9 May 2012

First quarter 2012 results



  • English version
  • French version

Luxembourg, May 9, 2012 - Aperam (referred to as “Aperam” or the “Company”) (Amsterdam, Luxembourg, Paris: APAM and NYRS: APEMY), today announced results1 for the three month period ending March 31, 2012

Philippe Darmayan, CEO of Aperam, commented: “Despite a more difficult environment than anticipated, Aperam has been able to achieve an improved performance in Q1 2012 compared to Q4 2011. Aperam was also able to slightly reduce net debt in the quarter.

Looking forward, we continue to remain cautious considering the global economic uncertainty for 2012. In this environment, our key priorities for 2012 will be to deliver on the Leadership Journey™ and to maintain a strong control on net debt.”

Highlights

  • Health and Safety frequency rate2 of 1.0x in Q1 2012 compared to 0.3x in Q4 2011
  • Shipments of 433 thousand tonnes in Q1 2012, flat compared to shipments of 429 thousand tonnes in Q4 2011
  • EBITDA3 of USD 64 million in Q1 2012 compared to EBITDA of USD 53 million in Q4 2011
  • Basic earnings per share of USD (0.14) in Q1 2012
  • Cash flow from operations amounted to USD 79 million in Q1 2012
  • Net debt reduced to USD 857 million at March 31, 2012, representing a gearing of 24%

Prospects

  • EBITDA in Q2 2012 is expected to be comparable to EBITDA in Q1 2012 and net debt to remain under control

Financial Highlights (on the basis of IFRS)

(USDm) unless otherwise stated Q1 2012 Q4 2011 Q1 2011
Sales 1,409 1,436 1,681
EBITDA 64 53 139
Operating (loss) income (13) (29) 70
Net (loss) income (11) (46) 25
       
Steel shipments (000t) 433 429 452
EBITDA/tonne (USD) 148 124 308
Basic earnings per share (USD) (0.14) (0.57) 0.32

 

Health & Safety results analysis

Health and Safety performance, based on Aperam personnel figures and contractors lost time injury frequency rate2, was 1.0x in the first quarter of 2012 compared to 0.3x in the fourth quarter of 2011.

Financial results analysis

Sales in the first quarter of 2012 decreased by 2% to USD 1,409 million compared to USD 1,436 million in the fourth quarter of 2011. Shipments in the first quarter of 2012 were flat at 433 thousand tonnes compared to 429 thousand tonnes in the fourth quarter of 2011.

EBITDA was USD 64 million in the first quarter of 2012 compared to EBITDA of USD 53 million in the fourth quarter of 2011. The increase in EBITDA quarter versus quarter was primarily driven by the continuing progress of the Leadership Journey™4. The Leadership Journey™ has contributed USD 204 million to EBITDA since the beginning of 2011.

Depreciation and amortization expense in the first quarter of 2012 was USD 77 million.

Aperam had an operating loss in the first quarter of USD 13 million compared to an operating loss of USD 29 million in the previous quarter.

Net interest expense and other financing costs in the first quarter of 2012 were USD 13 million, including financing costs of USD 15 million. Unrealized foreign exchange and derivative gains were USD 1 million in the first quarter of 2012.

The Company recorded a net loss of USD 11 million, inclusive of an income tax benefit of USD 14 million in the first quarter of 2012.

Cash flows from operations in the first quarter were USD 79 million, with a working capital decrease of USD 27 million. CAPEX in the first quarter was USD 40 million.

As of March 31, 2012, shareholder’s equity was USD 3,545 million and net financial debt was USD 857 million (gross financial debt as of March 31, 2012 was USD 1,024 million and cash & cash equivalents were USD 167 million).

The Company had liquidity of USD 617 million as of March 31, 2012, consisting of cash and cash equivalents (including short-term investments) of USD 167 million and available credit lines of USD 450 million.

Operating segment results analysis

Stainless & Electrical Steel

The Stainless & Electrical Steel segment had sales of USD 1,122 million in the first quarter of 2012. This represents an increase of 1% compared to sales of USD 1,107 million in the fourth quarter of 2011. Shipments during the first quarter were 415 thousand tonnes, including 263 thousand tonnes in Europe and 152 thousand tonnes in South America. This is an increase of 19 thousand tonnes compared to the previous quarter’s shipments of 396 thousand tonnes (238 thousand tonnes in Europe and 158 thousand tonnes in South America). The 4% volume decrease in South America was offset by the 11% volume increase in Europe.

The segment had EBITDA of USD 30 million in the first quarter of 2012 compared to USD 26 million in the fourth quarter of 2011. EBITDA from South America decreased from USD 23 million in the fourth quarter of 2011 to USD 20 million in the first quarter of 2012. The impact of lower volumes was partially offset by the continuing progress of the Leadership Journey™. EBITDA from Europe increased from USD 3 million in the fourth quarter of 2011 to USD 10 million in the first quarter of 2012. The improvement in EBITDA was driven by the increase in volumes in Europe during the quarter. Additionally, average steel selling prices for the Stainless & Electrical Steel segment were lower for the quarter.

The Stainless & Electrical Steel segment had an operating loss of USD 33 million during the first quarter of 2012 compared to an operating loss of USD 37 million in the fourth quarter of 2011. Depreciation and amortization expense was USD 63 million in the first quarter of 2012.

Services & Solutions

The Services & Solutions segment had a 7% increase in sales during the period, from USD 546 million in the fourth quarter of 2011 to USD 584 million in the first quarter of 2012. In the first quarter of 2012, shipments were 168 thousand tonnes compared to 149 thousand tonnes in the previous quarter. The Services & Solutions segment also had lower average selling prices for the period.

The segment had EBITDA in the first quarter of 2012 of USD 11 million compared to negative EBITDA of USD 6 million in the fourth quarter of 2011. The improvement in EBITDA was driven primarily by the increase in volumes. In addition, the segment was also impacted in the fourth quarter of 2011 by a negative stock effect resulting primarily from the decline in nickel prices.

Depreciation and amortization expense in the first quarter of 2012 was USD 7 million.

The Services & Solutions segment had operating income of USD 4 million in the first quarter of 2012 compared to an operating loss of USD 17 million in the fourth quarter of 2011.

Alloys & Specialties

The Alloys & Specialties segment had sales in the first quarter of 2012 of USD 178 million, representing an increase of 16% compared to USD 153 million in the fourth quarter of 2011. Shipments were higher in the first quarter of 2012 at 10 thousand tonnes compared to 8 thousand tonnes in the fourth quarter of 2011.

The Alloys & Specialties segment achieved EBITDA of USD 11 million in the first quarter of 2012 compared to USD 12 million in the fourth quarter of 2011. Volumes were higher and average selling prices were lower in the quarter.

Depreciation and amortization expense for the quarter was USD 1 million.

The Alloys & Specialties segment had operating income of USD 10 million in the first quarter of 2012 compared to operating income of USD 10 million in the fourth quarter of 2011.

New developments

  • On May 8, 2012, the Annual and Extraordinary General Meetings of Shareholders of Aperam in Luxembourg approved all resolutions on the agenda by a large majority. In particular, the shareholders approved the consolidated financial statements as of and for the calendar year ended December 31, 2011. In addition, the shareholders approved the proposed amendments to the Articles of Association of the Company to reflect recent changes in Luxembourg law.

Investor conference call

Aperam management will host a conference call for members of the investment community to discuss the first quarter 2012 financial performance at the following time:

Date New York London Luxembourg
Wednesday, May 9, 2012 12:30 pm 5:30 pm 6:30 pm

The dial-in numbers for the call are: France (+33 (0) 170 99 43 00 and toll free 0805 631 579); USA (+1 646 254 3388 and toll free +1 877 249 9037); and international (+44 (0) 20 7136 2055). The participant access code is: APERAM.

A replay of the conference call will be available until May 16, 2012: France (+33 (0) 174 20 28 00); USA (+1 347 366 9565) and international (+44 (0) 20 7111 1244). The participant access code is 4512872#.

Contacts

Corporate Communications / Jean Lasar: +352 27 36 27 27
Investor Relations / Michael Bennett: +352 27 36 27 36

About Aperam

Aperam is a global player in stainless, electrical and specialty steel, with operations in more than 30 countries. The business is organized in three divisions: Stainless & Electrical Steel, Services & Solutions and Alloys & Specialties.

Aperam has 2.5 million tonnes of flat stainless steel capacity in Brazil and Europe and is a leader in high value added niches - alloys and specialties. 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 main plants located in Brazil, Belgium and France. Aperam has about 10,400 employees.

Aperam commits to operate in a responsible way with respect to health, safety and the well-being of its employees, contractors and the communities in which it operates. It is also committed to the sustainable management of the environment and of finite resources. In 2011, Aperam had revenues of USD 6.3 billion and shipments of 1.75 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, whether as a result of new information, future events, or otherwise.

 

APERAM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(in million of U.S. dollars) March 31, 2012 December 31, 2011 March 31, 2011

Non current assets
4,271 4,156 4,641

Intangible assets
924 904 1,035

Property, plant and equipments
2,873 2,804 3,020

Investments & Other
474 448 586
       

Current assets & working capital
1,108 1,199 1,467

Inventories, trade receivables & trade payables
801 807 1,018

Other assets
140 145 181

Cash & cash equivalents
167 247 268
       

Shareholders' equity
3,545 3,443 3,999

Group share
3,539 3,437 3,993

Non-controlling interests
6 6 6
       

Non current liabilities
1,016 1,020 1,078

Interest bearing liabilities
581 587 603

Deferred employee benefits
179 174 191

Provisions and other
256 259 284
       

Current liabilities (excluding trade payables)
818 892 1,031

Interest bearing liabilities
443 538 529

Other
375 354 502

 

APERAM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 

(in million of U.S. dollars) Three Months Ended
March 31, 2012 December 31, 2011 March 31, 2011
Sales 1,409 1,436 1,681
EBITDA 64 53 139
Depreciation & impairment 77 82 69
Operating (loss) / income (13) (29) 70
Income from other investments - 1 -
Net interest expense and other net financing costs (13) (27) (44)
Unrealized foreign exchange and derivative gains / (losses) 1 2 (2)
(Loss) / income before taxes and non-controlling interests (25) (53) 24
Income tax benefit 14 8 1
(Loss) / income before non-controlling interests (11) (45) 25
Non-controlling interests - 1 -
Net (loss) / income (11) (46) 25

 

APERAM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in million of U.S. dollars) Three Months Ended
March 31, 2012 December 31, 2011 March 31, 2011
Net (loss) / income (11) (46) 25
Non-controlling interests - 1 -
Depreciation and impairment 77 82 69
Change in working capital 27 253 (9)
Other (14) (63) (45)
Net cash provided by / (used in) operating activities 79 227 40
Purchase of property, plant and equipments (CAPEX) (40) (51) (32)
Loans under cash pooling arrangements (net) - - 647
Other investing activities (3) 2 -
Net Cash (used in) / provided by investing activities (43) (49) 615
(Payments) / proceeds from payable to banks and long term debt (105) (212) 32
Borrowings / (repayments) under cash pooling arrangements (net) - - (530)
Dividends paid (15) (17) (14)
Other financing activities (net) (1) (2) -
Net cash (used in) / provided by financial activities (121) (231) (512)
Net (decrease) / increase in cash and cash equivalents (85) (53) 143
Effect of exchange rate changes on cash 5 (2) 5
Change in cash and cash equivalents (80) (55) 148

 

Appendix 1a – Health & Safety statistics

Health & Safety Statistics Three Months Ended
March 31, 2012 December 31, 2011 September 30, 2011
Frequency Rate 1.0 0.3 0.9

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 Ended March 31, 2012 Stainless & Electrical Steel1,2 Services & Solutions Alloys & Specialties Others & Eliminations Total
Operational information          
Steel Shipment (000t) 415  168  10  (160) 433 
Steel selling price (USD/t) 2,607  3,319  16,962   - 3,123 
           
Financial information          
Sales (USDm) 1,122  584  178  (475) 1,409 
EBITDA (USDm) 30  11  11  12  64 
Depreciation & Impairment (USDm) 63  7  1  6  77 
Operating (loss) / income (USDm) (33) 4  10  6  (13)
           
Note 1: Stainless & Electrical Steel shipments of 415kt of which 152kt were from South America and 263kt were from Europe
Note 2: Stainless & Electrical Steel EBITDA of USD 30m of which USD 20m were from South America and USD 10m were from Europe

 

Quarter Ended December 31, 2011 Stainless & Electrical Steel1,2 Services & Solutions Alloys & Specialties Others & Eliminations Total
Operational information          
Steel Shipment (000t) 396  149  8  (124) 429 
Steel selling price (USD/t) 2,676  3,487  17,399  3,200 
           
Financial information          
Sales (USDm) 1,107  546  153  (370) 1,436 
EBITDA (USDm) 26  (6) 12  21  53 
Depreciation & Impairment (USDm) 63  11  2  6  82 
Operating (loss) / income (USDm) (37) (17) 10  15  (29)
           
Note 1: Stainless & Electrical Steel shipments of 396kt of which 158kt were from South America and 238kt were from Europe
Note 2: Stainless & Electrical Steel EBITDA of USD 26m of which USD 23m were from South America and USD 3m were from Europe

 

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.

2 Lost time injury frequency rate equals lost time injuries per 1,000,000 worked hours, based on own personnel and contractors.

3 EBITDA is defined as operating income plus depreciation and impairment expenses.

4 The Leadership Journey™ is an initiative launched on December 16, 2010, and subsequently accelerated and increased, to target management gains and profit enhancement of USD 350 million by 2013.