10 February 2016

Full year and fourth quarter 2015 results



English version

French version

 

Luxembourg, February 10, 2016 Aperam (referred to as “Aperam” or the “Company”) (Amsterdam, Luxembourg, Paris: APAM and NYRS: APEMY), announced today results for the three month and full year periods ending December 31, 2015

Timoteo Di Maulo, CEO of Aperam, commented:

“In 2015, Aperam has continued to improve its operating performance with the best yearly EBITDA over the last 5 years – excluding gains from electricity surplus. Aperam has also continued to strengthen its balance sheet and reinstated a dividend6. This reinforces further our confidence on the contribution of the Leadership Journey®7 and the Top Line strategy.

Looking ahead, we continue to be cautious given the global economic uncertainty.
However, we are confident in the resilience of Aperam and we remain focused on implementing our self-help strategy.”

Highlights

  • Health and Safety LTI frequency rate2 of 1.0x in 2015 compared to 1.1x in 2014.
  • Shipments of 1,886 thousand tonnes in full year 2015, a 4% increase compared to shipments of 1,813 thousand tonnes in full year 2014.
  • EBITDA3 of USD 501 million in full year 2015, compared to EBITDA of USD 547 million in full year 2014, including gains from electricity surplus of USD 3 million and USD 57 million in 2015 and 2014 respectively.
  • EBITDA of USD 105 million in Q4 2015, compared to EBITDA of USD 108 million in Q3 2015.
  • Net income of USD 172 million in full year 2015, compared to net income of USD 95 million in full year 2014.
  • Basic earnings per share of USD 2.21 in 2015 compared to USD 1.21 in 2014.
  • Cash flow from operations amounted to USD 392 million in 2015 compared to USD 240 million in 2014.
  • Net debt4 of USD 316 million on December 31, 2015, representing a gearing5 of 14% compared to a net debt of USD 536 million on December 31, 2014.

 

 

Prospects

  • EBITDA in Q1 2016 is expected to slightly increase compared to EBITDA in Q4 2015.
  • Net debt to slightly increase in Q1 2016.  

 

Financial Highlights (on the basis of IFRS)

(USDm) unless otherwise stated

Q4 ‘15

Q3 ‘15

Q4 ‘14

12M ‘15

12M ‘14

Sales

1,081

1,113

1,291

4,716

5,482

EBITDA

105

108

117

501

547

Operating income

65

67

53

327

296

Net income

33

31

19

172

95

 

 

 

 

 

 

Steel shipments (000t)

476

455

439

1,886

 

1,813

 

EBITDA/tonne (USD)

221

237

267

266

302

Basic earnings per share (USD)

0.42

0.40

0.24

2.21

1.21

Diluted earnings per share (USD)

0.40

0.39

0.21

2.09

1.17











 

 







Health & Safety results analysis

Health and Safety performance based on Aperam personnel figures and contractors’ LTI (lost time injury) frequency rate2, was 0.7x in the fourth quarter of 2015 compared to 1.2x in the third quarter of 2015.

 

Financial results analysis for full year ending December 31, 2015

Sales in the year ended December 31, 2015 decreased by 14% at USD 4,716 million compared to USD 5,482 million in the year ended December 31, 2014 mainly due to low nickel price and forex translation effects. Shipments in 2015 increased by 4% at 1,886 thousand tonnes compared to 1,813 thousand tonnes in 2014.

EBITDA was USD 501 million in the year ended December 31, 2015, including USD 3 million positive result from the sale of electricity surplus, compared to EBITDA of USD 547 million in the year ended December 31, 2014, including USD 57 million positive result from the sale of electricity surplus. Despite headwinds coming from a challenging economic environment, the company improved its EBITDA (excluding the impact of the sale of electricity surplus) in the year primarily due to the continuous contribution of the Leadership Journey®7 and the Top Line strategy. The Leadership Journey®7 has continued to progress over the year and has contributed a total amount of USD 478 million to EBITDA since the beginning of 2011.

Depreciation and amortization expense in the year ended December 31, 2015 was USD 174 million.

Aperam had an operating income in the year ended December 31, 2015 of USD 327 million compared to an operating income of USD 296 million in the year ended December 31, 2014.

The Company recorded a loss from other investments of USD 15 million in the year ended December 31, 2015, related to an impairment loss of USD 12 million booked on the minority stake it holds in Gerdau, a Brazilian steelmaker, and USD 3 million booked on the minority stake it holds in General Moly, a US molybdenum mining company.

Net interest expense and other financing costs in the year ended December 31, 2015 were USD 77 million, primarily related to financing costs of USD 29 million and USD 14 million of non-recurring expenses. Realized and unrealized foreign exchange and derivative losses were USD 7 million in the year ended December 31, 2015.

The Company recorded a net income of USD 172 million, inclusive of an income tax expense of USD 55 million, in the year ended December 31, 2015.

Cash flows from operations in the year ended December 31, 2015 were positive at USD 392 million, with a working capital increase of USD 3 million. CAPEX in the year ended December 31, 2015 were USD 132 million.

As of December 31, 2015, shareholders’ equity was USD 2,222 million and net financial debt4 was USD 316 million (gross financial debt as of December 31, 2015 was USD 464 million and cash & cash equivalents were USD 148 million).

The Company had liquidity of USD 548 million as of December 31, 2015, consisting of cash and cash equivalents of USD 148 million and undrawn credit lines8 of USD 400 million.

 

Financial results analysis for the three month period ending December 31, 2015

Sales in the fourth quarter of 2015 decreased by 3% at USD 1,081 million compared to USD 1,113 million in the third quarter of 2015. Shipments in the fourth quarter of 2015 increased by 5% at 476 thousand tonnes compared to 455 thousand tonnes in the third quarter of 2015.

EBITDA was USD 105 million in the fourth quarter of 2015 compared to EBITDA of USD 108 million in the third quarter of 2015. The traditional seasonal effect in Brazil and the challenging market conditions have been almost entirely offset by better activity in Europe and the contribution of the Leadership Journey®7 and the Top Line strategy.

Depreciation and amortization expense in the fourth quarter of 2015 was USD 40 million.

Aperam had an operating income in the fourth quarter of USD 65 million compared to an operating income of USD 67 million in the previous quarter.

The Company recorded a loss from other investments of USD 3 million in the fourth quarter of 2015, related to an impairment loss of USD 2 million booked on the minority stake it holds in Gerdau, a Brazilian steelmaker, and USD 1 million booked on the minority stake it holds in General Moly, a US molybdenum mining company.

Net interest expense and other financing costs in the fourth quarter of 2015 were USD 12 million, primarily related to financing costs of USD 4 million. Realized and unrealized foreign exchange and derivative losses were USD 5 million in the fourth quarter of 2015.

The Company recorded a net income of USD 33 million, inclusive of an income tax expense of USD 12 million, in the fourth quarter of 2015.

Cash flows from operations in the fourth quarter were positive at USD 169 million, with a working capital decrease of USD 107 million. CAPEX in the fourth quarter were USD 48 million.

 

Operating segment results analysis

Stainless & Electrical Steel

The Stainless & Electrical Steel segment had sales of USD 857 million in the fourth quarter of 2015. This is similar to sales of USD 855 million in the third quarter of 2015. Shipments during the fourth quarter were 464 thousand tonnes. This is an increase of 8% compared to shipments of 429 thousand tonnes in the previous quarter. The volume increase was mainly due to the healthy apparent demand in Europe following the summer seasonal effect and the good progress of the Top Line strategy, especially in South America. Overall, average selling prices for the Stainless & Electrical Steel segment were lower for the quarter.

The segment had EBITDA of USD 438 million (of which USD 243 million from Europe and USD 195 million from South America, including USD 3 million gains from electricity surplus) in the year 2015 compared to USD 427 million (of which USD 204 million from Europe and USD 223 million from South America, including USD 57 million gains from electricity surplus) in the year 2014. The strong performance of both regions over 2015 is due to the continuous contribution of the Leadership Journey®7 and the Top line strategy as well as the improving real demand in Europe, in spite of the negative effects of a challenging environment, especially in South America, and the decline of the nickel price.  

The segment had EBITDA of USD 95 million in the fourth quarter of 2015 compared to USD 94 million in the third quarter of 2015. EBITDA in South America decreased mainly as a result of negative effect of the domestic seasonal effect on the product mix. The increase of activity in Europe following the summer seasonality enabled to compensate this impact.

Depreciation and amortization expense was USD 34 million in the fourth quarter of 2015.  

The Stainless & Electrical Steel segment had an operating income of USD 61 million during the fourth quarter of 2015 compared to an operating income of USD 60 million in the third quarter of 2015.

 

Services & Solutions

The Services & Solutions segment had a 9% decrease in sales during the quarter, from USD 510 million in the third quarter of 2015 to USD 464 million in the fourth quarter of 2015. In the fourth quarter of 2015, shipments were 180 thousand tonnes compared to 187 thousand tonnes in the previous quarter. The Services & Solutions segment had lower average selling prices during the period.     

The segment had EBITDA of USD 42 million in the year 2015 compared to USD 87 million in the year 2014, due to the negative impact of the nickel price evolution.

The segment had EBITDA of USD 8 million in the fourth quarter of 2015 compared to EBITDA of USD 2 million in the third quarter of 2015. Overall, the increase in EBITDA was mainly driven by lower negative stock effect resulting from the steep decline in nickel prices.

Depreciation and amortization expense was USD 5 million in the fourth quarter of 2015.

The Services & Solutions segment had an operating income of USD 3 million in the fourth quarter of 2015 compared to an operating loss of USD 2 million in the third quarter of 2015.   

 

Alloys & Specialties

The Alloys & Specialties segment had sales in the fourth quarter of 2015 of USD 130 million, representing an increase of 4% compared to USD 125 million in the third quarter of 2015. Shipments were stable in the fourth quarter of 2015 at 7 thousand tonnes compared to 7 thousand tonnes in the third quarter of 2015. Average selling prices decreased over the quarter.

The segment had EBITDA of USD 44 million in the year 2015 compared to USD 58 million in the year 2014, mainly due to forex translation effects.

The Alloys & Specialties segment achieved EBITDA of USD 8 million in the fourth quarter of 2015 compared to USD 9 million in the third quarter of 2015. The EBITDA decrease is mainly due to some raw material negative effect and forex translation effects.

Depreciation and amortization expense in the fourth quarter of 2015 was USD 1 million. 

The Alloys & Specialties segment had an operating income of USD 7 million in the fourth quarter of 2015 compared to an operating income of USD 7 million in the third quarter of 2015.

 

Recent developments

  • On December 22, 2015 Aperam announced its financial calendar for 2016. The financial calendar is available on the Company’s website at the following link: http://www.aperam.com/about-2/investors-shareholders/financial-calendars.
  • On December 1, 2015, Aperam cancelled USD 100 million of a USD 500 million secured borrowing base revolving credit facility ("The Facility")8, leading to a remaining USD 400 million facility8. Aperam had previously signed on March 6, 2015 this new facility with a group of nine banks. The Facility, which aimed to refinance the previous facility, was structured as a three-year revolving credit facility and included a one year extension option. It is being used for liquidity and working capital purposes.

New developments

  • On February 10, 2016 Aperam announced its detailed dividend payment schedule for 2016. As announced on November 5, 2015 the Company proposed to reinstate a base dividend of USD 1.25/share, subject to shareholder approval at the 2016 Annual General Meeting, as the company continues to improve its sustainable profitability benefiting from its strategic actions. The dividend payments would occur in four equal quarterly installments of USD 0.3125 (gross) per share in 2016: on 30 March 2016, 14 June 2016, 12 September 2016 and 12 December 2016, taking into account that the first quarterly dividend payment to be paid on March 30, 2016 shall be an interim dividend. The schedule is available on Aperam’s website at the following link: http://www.aperam.com/about-2/investors-shareholders/financial-calendars/Dividends.

 

Investor conference call

Aperam management will host a conference call for members of the investment community to discuss the fourth quarter 2015 financial performance at the following time: 

Date

New York

London

Luxembourg

Wednesday, February 10, 2016

12:30 pm

5:30 pm

6:30 pm

 

The dial-in numbers for the call are: France (+33(0)1 70 99 42 70); USA (+1718 354 1357); and international (+44(0)20 3427 1910). The participant access code is: 4584670#.

A replay of the conference call will be available until February 16th, 2016: 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 4584670#.

 

Contacts

Corporate Communications / Laurent Beauloye: +352 27 36 27 27

Investor Relations / Romain Grandsart: +352 27 36 27 36

 

About Aperam

Aperam is a global player in stainless, electrical and specialty steel, with customers in over 40 countries. The business is organized 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 2015, Aperam had sales of USD 4.7 billion and shipments of 1.89 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 million of U.S. dollars)

December 31,          2015

September 30,          2015

December 31,          2014

Non current assets

            2,642 

            2,620 

            3,221 

Intangible assets

               556 

               565 

               696 

Property, plant and equipments

            1,652 

            1,653 

            2,026 

Investments & Other

               434 

               402 

               499 

 

 

 

 

Current assets & working capital

               808 

            818 

               999 

Inventories, trade receivables and trade payables

               520 

               640 

               638 

Other assets

               140 

               110 

               164 

Cash & cash equivalents

               148 

               68 

               197 

 

 

 

 

Shareholders' equity

            2,222 

            2,225 

            2,676 

Group share

            2,217 

            2,220 

            2,672 

Non-controlling interest

                   5 

                   5 

                   4 

 

 

 

 

Non current liabilities

            883 

            853 

            1,162 

Interest bearing liabilities

               450 

               445 

               693 

Deferred employee benefits

               184 

               191 

               213 

Provisions and other

               249 

               217 

               256 

 

 

 

 

Current liabilities (excluding trade payables)

               345 

               360 

               382 

Interest bearing liabilities

                 14 

               42 

                 40 

Other

               331 

               318 

               342 

 


APERAM CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS 

(in million of U.S. dollars)

Three Months Ended

 

Year Ended

December 31, 2015

September 30, 2015

December 31, 2014

 

December 31, 2015

December 31, 2014

Sales

             1,081 

             1,113 

             1,291 

 

             4,716 

            5,482 

EBITDA

                105 

                108 

                117 

 

                501 

               547 

Depreciation & Impairment

                  40 

                  41 

                  64 

 

                174 

               251 

Operating income

                  65

                  67 

                  53 

 

                327 

               296 

Loss from other investments and associates

                   (3)

                 (6)

                   (9)

 

                 (15)

                 (54)

Net interest expense and other net financing costs

                 (12)

                 (15)

                 (21)

 

               (77)

             (116)

Foreign exchange and derivative gains / (losses)

                    (5)

                   (7)

                    2 

 

                   (7)

               (3)

Income before taxes and non-controlling interests

                  45 

                  39 

                  25 

 

                228 

             123 

Income tax (expense)

                   (12)

                   (8)

                   (6)

 

                 (55)

                 (28) 

Income before non-controlling interests

                  33 

                  31 

                  19 

 

                  173 

               95 

Non-controlling interests

                     — 

                     — 

                     — 

 

                     1 

                   — 

Net income

                  33 

                  31 

                  19 

 

                  172 

             95 

 

 

APERAM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(in million of U.S. dollars)

Three Months Ended

 

Year Ended

December 31, 2015

September 30, 2015

December 31, 2014

 

December 31, 2015

December 31, 2014

Net income

                  33 

                  31 

                 19 

 

                  172 

               95 

Non-controlling interests

                     — 

                     — 

                   — 

 

                     1 

                    — 

Depreciation and impairment

                  40 

                  41 

                  64 

 

                174 

                251 

Change in working capital

                   107 

                 (43)

                  (3)

 

               (3)

                 (211)

Other

                  (11)

                  36 

                  28 

 

                48

                  105 

Net cash provided by operating activities

                169 

                  65 

                108 

 

                392 

                240 

Purchase of property, plant and equipment (CAPEX)

                 (48)

                 (26)

                 (38)

 

               (132)

               (103)

Other investing activities (net)

                   3 

                    1 

                    (1)

 

                    6 

                    8 

Net cash used in investing activities

                 (45)

                 (25)

                 (39)

 

                 (126)

               (95)

Payments to banks and long term debt

               (30)

                (36)

               (258)

 

               (279)

                   (198)

Purchase of treasury stock

                     (14)

                   — 

            — 

 

                   (14)

                     (3)

Dividends paid

                     — 

                   — 

                     — 

 

                   — 

                     (1)

Other financing activities (net)

                   — 

                   (2)

                   (8)

 

                 (3)

                   (11)

Net cash used in financing activities

               (44)

                (38)

               (266)

 

               (296)

                 (213)

Effect of exchange rate changes on cash

                   — 

                 (6)

                    (5)

 

                 (19)

                   (26)

Change in cash and cash equivalents

               80 

                (4)

                 (202)

 

                 (49)

                  (94)

 


Appendix 1a – Health & Safety statistics

Health & Safety Statistics

Three Months Ended

Year Ended

December 31, 2015

September 30, 2015

December  31, 2014

December 31, 2015

December 31, 2014

Frequency Rate

0.7

1.2

1.8

1.0

1.1

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, 2015

Stainless & Electrical Steela,b

Services & Solutions

Alloys & Specialties

Others & Eliminations

Total

Operational information

 

 

 

 

 

Steel Shipment (000t)

                      1,838 

                         769 

                           34 

                        (755)

                      1,886 

Steel selling price (USD/t)

                      1,988 

                      2,612 

                    15,874 

 

                      2,413 

 

 

 

 

 

 

Financial information

 

 

 

 

 

Sales (USDm)

                      3,764 

                      2,123 

                         566 

                     (1,737)

                      4,716 

EBITDA (USDm)

                         438 

                           42 

                           44 

                          (23)

                         501 

Depreciation & Impairment (USDm)

                         147 

                           19 

                             6 

                             2 

                         174 

Operating income / (loss) (USDm)

                         291 

                           23 

                           38 

                          (25)

                         327 

Note a: Stainless & Electrical Steel Shipments of 1,838kt of which 654kt  were from South America and 1,184kt were from Europe

Note b: Stainless & Electrical Steel EBITDA of USD 438m of which USD 195m (including gains from electricity surplus USD 3m) were from South America and USD 243m were from Europe

 

Year Ended

December 31, 2014

Stainless & Electrical Steela,b

Services & Solutions

Alloys & Specialties

Others & Eliminations

Total

Operational information

 

 

 

 

 

Steel Shipment (000t)

                      1,736 

                         721 

                           35 

                        (679)

                      1,813 

Steel selling price (USD/t)

                      2,391 

                      3,090 

                    16,728 

 

                      2,851 

 

 

 

 

 

 

Financial information

 

 

 

 

 

Sales (USDm)

                      4,390 

                      2,363 

                         618 

                     (1,889)

                      5,482 

EBITDA (USDm)

                         427 

                           87 

                           58 

                          (25)

                         547 

Depreciation & Impairment (USDm)

                         218 

                           23 

                             7 

                             3 

                         251 

Operating (loss) / income (USDm)

                         209 

                           64 

                           51 

                          (28)

                         296 

 

 

 

 

 

 

Note a: Stainless & Electrical Steel Shipments of 1,736kt of which 654kt were from South America and 1,082kt were from Europe

Note b: Stainless & Electrical Steel EBITDA of USD 427m of which USD 223m (including gains from electricity surplus USD 57m) were from South America and USD 204m were from Europe

 


 

Quarter Ended

December 31, 2015

Stainless & Electrical Steel

Services & Solutions

Alloys & Specialties

Others & Eliminations

Total

Operational information

 

 

 

 

 

Steel Shipment (000t)

                         464 

                         180 

                             7 

                        (175)

                         476 

Steel selling price (USD/t)

                      1,790 

                      2,419 

                    16,228 

 

                      2,185 

 

 

 

 

 

 

Financial information

 

 

 

 

 

Sales (USDm)

                      857 

                         464 

                         130 

                        (370)

                      1,081 

EBITDA (USDm)

                           95 

                           8 

                           8 

                            (6)

                         105 

Depreciation & Impairment (USDm)

                           34 

                             5 

                             1 

                             — 

                           40 

Operating income / (loss) (USDm)

                           61 

                             3 

                           7 

                            (6)

                           65 

 

 

 

Quarter Ended

September 30, 2015

Stainless & Electrical Steel

Services & Solutions

Alloys & Specialties

Others & Eliminations

Total

Operational information

 

 

 

 

 

Steel Shipment (000t)

                         429 

                         187 

                             7 

                        (168)

                         455 

Steel selling price (USD/t)

                      1,978 

                      2,592 

                    17,612 

 

                      2,394 

 

 

 

 

 

 

Financial information

 

 

 

 

 

Sales (USDm)

                      855 

                         510 

                         125 

                        (377)

                      1,113 

EBITDA (USDm)

                         94 

                           2 

                           9 

                            3 

                         108 

Depreciation & Impairment (USDm)

                           34 

                             4 

                             2 

                             1 

                           41 

Operating (loss) / income (USDm)

                           60 

                           (2) 

                           7 

                            2 

                           67 

 

 

 

 

 

 

 

 

 

 

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 Net debt refers to long-term debt, plus short-term debt, less cash and cash equivalents (including short-term investments) and restricted cash.

5 Gearing defined as Net Debt out of Equity

6 Subject to shareholder approval.

7 The Leadership Journey® is an initiative launched on December 16, 2010, and subsequently accelerated and increased, to target management gains and profit

enhancement. Aperam targets a contribution to EBITDA of a total amount of USD 475 million by end of 2015 and of USD 575 million by end of 2017, since the beginning of 2011.

8 Subject to eligible collateral available. The Borrowing base facility has been reduced from USD 500 million to USD 400 million as from December 1, 2015.