarter of 2018, the Company
repurchased Convertible Bonds 2021 with a nominal amount of USD
11,2 million (EUR 9.6 million) for a total consideration of EUR
11.5 million. Since the beginning of the repurchase program Aperam
has bought back a total nominal amount of USD 37,0 million for a
total consideration of EUR 38,4 million.
As of September 30, 2018, shareholders’ equity
was EUR 2,433 million and net financial debt was EUR 64 million (as
of September 30, 2018, gross financial debt was EUR 233 million and
cash and cash equivalents were EUR 169 million).
The Company had liquidity of EUR 519 million as
of September 30, 2018, consisting of cash and cash equivalents of
EUR 169 million and undrawn credit lines3 of EUR 350 million.
Operating segment results analysis
Stainless & Electrical Steel
(1)
(in millions of Euros, unless otherwise stated) |
Q3 18 |
Q2 18 |
Q3 17 |
9M 2018 |
9M 2017 |
Sales |
917 |
1,016 |
819 |
2,927 |
2,770 |
EBITDA |
101 |
123 |
78 |
335 |
343 |
Depreciation |
(31) |
(31) |
(32) |
(92) |
(96) |
Operating income |
70 |
92 |
46 |
243 |
247 |
Steel shipments (000t) |
449 |
499 |
451 |
1,444 |
1,383 |
Average steel selling price (EUR/t) |
1,983 |
1,976 |
1,751 |
1,969 |
1,943 |
(1) Amounts are shown prior to intra-group
eliminations
The Stainless & Electrical Steel segment had
sales of EUR 917 million for the third quarter of 2018. This
represents a 10% decrease compared to sales of EUR 1,016 million
for the second quarter of 2018. Steel shipments during the third
quarter were 449 thousand tonnes compared to 499 thousand tonnes
during the previous quarter. The seasonal demand drop combined
with very high import pressure into Europe was partially
compensated by improving demand in South America. Overall, average
steel selling prices for the Stainless & Electrical Steel
segment remained almost unchanged during the quarter.
The segment EBITDA of EUR 101 million for the
third quarter of 2018 compared to EUR 123 million for the second
quarter of 2018. The sequential decline reflects the seasonally
lower volumes in Europe paired with input cost pressure. These were
partially offset by the Top Line strategy, contributions from the
Leadership Journey®, and a positive development in South America
which remains in recovery mode.
The Stainless & Electrical Steel segment had
an operating income of EUR 70 million for the third quarter of 2018
compared to an operating income of EUR 92 million for the second
quarter of 2018.
Services & Solutions(1)
(in millions of Euros, unless otherwise stated) |
Q3 18 |
Q2 18 |
Q3 17 |
9M 2018 |
9M 2017 |
Sales |
489 |
548 |
481 |
1,599 |
1,566 |
EBITDA |
8 |
17 |
7 |
46 |
49 |
Depreciation |
(2) |
(1) |
(3) |
(6) |
(7) |
Operating income |
6 |
16 |
4 |
40 |
42 |
Steel shipments (000t) |
191 |
217 |
203 |
638 |
623 |
Average steel selling price (EUR/t) |
2,436 |
2,428 |
2,291 |
2,403 |
2,421 |
(1) Amounts are shown prior to intra-group
eliminations
The Services & Solutions segment had sales
of EUR 489 million for the third quarter of 2018 compared to EUR
548 million for the second quarter of 2018. For the third quarter
of 2018, steel shipments were 191 thousand tonnes compared to 217
thousand tonnes during the previous quarter. The Services &
Solutions segment had slightly higher average steel selling prices
during the period compared to the previous period.
The segment had EBITDA of EUR 8 million for the
third quarter of 2018, compared to EUR 17 million for the second
quarter of 2018. The decrease in EBITDA was mainly due to seasonal
effects combined with lower shipments as well as margin pressure
resulting from high imports.
The Services & Solutions segment had an
operating income of EUR 6 million for the third quarter of 2018,
compared to EUR 16 million for the second quarter of 2018.
Alloys & Specialties(1)
(in millions of Euros, unless otherwise stated) |
Q3 18 |
Q2 18 |
Q3 17 |
9M 2018 |
9M 2017 |
Sales |
136 |
149 |
103 |
416 |
337 |
EBITDA |
9 |
16 |
12 |
39 |
35 |
Depreciation |
(2) |
(1) |
(1) |
(5) |
(4) |
Operating income |
7 |
15 |
11 |
34 |
31 |
Steel shipments (000t) |
8 |
9 |
7 |
27 |
24 |
Average steel selling price (EUR/t) |
15,521 |
15,220 |
13,557 |
14,522 |
13,276 |
(1) Amounts are shown prior to intra-group
eliminations
The Alloys & Specialties segment had sales
of EUR 136 million for the third quarter of 2018 compared to EUR
149 million for the second quarter of 2018. Steel shipments during
the third quarter of 2018 were at 8 thousand tonnes compared to 9
thousand tonnes during the second quarter of 2018. Average steel
selling prices increased over the quarter.
The Alloys & Specialties segment achieved an
EBITDA of EUR 9 million for the third quarter of 2018 compared to
EUR 16 million for the second quarter of 2018. The decrease in
EBITDA was mainly due to seasonal effects and product mix.
The Alloys & Specialties segment had an
operating income of EUR 7 million for the third quarter of 2018
compared to an operating income of EUR 15 million for the second
quarter of 2018.
Recent developments
- On October 23 2018, Aperam /
VDM filed the Form CO notification for acquisition of VDM Metals
with the EU Commission (DG Competition)
Investor conference call
Aperam management will host a conference call
for members of the investment community to discuss the third
quarter of 2018 financial performance at the following time:
Date |
New York |
London |
Luxembourg |
Tuesday, October 30, 2018 |
12:30 pm |
5:30 pm |
6:30 pm |
The dial-in numbers for the call are: France (+33 (0)1 76 77 22
74); USA (+1 929 477 0402) and international (+44 (0)330 336 9105).
The participant access code is: 5578510#.A replay of the conference
call will be available until November 6, 2018: France (+33 (0) 1 70
48 00 94); USA (+1 719 457 0820) and international (+44 (0) 207 660
0134). The participant access code is 5578510#.
ContactsInvestor Relations / Thorsten Zimmermann: +352 27
36 67 304Corporate Communications / Laurent Beauloye: +352 27 36 27
103
About Aperam
Aperam is a global player in stainless,
electrical and specialty steel, with customers in over 40
countries. The business is organised in three primary operating
segments: Stainless & Electrical Steel, Services &
Solutions and Alloys & Specialties.
Aperam has 2.5 million tonnes of flat Stainless
and Electrical steel capacity in Brazil and Europe and is a leader
in high value specialty products. Aperam has a highly integrated
distribution, processing and services network and a unique
capability to produce stainless and specialty from low cost biomass
(charcoal). Its industrial network is concentrated in six
production facilities located in Brazil, Belgium and France.
In 2017, Aperam had sales of EUR 4.5 billion and
steel shipments of 1.94 million tonnes.
For further information, please refer to our
website at www.aperam.com
Forward-looking statements
This document may contain forward-looking
information and statements about Aperam and its subsidiaries. These
statements include financial projections and estimates and their
underlying assumptions, statements regarding plans, objectives and
expectations with respect to future operations, products and
services, and statements regarding future performance.
Forward-looking statements may be identified by the words
“believe,” “expect,” “anticipate,” “target” or similar expressions.
Although Aperam’s management believes that the expectations
reflected in such forward-looking statements are reasonable,
investors and holders of Aperam’s securities are cautioned that
forward-looking information and statements are subject to numerous
risks and uncertainties, many of which are difficult to predict and
generally beyond the control of Aperam, that could cause actual
results and developments to differ materially and adversely from
those expressed in, or implied or projected by, the forward-looking
information and statements. These risks and uncertainties include
those discussed or identified in Aperam’s filings with the
Luxembourg Stock Market Authority for the Financial Markets
(Commission de Surveillance du Secteur Financier). Aperam
undertakes no obligation to publicly update its forward-looking
statements or information, whether as a result of new information,
future events, or otherwise.
APERAM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
(in millions of Euros) |
September 30,2018 |
June 30, 2018 |
September 30,2017 |
Non current assets |
2,349 |
2,325 |
2,493 |
Goodwill and intangible assets |
480 |
486 |
516 |
Property, plant and equipments (incl. biological assets) |
1,518 |
1,506 |
1,537 |
Investments & other |
351 |
333 |
440 |
|
|
|
|
Current assets & working capital |
1,003 |
1,008 |
995 |
Inventories, trade receivables and trade payables |
753 |
702 |
691 |
Prepaid expenses and other current assets |
81 |
89 |
96 |
Cash and cash equivalents (C) |
169 |
217 |
208 |
|
|
|
|
Shareholders' equity |
2,433 |
2,407 |
2,435 |
Group share |
2,429 |
2,403 |
2,431 |
Non-controlling interest |
4 |
4 |
4 |
|
|
|
|
Non current liabilities |
402 |
396 |
724 |
Long-term debt, net of current portion (A) |
6 |
2 |
241 |
Deferred employee benefits |
153 |
155 |
160 |
Provisions and other |
243 |
239 |
323 |
|
|
|
|
Current liabilities (excluding trade payables) |
517 |
530 |
329 |
Short-term debt and current portion of long-term debt (B) |
227 |
235 |
65 |
Accrued expenses and other current liabilities |
290 |
295 |
264 |
|
|
|
|
Net Financial Debt (D = A+B-C) |
64 |
20 |
98 |
APERAM CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in millions of Euros) |
Three Months Ending |
|
Nine Months Ending |
September 30,2018 |
June 30, 2018 |
September 30,2017 |
|
September 30, 2018 |
September 30, 2017 |
Sales |
1,123 |
1,218 |
1,024 |
|
3,557 |
3,373 |
EBITDA (C = A-B) |
123 |
150 |
107 |
|
414 |
421 |
EBITDA margin (%) |
11.0% |
12.3% |
10.4% |
|
11.6% |
12.5% |
Depreciation & amortisation (B) |
(35) |
(35) |
(37) |
|
(105) |
(110) |
Operating income (A) |
88 |
115 |
70 |
|
309 |
311 |
Operating margin (%) |
7.8% |
9.4% |
6.8% |
|
8.7% |
9.2% |
Result from other investments and associates |
- |
1 |
- |
|
1 |
- |
Net interest expense and other net financing costs |
(7) |
(5) |
(8) |
|
(17) |
(32) |
Foreign exchange and derivative gains (losses) |
(2) |
(3) |
3 |
|
(1) |
(1) |
Income before taxes |
79 |
108 |
65 |
|
292 |
278 |
Income tax expense |
(7) |
(28) |
(12) |
|
(55) |
(61) |
Effective tax rate (%) |
8.4% |
25.7% |
18.9% |
|
18.7% |
21.9% |
Net income |
72 |
80 |
53 |
|
237 |
217 |
APERAM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions of Euros) |
Three Months Ending |
|
Nine Months Ending |
September 30,2018 |
June 30,2018 |
September 30, 2017 |
|
September 30, 2018 |
September 30, 2017 |
Net income |
72 |
80 |
53 |
|
237 |
217 |
Depreciation & amortisation |
35 |
35 |
37 |
|
105 |
110 |
Change in working capital |
(74) |
(18) |
(36) |
|
(209) |
(235) |
Other operating activities (net) |
31 |
4 |
13 |
|
74 |
88 |
Net cash provided by operating activities (A) |
64 |
101 |
67 |
|
207 |
180 |
Purchase of PPE, intangible and biological assets (CAPEX) |
(49) |
(41) |
(27) |
|
(137) |
(102) |
Other investing activities (net) |
- |
2 |
- |
|
3 |
1 |
Net cash used in investing activities (B) |
(49) |
(39) |
(27) |
|
(134) |
(101) |
Proceeds (payments) from payable to banks and long term debt |
(14) |
(27) |
(3) |
|
(40) |
(7) |
Purchase of treasury stock |
(15) |
(55) |
- |
|
(70) |
(90) |
Dividend paid |
(33) |
(35) |
(26) |
|
(96) |
(79) |
Net cash used in financing activities |
(62) |
(117) |
(29) |
|
(206) |
(176) |
Effect of exchange rate changes on cash |
(1) |
(2) |
- |
|
(4) |
(3) |
Change in cash and cash equivalent |
(48) |
(57) |
11 |
|
(137) |
(100) |
|
|
|
|
|
|
|
Free cash flow before dividend and share buy-back (C =
A+B) |
15 |
62 |
40 |
|
73 |
79 |
Appendix 1a – Health & Safety statistics
Health & Safety Statistics |
Three Months Ending |
Septembre 30,2018 |
June 30,2018 |
September 30, 2017 |
Frequency Rate |
2.1 |
1.8 |
2.0 |
Lost time injury frequency rate equals lost time injuries per
1,000,000 worked hours, based on own personnel and contractors.
Appendix 1b - Key operational and financial
information
Quarter EndingSeptember 30, 2018 |
Stainless & Electrical Steel |
Services & Solutions |
Alloys & Specialties |
Others & eliminations |
Total |
Operational information |
|
|
|
|
|
Steel Shipment (000t) |
449 |
191 |
8 |
(181) |
467 |
Average steel selling price (EUR/t) |
1,983 |
2,436 |
15,521 |
|
2,213 |
|
|
|
|
|
|
Financial information (EURm) |
|
|
|
|
|
Sales |
917 |
489 |
136 |
(419) |
1,123 |
EBITDA |
101 |
8 |
9 |
5 |
123 |
Depreciation & amortisation |
(31) |
(2) |
(2) |
- |
(35) |
Operating income |
70 |
6 |
7 |
5 |
88 |
Quarter Ending June 30, 2018 |
Stainless & Electrical Steel |
Services & Solutions |
Alloys & Specialties |
Others & eliminations |
Total |
Operational information |
|
|
|
|
|
Steel Shipment (000t) |
499 |
217 |
9 |
(217) |
508 |
Average steel selling price (EUR/t) |
1,976 |
2,428 |
15,220 |
|
2,333 |
|
|
|
|
|
|
Financial information (EURm) |
|
|
|
|
|
Sales |
1,016 |
548 |
149 |
(495) |
1,218 |
EBITDA |
123 |
17 |
16 |
(6) |
150 |
Depreciation & amortisation |
(31) |
(1) |
(1) |
(2) |
(35) |
Operating income / (loss) |
92 |
16 |
15 |
(8) |
115 |
Appendix 2 – Terms and definitions
Unless indicated otherwise, or the context otherwise requires,
references in this earnings release report to the following terms
have the meanings set out next to them below:
Average steel selling prices: calculated as steel sales
divided by steel shipments.Cash and cash equivalents:
represents cash and cash equivalents, restricted cash and
short-term investments.CAPEX: relates to capital
expenditures and is defined as purchase of tangible assets,
intangible assets and biological assets.EBITDA: operating
income before depreciation, amortisation and impairment
expenses.EBITDA/tonne: calculated as EBITDA divided by total
steel shipments.Free cash flow before dividend and share
buy-back: net cash provided by operating activities less net
cash used in investing activities.Gross financial debt:
long-term debt plus short-term debt.Liquidity: Cash and cash
equivalent and undrawn credit lines.LTI frequency rate: Lost
time injury frequency rate equals lost time injuries per 1,000,000
worked hours, based on own personnel and contractors.Net
financial debt: long-term debt, plus short-term debt less cash
and cash equivalents.Net financial debt/EBITDA or Gearing:
Refers to Net financial debt divided by last twelve months EBITDA
calculation.Shipments: information at segment and group
level eliminates inter-segment shipments (which are primarily
between Stainless & Electrical Steel and Services &
Solutions) and intra-segment shipments, respectively.Working
capital: trade accounts receivable plus inventories less trade
accounts payable.
1 The financial information in this press
release and Appendix 1 has been prepared in accordance with the
measurement and recognition criteria of International Financial
Reporting Standards (“IFRS”) as adopted in the European Union.
While the interim financial information included in this
announcement has been prepared in accordance with IFRS applicable
to interim periods, this announcement does not contain sufficient
information to constitute an interim financial report as defined in
International Accounting Standard 34, “Interim Financial
Reporting”. Unless otherwise noted the numbers and information in
the press release have not been audited. The financial information
and certain other information presented in a number of tables in
this press release have been rounded to the nearest whole number or
the nearest decimal. Therefore, the sum of the numbers in a column
may not conform exactly to the total figure given for that column.
In addition, certain percentages presented in the tables in this
press release reflect calculations based upon the underlying
information prior to rounding and, accordingly, may not conform
exactly to the percentages that would be derived if the relevant
calculations were based upon the rounded numbers. This press
release also includes Alternative Performance Measures (“APM”
hereafter). The Company believes that these APMs are relevant to
enhance the understanding of its financial position and provides
additional information to investors and management with respect to
the Company’s financial performance, capital structure and credit
assessment. These non-GAAP financial measures should be read in
conjunction with and not as an alternative for, Aperam’s financial
information prepared in accordance with IFRS. Such non-GAAP
measures may not be comparable to similarly titled measures applied
by other companies. The APM’s used are defined under Appendix 2
“Terms & definitions”. 2 The Leadership Journey® is an
initiative launched on December 16, 2010, and subsequently
accelerated and increased, to target management gains and profit
enhancement. The third phase of the Leadership Journey® - the
Transformation Program - is targeting EUR 150 million of additional
EBITDA gains per year by end of 2020. 3 Includes revolving credit
facility of EUR 300 million and EIB financing of EUR 50
million.
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