4 February 2013

Full year and fourth quarter 2012 results



  • English version
  • French version

Luxembourg, February 4, 2013 - Aperam (referred to as “Aperam” or the “Company”) (Amsterdam, Luxembourg, Paris: APAM and NYRS: APEMY), today announced results for the three month and twelve month periods ending December 31, 2012.

Philippe Darmayan, CEO of Aperam, commented:

"In a difficult environment Aperam has been able in 2012 to successfully progress with its Leadership Journey® and reduce its net debt. Looking ahead, we continue to remain cautious considering the current general environment and industry volatility despite some positive signs of market improvement. We have decided to expand our Leadership Journey® and accelerate our net debt reduction to be in a good position to capture industry opportunities."

Highlights

  • Health and Safety frequency rate2 of 1.3x in 2012 compared to 0.7x in 2011
  • Shipments of 1,683 thousand tonnes in full year 2012, a 4% decrease compared to full year 2011
  • EBITDA3 of USD 214 million in full year 2012, compared to USD 356 million in full year 2011
  • Basic loss per share of USD 1.39 in 2012
  • Cash inflow from operations amounted to USD 278 million in 2012
  • Net debt of USD 816 million at December 31, 2012, representing a gearing of 26%, compared to a net debt of USD 878 million at December 31, 2011

Prospects

  • EBITDA in Q1 2013 is expected to improve compared to Q4 2012. Due to higher activity, net debt is expected to increase in Q1 2013 compared to Q4 2012

Plan 2013-2014

  • Expansion of Leadership Journey® to 2014. USD 150 million targeted over next 2 years
  • Dividend stopped to accelerate net debt reduction. Target of net debt of USD 650 million by the end of 2014

Financial Highlights (on the basis of IFRS)

(USDm) unless otherwise stated 12M ‘12 12M ‘11 Q4 ‘12 Q3 ‘12 Q4 ‘11
Sales 5,261 6,345 1,294 1,207 1,436
EBITDA 214 356 43 42 53
Operating (loss) income (106) 45 (45) (29) (29)
Net (loss) (108) (60) (52) (17) (46)
           
Steel shipments (000t) 1,683 1,749 407 410 429
EBITDA/tonne (USD) 127 204 106 102 124
Basic loss per share (USD) 1.39 0.76 0.68 0.21 0.57

 

Health & Safety results analysis

Health and Safety performance, based on Aperam personnel figures and contractors lost time injury frequency rate2, was 1.9x in the fourth quarter of 2012 compared to 1.3x in the third quarter of 2012.

Financial results analysis

Sales in the fourth quarter of 2012 increased by 7% to USD 1,294 million compared to USD 1,207 million in the third quarter of 2012. Shipments in the fourth quarter of 2012 were flat at 407 thousand tonnes compared to 410 thousand tonnes in the third quarter of 2012.

EBITDA was USD 43 million in the fourth quarter of 2012 compared to EBITDA of USD 42 million in the third quarter of 2012. Despite difficult market conditions, EBITDA was flat quarter versus quarter primarily as a result of the continuing progress of the Leadership Journey®4. The Leadership Journey® has contributed USD 276 million to EBITDA since the beginning of 2011.

Depreciation and impairment expense in the fourth quarter of 2012 was USD 88 million, including USD 14 million of impairment relating to damaged assets in Gueugnon.

Aperam had an operating loss in the fourth quarter of USD 45 million compared to an operating loss of USD 29 million in the previous quarter.

Net interest expense and other financing costs in the fourth quarter of 2012 were USD 19 million, including financing costs of USD 19 million. Unrealized foreign exchange and derivative losses were USD 4 million in the fourth quarter of 2012.

The Company recorded a net loss of USD 28 million, inclusive of an income tax benefit of USD 19 million, in the second quarter of 2012.

The Company recorded a net loss of USD 52 million, inclusive of an income tax benefit of USD 15 million, in the fourth quarter of 2012.

Cash flows from operations in the fourth quarter were a positive USD 221 million, with a working capital decrease of USD 213 million. CAPEX in the fourth quarter was USD 37 million.

As of December 31, 2012, shareholder’s equity was USD 3,190 million and net financial debt was USD 816 million (gross financial debt as of December 31, 2012 was USD 1,042 million and cash & cash equivalents were USD 226 million).

The Company had liquidity of USD 701 million as of December 31, 2012, consisting of cash and cash equivalents (including short-term investments) of USD 226 million and undrawn credit lines of USD 475 million.

Operating segment results analysis

Stainless & Electrical Steel

The Stainless & Electrical Steel segment had sales of USD 1,020 million in the fourth quarter of 2012. This represents an increase of 10% compared to sales of USD 930 million in the third quarter of 2012. Shipments during the fourth quarter were 400 thousand tonnes, including 249 thousand tonnes in Europe and 151 thousand tonnes in South America. This is an increase of 8% compared to shipments in the previous quarter of 370 thousand tonnes (219 thousand tonnes in Europe and 151 thousand tonnes in South America). Volume increased of 14% in Europe whereas volumes were flat in South America due to seasonal slowdown. Overall, average steel selling prices for the Stainless & Electrical Steel segment were slightly lower for the quarter.

The segment had EBITDA of USD 35 million in the fourth quarter of 2012 compared to USD 14 million in the third quarter of 2012. EBITDA from South America decreased from USD 26 million in the third quarter of 2012 to USD 24 million in the fourth quarter of 2012. The decrease in EBITDA in South America was primarily due to the seasonality impact but was partially offset by some positive mix improvement. EBITDA from Europe increased from negative USD 12 million in the third quarter of 2012 to positive USD 11 million in the fourth quarter of 2012. The improvement in EBITDA in Europe was primarily driven by a reduced seasonality, the impact from some positive price movements and the continuing progress of the Leadership Journey®.

The Stainless & Electrical Steel segment had an operating loss of USD 42 million during the fourth quarter of 2012 compared to an operating loss of USD 43 million in the third quarter of 2012. Depreciation and amortization expense was USD 77 million in the fourth quarter of 2012, including USD 14 million of impairment relating to damaged assets in Gueugnon.

Services & Solutions

The Services & Solutions segment had a 4% decrease in sales during the period, from USD 526 million in the third quarter of 2012 to USD 504 million in the fourth quarter of 2012. In the fourth quarter of 2012, shipments were 158 thousand tonnes compared to 165 thousand tonnes in the previous quarter. The Services & Solutions segment had slightly higher average selling prices for the period.

The segment had negative EBITDA in the fourth quarter of 2012 of USD 4 million compared to positive EBITDA of USD 9 million in the third quarter of 2012. The decrease in EBITDA was primarily driven by losses in the precision business units and some underperforming service centres. In the third quarter, there was a USD 8 million capital gain resulting from the disposal of assets related to the key Leadership Journey® project of Campinas.

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

The Services & Solutions segment had an operating loss of USD 11 million in the fourth quarter of 2012 compared to an operating income of USD 2 million in the third quarter of 2012.

Alloys & Specialties

The Alloys & Specialties segment had sales in the fourth quarter of 2012 of USD 170 million, representing an increase of 22% compared to USD 139 million in the third quarter of 2012. Shipments were higher in the fourth quarter of 2012 at 9 thousand tonnes compared to 8 thousand tonnes in the third quarter of 2012, while average selling prices also increased quarter over quarter.

The Alloys & Specialties segment achieved EBITDA of USD 13 million in the fourth quarter of 2012 compared to USD 16 million in the third quarter of 2012. Despite higher volumes, EBITDA was down in the fourth quarter compared to the third quarter primarily as a result of the mix deterioration.

Depreciation and amortization expense in the quarter was USD 2 million.

The Alloys & Specialties segment had operating income of USD 11 million in the fourth quarter of 2012 compared to operating income of USD 15 million in the third quarter of 2012.

Recent developments

  • On November 8, 2012, Moody’s downgraded the corporate family rating for Aperam S.A. to B1 from Ba3. Moody’s maintained the company’s negative outlook.
  • On December 19, 2012, Aperam announced its financial calendar for the year 2013.
  • On December 23, 2012, an accidental fire partially damaged the RD79 pickling and annealing line at the Gueugnon plant in France. Aperam is mitigating the resulting production fallout by stepping up production at its other active pickling and annealing lines and has in addition decided to temporarily relaunch two production lines at its plants in Genk, Belgium (BUL1) and Isbergues, France (Inox3) which were kept as capacity reserve. With these measures, Aperam will be able to supply its customers while the RD79 line is being rebuilt. The RD79 line is expected to be restarted before the second half of the year 2013.

New developments

  • On February 4, 2013, Aperam announces that the Board of Directors will submit to a shareholder’s vote, at the next annual general meeting, a proposal to stop the dividend payment to accelerate the net debt reduction target of USD 650 million by the end of 2014. Capex is also expected to be reduced in full year 2013 compared to full year 2012 and concentrated on security, environment and cost reduction.
  • On February 4, 2013, Aperam announces that in response to the current economic uncertainty and in a continuing effort to improve its cost competitiveness and profitability, the Company targets an expansion of the Leadership Journey® to 2014 with USD 150 million targeted over the next 2 years. This expansion of the Leadership Journey® in combination with the achievements realized under the previous Leadership Journey® target of USD 350 million by 2013 leads to a new combined target of USD 425 million by 2014.
  • On February 4, 2013, Aperam announces that it obtained an in-principle refinancing commitment to extend a portion of 600 million USD of its current Secured Borrowing Base Revolving Credit Facility from March 2014 until March 2015

Investor conference call

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

Date

New York

London

Luxembourg

Monday, February 4, 2013

12:30 pm

5:30 pm

6:30 pm

The dial-in numbers for the call are: France (+33(0)1 70 48 01 66 and toll free 0805 631 579); USA (+1212 444 0896 and toll free 1 877 249 9037); and international (+44(0)20 7784 1036). The participant access code is: 7144327#.

A replay of the conference call will be available until February 11, 2013: France (+33 (0) 1 74 20 28 00); USA (+1 347 366 9565) and international (+44 (0) 20 3427 0598). The participant access code is 7144327#.

Contacts

Corporate Communications / Jean Lasar: +352 27 36 27 27
Investor Relations / Laurent Beauloye: +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 9,800 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 2012, Aperam had revenues of USD 5.3 billion and shipments of 1.68 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) December 31, 2012 September 30, 2012 December 31, 2011

Non current assets
3,992 3,954 4,156

Intangible assets
859 854 904

Property, plant and equipments
2,609 2,621 2,804

Investments & Other
524 479 448
       

Current assets & working capital
967 1,205 1,199

Inventories, trade receivables & trade payables
607 831 807

Other assets
134 146 145

Cash & cash equivalents
226 228 247
       

Shareholders' equity
3,190 3,218 3,443

Group share
3,186 3,214 3,437

Non-controlling interests
4 4 6
       

Non current liabilities
1,001 954 1,020

Interest bearing liabilities
607 559 587

Deferred employee benefits
169 171 174

Provisions and other
225 224 259
       

Current liabilities (excluding trade payables)
768 987 892

Interest bearing liabilities
435 656 538

Other
333 331 354

 

APERAM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in million of U.S. dollars) Three Months Ended   Year Ended
December 31, 2012 September 30, 2012 December 31, 2011 December 31, 2012 December 31, 2011
Sales 1,294  1,207  1,436    5,261  6,345 
EBITDA 43 42 53   214 356
Depreciation & impairment 88 71 82   320 311
Operating (loss) / income (45) (29) (29)   (106) 45
Income from other investments 1 - 1   2 2
Net interest expense and other net financing costs (19) (12) (27)   (64) (124)
Unrealized foreign exchange and derivative gains / (losses) (4) 8 2   (4) (30)
Loss before taxes and non-controlling interests (67) (33) (53)   (172) (107)
Income tax benefit 15 16 8   64 48
Loss before non-controlling interests (52) (17) (45)   (108) (59)
Non-controlling interests - - 1   - 1
Net loss (52) (17) (46)   (108) (60)

 

APERAM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in million of U.S. dollars) Three Months Ended   Year Ended
December 31, 2012 September 30, 2012 December 31, 2011 December 31, 2012 December 31, 2011
Net loss (52) (17) (46)   (108) (60)
Non-controlling interests - - 1   - 1
Depreciation & impairment 88 71 82   320 311
Change in working capital 213 (96) 253   156 34
Other (28) (8) (63)   (90) (97)
Net cash provided by (used in) operating activities 221 (50) 227   278 189
Purchase of property, plant and equipment(CAPEX) (37) (41) (51)   (161) (158)
Loans under cash pooling arrangements - - -   - 647
Other investing activities (net) - 7 2   3 9
Net Cash (used in) provided by investing activities (37) (34) (49)   (158) 498
(Payments) proceeds from payable to banks and long term debt (176) 92 (212)   (83) 55
Repayments under cash pooling arrangements - - -   - (540)
Dividends paid (15) (17) (17)   (61) (61)
Other financing activities (net) - 1 (2)   (2) (6)
Net cash (used in) provided by financing activities (191) 76 (231)   (146) (552)
Net (decrease) increase in cash and cash equivalents (7) (8) (53)   (26) 135
Effect of exchange rate changes on cash 5 1 (2)   5 (8)
Change in cash and cash equivalent (2) (7) (55)   (21) 127

 

 

Appendix 1a – Health & Safety statistics

Health & Safety Statistics Three Months Ended Year Ended
December 31, 2012 September 30, 2012 December 31, 2011 December 31, 2012 December 31, 2011
Frequency Rate 1.9 1.3 0.3 1.3 0.7

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

Year Ended December 31, 2012 Stainless & Electrical Steel1,2 Services & Solutions Alloys & Specialties Others & Eliminations Total
Operational information          
Steel Shipment (000t) 1,611 661 36 (625) 1,683
Steel selling price (USD/t) 2,489 3,148 17,405   2,991
           
Financial information          
Sales (USDm) 4,180 2,173 659 (1,751) 5,261
EBITDA (USDm) 118 21 56 19 214
Depreciation & Impairment (USDm) 268 29 6 17 320
Operating (loss) / income (USDm) (150) (8) 50 2 (106)
           
Note 1: Stainless & Electrical Steel Shipments of 1,611kt of which 617kt were from South America and 994kt were from Europe
Note 2: Stainless & Electrical Steel EBITDA of USD 118m of which USD 103m were from South America and USD 15m were from Europe

 

Year Ended December 31, 2011 Stainless & Electrical Steel1,2 Services & Solutions Alloys & Specialties Others & Eliminations Total
Operational information          
Steel Shipment (000t) 1,675 662 37 (625) 1,749
Steel selling price (USD/t) 2,903 3,764 18,805   3,475
           
Financial information          
Sales (USDm) 5,068 2,603 721 (2,047) 6,345
EBITDA (USDm) 221 15 70 50 356
Depreciation & Impairment (USDm) 260 33 6 12 311
Operating (loss) / income (USDm) (39) (18) 64 38 45
           
Note 1: Stainless & Electrical Steel Shipments of 1,675kt of which 647kt were from South America and 1,028kt were from Europe
Note 2: Stainless & Electrical Steel EBITDA of USD 221m of which USD 118m were from South America and USD 103m were from Europe

 

 

Quarter Ended December 31, 2012 Stainless & Electrical Steel1,2 Services & Solutions Alloys & Specialties Others & Eliminations Total
Operational information          
Steel Shipment (000t) 400 158 9 (160) 407
Steel selling price (USD/t) 2,417 3,066 18,436   3,009
           
Financial information          
Sales (USDm) 1,020 504 170 (400) 1,294
EBITDA (USDm) 35 (4) 13 (1) 43
Depreciation & Impairment (USDm) 77 7 2 2 88
Operating (loss) / income (USDm) (42) (11) 11 (3) (45)
           
Note 1: Stainless & Electrical Steel Shipments of 400kt of which 151kt were from South America and 249kt were from Europe
Note 2: Stainless & Electrical Steel EBITDA of USD 35m of which USD 24m were from South America and USD 11m were from Europe

 

 

Quarter Ended September 30, 2012 Stainless & Electrical Steel1,2 Services & Solutions Alloys & Specialties Others & Eliminations Total
Operational information          
Steel Shipment (000t) 370 165 8 (133) 410
Steel selling price (USD/t) 2,423 3,066 16,962   2,830
           
Financial information          
Sales (USDm) 930 526 139 (388) 1,207
EBITDA (USDm) 14 9 16 3 42
Depreciation & Impairment (USDm) 57 7 1 6 71
Operating (loss) / income (USDm) (43) 2 15 (3) (29)
           
Note 1: Stainless & Electrical Steel shipments of 370kt of which 151kt were from South America and 219kt were from Europe
Note 2: Stainless & Electrical Steel EBITDA of USD 14m of which USD 26m were from South America and USD (12)m were from Europe

 

 


1. Les informations financières figurant dans ce communiqué de presse et dans l’Annexe 1 ont été préparées conformément aux critères de mesure et de reconnaissance des Normes internationales d’information financière (International Financial Reporting Standards, « IFRS ») telles qu’adoptées au sein de l’Union Européenne. Les informations financières intermédiaires incluses dans ce communiqué ont été préparées conformément aux IFRS applicables aux périodes intermédiaires, mais ce communiqué ne contient toutefois pas suffisamment d’informations pour constituer un rapport intermédiaire au sens de la norme IAS 34, « Information financière intermédiaire ». Sauf indication contraire, les chiffres et informations indiqués dans le communiqué de presse n’ont pas été audités. Les informations financières et certaines autres informations présentées dans différents tableaux de ce communiqué de presse ont été arrondies à l’entier le plus proche ou à la décimale la plus proche. En conséquence, la somme des nombres d’une colonne peut ne pas correspondre exactement au total indiqué dans cette colonne. En outre, certains pourcentages présentés dans ce communiqué de presse reflètent des calculs basés sur les informations sousjacentes avant arrondis et, par conséquent, peuvent ne pas correspondre exactement aux pourcentages qui résulteraient des calculs basés sur des chiffres arrondis.

2. Le taux de fréquence des accidents avec arrêt de travail est calculé pour 1 000 000 d’heures travaillées, sur la base de notre personnel et de celui de nos sous-traitants.

3. On entend par EBITDA le résultat opérationnel, plus amortissements et coûts de dépréciation.

4. Le Leadership Journey est une initiative lancée le 16 décembre 2010 accélérée et étendue par la suite pour viser des gains de management et une amélioration des profits de 350 millions de dollars US d’ici 2013. Le 4 février 2013, Aperam a annoncé une extension du Leadership Journey® à 2014 avec un objectif de 150 millions de dollars US sur les deux prochaines années.

5. Sujet à des actifs collatéraux disponibles