Third quarter 2013 results
Luxembourg, November 6, 2013 - Aperam (referred to as “Aperam” or the “Company”) (Amsterdam, Luxembourg, Paris: APAM and NYRS: APEMY), announced today results for the three month period ending September 30, 2013
Philippe Darmayan, CEO of Aperam, commented:
Despite the market deterioration, we are pleased to have improved once again our operational performance compared to last year.
For the end of the year, we look positively on the recent base price increases and higher import duties in Brazil, but need to remain cautious as a result of the volatile and uncertain market conditions. In the current environment, we continue to remain focused on delivering the Leadership Journey5.
- Health and Safety frequency rate2of 1.9x in Q3 2013 compared to 1.4x in Q2 2013.
- Shipments of 436 thousand tonnes in Q3 2013, a 3% decrease compared to shipments of 450 thousand tonnes in Q2 2013.
- EBITDA3 of USD 62 million in Q3 2013, compared to EBITDA of USD 81 million in Q2 2013.
- Basic loss per share of USD 0.24 in Q3 2013.
- Cash flow from operations amounted to USD 17 million in Q3 2013.
- Net debt4 of USD 808 million on September 30, 2013, representing a gearing of 27%.
- EBITDA in Q4 2013 is expected to slightly increase compared to EBITDA in Q3 2013.
- Net debt to decrease significantly in Q4 2013.
Financial Highlights (on the basis of IFRS)
|(USDm) unless otherwise stated||Q3 13||Q2 13||Q3 126||9M 2013||9M 20126|
|Operating (loss) income||(8)||5||(28)||(14)||(58)|
|Steel shipments (000t)||436||450||410||1,287||1,276|
|Basic loss per share (USD)||(0.24)||(0.15)||(0.23)||(0.75)||(0.74)|
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 third quarter of 2013 compared to 1.4x in the second quarter of 2013.
Financial results analysis
Sales in the third quarter of 2013 decreased by 12% at USD 1,204 million compared to USD 1,366 million in the second quarter of 2013. Shipments in the third quarter of 2013 decreased by 3% at 436 thousand tonnes compared to 450 thousand tonnes in the second quarter of 2013.
EBITDA was USD 62 million in the third quarter of 2013 compared to EBITDA of USD 81 million in the second quarter of 2013. The impact of traditional seasonality and the deterioration of the stainless steel market conditions resulted in lower EBITDA in the third quarter compared to the previous quarter. Despite lower stainless steel prices, Aperam has however significantly increased its profitability compared to Q3 2012. The Leadership Journey ®5 has continued to progress over the quarter and has contributed a total amount of USD 349 million to EBITDA since the beginning of 2011.
Depreciation and impairment expense in the third quarter of 2013 was USD 70 million.
Aperam had an operating loss in the third quarter of USD 8 million compared to an operating income of USD 5 million in the previous quarter.
Net interest expense and other financing costs in the third quarter of 2013 were USD 29 million, primarily related to financing costs of USD 22 million. Realized and unrealized foreign exchange and derivative losses were USD 2 million in the third quarter of 2013.
The Company recorded a net loss of USD 19 million, inclusive of an income tax benefit of USD 21 million, in the third quarter of 2013.
Cash flows from operations in the third quarter were positive at USD 17 million despite a working capital increase of USD 66 million. CAPEX in the third quarter was USD 28 million.
As of September 30, 2013, shareholders’ equity was USD 3,017 million and net financial debt4 was USD 808 million (gross financial debt as of September 30, 2013 was USD 1,118 million and cash, cash equivalents and restricted cash were USD 310 million). This net financial debt includes a positive impact of USD 39 million related to the convertible bond issued on September 19, 2013.
The Company had liquidity of USD 698 million as of September 30, 2013, consisting of cash and cash equivalents of USD 309 million and undrawn credit lines7 8 of USD 389 million.
Operating segment results analysis
Stainless & Electrical Steel
The Stainless & Electrical Steel segment had sales of USD 915 million in the third quarter of 2013. This represents a decrease of 15% compared to sales of USD 1,078 million in the second quarter of 2013. Shipments during the third quarter were 408 thousand tonnes. This is a decrease of 5% compared to shipments of 429 thousand tonnes in the previous quarter. In Europe shipments were 226 thousand tonnes and in South America shipments were 182 thousand tonnes (compared to 267 thousand tonnes in Europe and 162 thousand tonnes in South America in Q2 2013). The volumes decline in Europe mainly due to the seasonal impact was partially compensated by the good commercial performance in Brazil. Overall, average selling prices for the Stainless & Electrical Steel segment were lower for the quarter.
The segment had EBITDA of USD 36 million in the third quarter of 2013 compared to USD 71 million in the second quarter of 2013. EBITDA from South America decreased in the third quarter of 2013 to USD 34 million from USD 41 million in the second quarter of 2013. The decrease in EBITDA in South America was mainly driven by the impact from deteriorating prices. EBITDA from Europe decreased from USD 30 million in the second quarter of 2013 to USD 2 million in the third quarter of 2013. The decrease in EBITDA in Europe was primarily drivenby lower volumes due to the traditional seasonality slowdown in the third quarter and pricing pressure. The ramp-up of the new annealing and pickling line in Gueugnon was finalised over the quarter as expected.
Depreciation and amortization expense was USD 57 million in the third quarter of 2013.
The Stainless & Electrical Steel segment had an operating loss of USD 21 million during the third quarter of 2013 compared to an operating income of USD 12 million in the second quarter of 2013.
Services & Solutions
The Services & Solutions segment had a 9% decrease in sales during the quarter, from USD 566 million in the second quarter of 2013 to USD 516 million in the third quarter of 2013. In the third quarter of 2013, shipments were 165 thousand tonnes compared to 174 thousand tonnes in the previous quarter. The Services & Solutions segment had lower average selling prices during the period.
The segment had positive EBITDA in the third quarter of 2013 of USD 1 million compared to negative EBITDA of USD 5 million in the second quarter of 2013. Overall, excluding the USD 7 million restructuring provision recorded in Q2 2013, there is a slight decline of EBITDA due to the seasonal effect in Europe.
Depreciation and amortization expense was USD 6 million in the third quarter of 2013.
The Services & Solutions segment had an operating loss of USD 5 million in the third quarter of 2013 compared to an operating loss of USD 15 million in the second quarter of 2013.
Alloys & Specialties
The Alloys & Specialties segment had sales in the third quarter of 2013 of USD 148 million, representing a decrease of 13% compared to USD 170 million in the second quarter of 2013. Shipments were lower in the third quarter of 2013 at 8 thousand tonnes compared to 10 thousand tonnes in the second quarter of 2013. Average selling prices increased over the quarter.
The Alloys & Specialties segment achieved EBITDA of USD 16 million in the third quarter of 2013 compared to USD 15 million in the second quarter of 2013. The EBITDA improvement is mainly due to product mix improvement and continuous progress in the Leadership Journey ® 5.
Depreciation and amortization expense in the third quarter of 2013 was USD 2 million.
The Alloys & Specialties segment had an operating income in the third quarter of 2013 comparable to its operating income in the second quarter at USD 14 million.
- On August 7, 2013 Aperam published its Half-Year Report for the six month period ended June 30, 2013. The report is available in the Luxembourg Stock Exchange’s electronic database OAM on www.bourse.lu and on www.aperam.com under Investors & shareholders, Aperam Financial Reports.
- On September 19, 2013 Aperam announced the successful placing and pricing of its offering of convertible and/or exchangeable bonds due 2020 (the “Bonds”) of a size of USD 200 million. The Mittal Family, the Company’s main shareholder, subscribed for USD 81.8 million of Bonds, equal to its current 40.85% stake in the Company’s share capital. The net proceeds of the offering targeted general corporate purposes, including the refinancing of existing indebtedness. The issue of the Bonds allowed the Company to extend the average maturity of its existing debt, diversify its financing resources and increase its financial flexibility. The senior and unsecured Bonds have an annual coupon of 2.625% payable semi-annually in arrear and an initial conversion price of USD 21.96. The Bonds are rated B+ by S&P and B3 by Moody’s. Additional information with respect to the Bonds is available on www.aperam.com under Media, Press Releases, September 2013.
Investor conference call
Aperam management will host a conference call for members of the investment community to discuss the third quarter 2013 financial performance at the following time:
|Wednesday, November 6, 2013||12:30 pm||5:30 pm||6:30 pm|
The dial-in numbers for the call are: France (+33(0)1 76 77 22 22); USA (+1212 444 0481); and international (+44(0)20 3427 1903). The participant access code is: 2828095#.
A replay of the conference call will be available until November 13th, 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 2828095#.
Corporate Communications / Jean Lasar: +352 27 36 27 27
Investor Relations / Romain Grandsart: +352 27 36 27 36
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 9,700 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
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 million of U.S. dollars)||September 30, 2013||June 30, 2013||September 30, 20126|
|Non current assets||3,792||3,774||3,954|
|Property, plant and equipments||2,438||2,435||2,621|
|Investments & Other||534||526||479|
|Current assets & working capital||1,092||973||1,205|
|Inventories, trade receivables and trade payables||621||554||831|
|Cash, cash equivalents and restricted cash||310||243||228|
|Non current liabilities||1,187||1,029||959|
|Interest bearing liabilities||773||616||559|
|Deferred employee benefits||216||211||177|
|Provisions and other||198||202||223|
|Current liabilities (excluding trade payables)||680||783||987|
|Interest bearing liabilities||345||468||656|
APERAM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|(in million of U.S. dollars)||Three Months Ending||Nine Months Ending|
|September 30, 2013 1||June 30, 20131||September 30, 20126||September 30, 2013||September 30, 20126|
|Depreciation & impairment||70||76||71||222||232|
|Operating (loss) / income||(8)||5||(28)||(14)||(58)|
|Income from other investments||-||-||-||-||1|
|Net interest expense and other net financing costs||(29)||(30)||(16)||(86)||(52)|
|Foreign exchange and derivative (losses) / gains||(2)||1||10||(10)||1|
|Loss before taxes and non-controlling interests||(39)||(24)||(34)||(110)||(108)|
|Income tax benefit||21||13||16||53||50|
|Loss before non-controlling interests||(18)||(11)||(18)||(57)||(58)|
APERAM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
|(in million of U.S. dollars)||Three Months Ending||Nine Months Ending|
|September 30, 20131||June 30, 20131||September 30, 20126||September 30, 2013||September 30, 20126|
|Depreciation and impairment||70||76||71||222||232|
|Change in working capital||(66)||(16)||(96)||(63)||(57)|
|Net cash provided by (used in) operating activities||17||34||(50)||61||57|
|Purchase of property, plant and equipment (CAPEX)||(28)||(33)||(41)||(95)||(124)|
|Other investing activities (net)||10||(9)||7||3||3|
|Net Cash used in investing activities||(18)||(42)||(34)||(92)||(121)|
|Proceeds (payment) from payable to banks and long term debt||73||(20)||92||125||93|
|Other financing activities (net)||(2)||(1)||1||(4)||(2)|
|Net cash provided by (used in) financing activities||71||(21)||76||121||45|
|Effect of exchange rate changes on cash||6||(9)||1||(7)||-|
|Change in cash and cash equivalent||76||(38)||(7)||83||(19)|
Appendix 1a - Health & Safety statistics
|Health & Safety Statistics||Three Months Ended|
|September 30, 20131||June 30, 20131||Septmeber 30, 2013|
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 September 30, 2013||Stainless & Electrical Steel1,2||Services & Solutions||Alloys & Specialties||Others & Eliminations||Total|
|Steel Shipment (000t)||408||165||8||(145)||436|
|Steel selling price (USD/t)||2,157||2,999||18,860||2,664|
|Depreciation & Impairment (USDm)||57||6||2||5||70|
|Operating (loss) / income (USDm)||(21)||(5)||14||4||(8)|
|Note 1: Stainless & Electrical Steel Shipments of 408kt of which 182kt were from South America and 226kt were from Europe|
|Note 2: Stainless & Electrical Steel EBITDA of USD 36m of which USD 34m were from South America and USD 2m were from Europe|
|Quarter Ended June 30, 2013||Stainless & Electrical Steel||Services & Solutions||Alloys & Specialties||Others & Eliminations||Total|
|Steel Shipment (000t)||429||174||10||(163)||450|
|Steel selling price (USD/t)||2,412||3,084||17,404||2,911|
|Depreciation & Impairment (USDm)||59||10||1||6||76|
|Operating income / (loss) (USDm)||12||(15)||14||(6)||5|
|Note 1: Stainless & Electrical Steel shipments of 429kt of which 162kt were from South America and 267kt were from Europe|
|Note 2: Stainless & Electrical Steel EBITDA of USD 71m of which USD 41m were from South America and USD 30m were from Europe|
1The 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.
2Lost time injury frequency rate equals lost time injuries per 1,000,000 worked hours, based on own personnel and contractors.
3EBITDA is defined as operating income plus depreciation and impairment expenses.
4 Net debt refers to long-term debt, plus short-term debt, less cash and cash equivalents (including short-term investments) and restricted cash.
5 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. On February 4, 2013, Aperam announced an expansion of the Leadership Journey® to 2014 with USD 150 million targeted over the next 2 years. This expansion of the Leadership Journey® leads to a new combined target of USD 425 million by 2014.
6 Figures for 2012 have been restated due to change in accounting principle of defined benefit plans and other long-term employee benefits, and adoption of revised IAS 19 standard.
7 Subject to eligible collateral available.
8 Following the issuance of the convertible bond in September 2013, available commitments under Tranche A of the Borrowing Base Facility (“BBF”) have been cancelled for an amount of USD 131 million, representing 2/3rd of the convertible bond net proceeds.