First quarter 2019 results - “Resilient results despite a weak
market environment in Europe and a seasonally weak Brazil”
Luxembourg, May 8, 2019 (07:00 CET) - Aperam (referred to
as “Aperam” or the “Company”) (Amsterdam, Luxembourg, Paris,
Brussels: APAM, NYRS: APEMY), announced today results for the three
months ending March 31, 2019
Highlights
- Health and Safety: LTI
frequency rate of 1.1x in Q1 2019 compared to 0.8x in Q4 2018.
- Steel shipments of 501 thousand
tonnes in Q1 2019, a 4.4% increase compared to steel shipments of
480 thousand tonnes in Q4 2018.
- EBITDA of EUR 81 million in Q1
2019, compared to EUR 90 million in Q4 2018.
- Net income of EUR 25 million in
Q1 2019, compared to EUR 49 million in Q4 2018.
- Basic earnings per share of EUR
0.30 in Q1 2019, compared to EUR 0.59 in Q4 2018.
- Cash flow from operations
amounted to EUR 71 million in Q1 2019, compared to EUR 88 million
in Q4 2018.
- Free cash flow before dividend
of EUR 24 million in Q1 2019, compared to EUR 35 million in Q4
2018.
- Net financial debt of EUR 106
million as of March 31, 2019, compared to EUR 48 million as of
December 31, 2018.
|
Strategic initiatives
- Leadership Journey®2
Phase 3: annualized gains of EUR 34 million were
added during the quarter, bringing the total annualized gains to
EUR 67 million at the end of Q1 2019, compared to the target of EUR
200 million by the end of 2020.
- Investment projects: The
investment in a new Cold Rolling and Annealing and Pickling Line in
Genk is on track.
|
Prospects
- EBITDA in Q2 2019 is expected
to increase compared to Q1 2019.
- Net financial debt is expected
to remain at low levels in Q2 2019.
|
Timoteo Di Maulo, CEO of Aperam, commented:“Thanks to our
self help measures, we achieved resilient results in the first
quarter 2019 despite a weak market environment in Europe due to the
import flood last quarter, and a seasonally weak market environment
in Brazil. Looking ahead despite soft economic conditions in Europe
we expect results to improve thanks to the Top Line Strategy and
Leadership Journey® gains. Also further discussions with the
European Commission are ongoing to implement necessary fair trade
measures for developing countries that are currently exempt from
the safeguard, such as Indonesia.” |
Financial Highlights (on the basis of financial information
prepared under IFRS)
(EURO million) unless otherwise stated |
Q1 19 |
Q4 18 |
Q1 18 |
Sales |
1,178 |
1,120 |
1,216 |
Operating income |
46 |
52 |
106 |
Net income attributable to equity holders of the parent |
25 |
49 |
85 |
Basic earnings per share (EUR) |
0.30 |
0.59 |
0.99 |
Diluted earnings per share (EUR) |
0.30 |
0.37 |
0.83 |
|
|
|
|
Free cash flow before dividend |
24 |
35 |
(4) |
Net Financial Debt / (Net Cash) (at the end of the period) |
106 |
48 |
(32) |
|
|
|
|
EBITDA |
81 |
90 |
141 |
|
|
|
|
EBITDA/tonne (EUR) |
162 |
188 |
273 |
|
|
|
|
Steel shipments (000t) |
501 |
480 |
517 |
Health & Safety results
Health and Safety performance based on Aperam
personnel figures and contractors’ lost time injury frequency rate
was 1.1x in the first quarter of 2019 compared to 0.8x in the
fourth quarter of 2018.
Financial results analysis for the three-month period
ending March 31, 2019
Sales for the first quarter of 2019 increased by
5.2%, at EUR 1,178 million compared to EUR 1,120 million for the
fourth quarter of 2018. Steel shipments increased from 480 thousand
tonnes in the fourth quarter of 2018, to 501 thousand tonnes in the
first quarter of 2019.
EBITDA was EUR 81 million for the first quarter
of 2019 compared to EUR 90 million for the fourth quarter of 2018.
Group EBITDA was negatively impacted due to lag effects from the
import flood in Europe during Q4 as destocking kept pressure on
base prices, while Brazil declined due to seasonal factors. Also
negative inventory valuation effects remained at a high level. The
positive effect from the Leadership Journey®, and the Top Line
strategy enabled resilient results over the quarter.
Depreciation and amortization was EUR (35)
million for the first quarter of 2019.
Aperam had an operating income for the first
quarter of 2019 of EUR 46 million compared to an operating income
of EUR 52 million for the previous quarter.
Net interest expense and other financing costs
for the first quarter of 2019 were EUR (16) million, including cash
cost of financing of EUR (2) million. During the quarter, the
Company booked an exceptional net financial loss of EUR (11)
million, mainly related to the accounting effects linked to the
acceptance by bondholders of the invitation to sell their
Convertible Bonds 2021 pursuant to a fixed price tender offer
process. Realized and unrealized foreign exchange and derivative
gains were EUR 2 million for the first quarter of 2019.
Income tax expense for the first quarter of 2019
was EUR (7) million.
The Company recorded a net income of EUR 25
million for the first quarter of 2019.
Cash flows from operations for the first quarter
of 2019 were positive at EUR 71 million, despite a working capital
increase of EUR (19) million, mainly due to higher prices and
activity. CAPEX for the first quarter was EUR (47) million.
Free cash flow before dividend for the first
quarter of 2019 amounted to EUR 24 million.
During the first quarter of 2019, the cash
returns to shareholders amounted to EUR (33) million, via
dividends. During the first quarter of 2019, the Company
repurchased Convertible Bonds 2021 with a nominal amount of USD
72.4 million (EUR 63 million) for a total consideration of EUR 63
million.
Operating segment results analysis
Stainless & Electrical Steel
(1)
(EURO million) unless otherwise stated |
Q1 19 |
Q4 18 |
Q1 18 |
Sales |
931 |
913 |
994 |
EBITDA |
52 |
87 |
111 |
Depreciation and amortisation |
(30) |
(34) |
(30) |
Operating income |
22 |
53 |
81 |
Steel shipments (000t) |
479 |
470 |
496 |
Average steel selling price (EUR/t) |
1,871 |
1,859 |
1,949 |
(1) Amounts are shown prior to intra-group
eliminations
The Stainless & Electrical Steel segment had
sales of EUR 931 million for the first quarter of 2019. This
represents a 2.0% increase compared to sales of EUR 913 million for
the fourth quarter of 2018. Steel shipments during the first
quarter were 479 thousand tonnes. This is an increase of 1.9%
compared to shipments of 470 thousand tonnes during the previous
quarter. The volume increase was mainly due to a soft seasonal
recovery in Europe. Overall, average steel selling prices for the
Stainless & Electrical Steel segment remained stable compared
to the previous quarter.
The segment recorded EBITDA of EUR 52 million
for the first quarter of 2019 compared to EUR 87 million for the
fourth quarter of 2018. Despite higher volumes and a stable mix, a
seasonally weak quarter in Brazil, challenging market conditions in
Europe and negative valuation effects on inventories due to lower
raw material prices caused lower earnings compared to the previous
quarter.
Depreciation and amortisation expense was EUR
(30) million for the first quarter of 2019.
The Stainless & Electrical Steel segment had
an operating income of EUR 22 million for the first quarter of 2019
compared to an operating income of EUR 53 million for the fourth
quarter of 2018.
Services & Solutions(1)
(EURO million) unless otherwise stated |
Q1 19 |
Q4 18 |
Q1 18 |
Sales |
520 |
467 |
562 |
EBITDA |
16 |
(3) |
21 |
Depreciation and amortisation |
(2) |
(3) |
(3) |
Operating income / (loss) |
14 |
(6) |
18 |
Steel shipments (000t) |
214 |
181 |
230 |
Average steel selling price (EUR/t) |
2,313 |
2,513 |
2,353 |
(1) Amounts are shown prior to intra-group
eliminations
The Services & Solutions segment had sales
of EUR 520 million for the first quarter of 2019, representing an
increase of 11% compared to EUR 467 million for the fourth quarter
of 2018. For the first quarter of 2019, steel shipments were 214
thousand tonnes compared to 181 thousand tonnes during the previous
quarter. The Services & Solutions segment recorded lower
average steel selling prices during the period compared to the
previous period.
Segment EBITDA at EUR 16 million for the first
quarter of 2019, compared to EUR (3) million for the fourth quarter
of 2018. EBITDA improved quarter on quarter primarily due to higher
shipments and positive inventory effects versus the previous
quarter.
Depreciation and amortisation was EUR (2)
million for the first quarter of 2019.
The Services & Solutions segment had an
operating income of EUR 14 million for the first quarter of 2019
compared to an operating loss of EUR (6) million for the fourth
quarter of 2018.
Alloys & Specialties(1)
(EURO million) unless otherwise stated |
Q1 19 |
Q4 18 |
Q1 18 |
Sales |
153 |
138 |
131 |
EBITDA |
12 |
7 |
14 |
Depreciation and amortisation |
(2) |
(1) |
(2) |
Operating income |
10 |
6 |
12 |
Steel shipments (000t) |
10 |
9 |
10 |
Average steel selling price (EUR/t) |
15,303 |
14,989 |
12,973 |
(1) Amounts are shown prior to intra-group
eliminations
The Alloys & Specialties segment had sales
of EUR 153 million for the first quarter of 2019, representing an
increase of 11% compared to EUR 138 million for the fourth quarter
of 2018. Steel shipments were higher during the first quarter of
2019 at 10 thousand tonnes compared to 9 thousand tonnes during the
fourth quarter of 2018. Average steel selling prices increased over
the quarter.
The Alloys & Specialties segment achieved an
EBITDA of EUR 12 million for the first quarter of 2019 compared to
EUR 7 million for the fourth quarter of 2018. The increase in
EBITDA was predominantly volume related and supplemented by a
positive inventory valuation effect and a better price/mix versus
the previous quarter.
Depreciation and amortisation expense for the
first quarter of 2019 was EUR (2) million.
The Alloys & Specialties segment had an
operating income of EUR 10 million for the first quarter of 2019
compared to an operating income of EUR 6 million for the fourth
quarter of 2018.
Recent developments
- Over the period, from February
11, 2019 to May 6, 2019, Aperam announced several notifications for
Designated Persons in relation to the share buyback.
- On February 25, 2019, Aperam
announced the signature of a financing contract where the EIB will
make available to Aperam an amount of EUR 100 million for advanced
stainless steel manufacturing.
- On February 26, 2019, Aperam
announced the publication of its Annual Report 2018 (Link).
- On March 25, 2019, Aperam
announced the invitation to holders of its outstanding U.S.$300
million 0.625 per cent Net Share Settled Bonds due 2021,
(convertible into common shares of Aperam) to offer to sell their
Bonds pursuant to a fixed price tender offer process.
- On March 25, 2019, Aperam
announced the results in relation to its fixed price tender of its
outstanding U.S.$300 million 0.625 per cent Net Share Settled Bonds
due 2021 (convertible into common shares of Aperam).
- On March 27, 2019, Aperam
announced the Final Purchase Price in relation to its fixed price
tender of its outstanding U.S.$300 million 0.625 per cent Net Share
Settled Bonds due 2021 (convertible into common shares of
Aperam).
- On April 1, 2019, Aperam
announced shareholding notifications by Prudential plc for reaching
and crossing the 5% voting rights threshold with reference to
Transparency Law.
- On April 5, 2019, Aperam
announced the publication of the convening notice for its Annual
General Meeting and Extraordinary General Meeting of shareholders
to be held on May 7, 2019 (Link).
- On April 19, 2019, Aperam
announced the publication of its “made for life” report for 2018,
which constitutes Aperam’s sustainability performance report
(Link). Aperam continues to produce the greenest stainless steel
globally.
- On May 7, 2019, Aperam
announced that the Annual and Extraordinary General Meetings of
Shareholders of Aperam held in Luxembourg on May 7, 2019 approved
all resolutions on the agenda by a large majority.
Investor conference call
Aperam management will host a conference call
for members of the investment community to discuss the first
quarter 2019 financial performance at the following time:
Date |
New York |
London |
Luxembourg |
Wednesday, 8 May 2019 |
8:00 am |
13:00 pm |
14:00 pm |
The dial-in numbers for the call are: France
(+33 (0) 1767 00794); USA (+1 631 510 7495); and international (+44
(0) 2071 928000). Conference ID: 4889473
A replay of the conference call will be
available until 15 May 2019: France (+33 (0) 170950348); USA (+1
(917) 677-7532) and international (+44 (0) 3333 009785). Conference
ID: 4889473
Contacts
Corporate Communications / Laurent Beauloye: +352 27 36 27
103Investor Relations / Thorsten Zimmermann: +352 27 36 27 304
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 spread in six production
facilities located in Brazil, Belgium and France.
In 2018, Aperam had sales of EUR 4,677 million
and steel shipments of 1.97 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 EURO) |
March 31,2019 |
December 31, 2018 |
March 31,2018 |
ASSETS |
|
|
|
Cash & cash equivalents (C) |
342 |
199 |
274 |
Inventories, trade receivables and trade payables |
773 |
744 |
706 |
Prepaid expenses and other current assets |
86 |
77 |
81 |
Total Current Assets & Working Capital |
1,201 |
1,020 |
1,061 |
|
|
|
|
Goodwill and intangible assets |
494 |
490 |
503 |
Property, plant and equipment (incl. Biological assets) |
1,605 |
1,589 |
1,553 |
Investments in associates, joint ventures and other |
33 |
32 |
39 |
Deferred tax assets |
160 |
160 |
188 |
Other assets |
97 |
92 |
152 |
Total Assets |
3,590 |
3,383 |
3,496 |
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
Short-term debt and current portion of long-term debt (B) |
272 |
66 |
240 |
Accrued expenses and other current liabilities |
267 |
270 |
261 |
Total Current Liabilities (excluding Trade Payables) |
539 |
336 |
501 |
|
|
|
|
Long-term debt, net of current portion (A) |
176 |
181 |
2 |
Deferred employee benefits |
148 |
148 |
157 |
Deferred tax liabilities |
130 |
131 |
136 |
Other long-term liabilities |
65 |
68 |
125 |
Total Liabilities |
1,058 |
864 |
921 |
|
|
|
|
Equity attributable to the equity holders of the parent |
2,528 |
2,515 |
2,571 |
Non-controlling interest |
4 |
4 |
4 |
Total Equity |
2,532 |
2,519 |
2,575 |
|
|
|
|
Total Liabilities and Shareholders' Equity |
3,590 |
3,383 |
3,496 |
|
|
|
|
Net Financial Debt / (Net Cash) (D = A+B-C) |
106 |
48 |
(32) |
APERAM CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in million of EURO) |
Three Months Ended |
March 31,2019 |
December 31, 2018 |
March 31,2018 |
Sales |
1,178 |
1,120 |
1,216 |
EBITDA (C = A-B) |
81 |
90 |
141 |
EBITDA margin % |
6.9% |
8.0% |
11.6% |
Depreciation and amortisation (B) |
(35) |
(38) |
(35) |
Operating income (A) |
46 |
52 |
106 |
Operating margin % |
3.9% |
4.6% |
8.7% |
Net interest expense and other net financing costs |
(16) |
11 |
(5) |
Foreign exchange and derivative gains |
2 |
2 |
4 |
Income before taxes |
32 |
65 |
105 |
Income tax expense |
(7) |
(16) |
(20) |
Effective tax rate % |
22.8% |
24.7% |
19.4% |
Net income attributable to equity holders of the parent |
25 |
49 |
85 |
|
|
|
|
Basic earnings per share (EUR) |
0.30 |
0.59 |
0.99 |
Diluted earnings per share (EUR) |
0.30 |
0.37 |
0.83 |
|
|
|
|
Weighted average common shares outstanding (in thousands) |
83,536 |
83,560 |
85,314 |
Diluted weighted average common shares outstanding (in
thousands) |
83,774 |
87,958 |
94,182 |
APERAM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in million of EURO) |
Three Months Ended |
March 31,2019 |
December 31, 2018 |
March 31,2018 |
Operating income |
46 |
52 |
106 |
Depreciation and amortization |
35 |
38 |
35 |
Change in working capital |
(19) |
12 |
(117) |
Income tax (paid) / refund |
2 |
(7) |
(3) |
Interest paid, (net) |
(1) |
(1) |
(1) |
Other operating activities (net) |
8 |
(6) |
22 |
Net cash provided by operating activities (A) |
71 |
88 |
42 |
Purchase of PPE, intangible and biological assets (CAPEX) |
(47) |
(55) |
(47) |
Other investing activities (net) |
- |
2 |
1 |
Net cash used in investing activities (B) |
(47) |
(53) |
(46) |
Net proceeds from banks and long term debt |
154 |
27 |
1 |
Dividends paid |
(33) |
(34) |
(28) |
Other financing activities (net) |
(2) |
(1) |
- |
Net cash provided by / (used in) financing activities |
119 |
(8) |
(27) |
Effect of exchange rate changes on cash |
- |
3 |
(1) |
Change in cash and cash equivalent |
143 |
30 |
(32) |
|
|
|
|
Free cash flow before dividend (C = A+B) |
24 |
35 |
(4) |
Appendix 1a – Health & Safety statistics
Health & Safety Statistics |
Three Months Ended |
March 31, 2019 |
December 31, 2018 |
March 31, 2018 |
Frequency Rate |
1.1 |
0.8 |
1.0 |
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 Ended March 31, 2019 |
Stainless & Electrical Steel |
Services & Solutions |
Alloys & Specialties |
Others & Eliminations |
Total |
Operational information |
|
|
|
|
|
Steel Shipment (000t) |
479 |
214 |
10 |
(202) |
501 |
Average steel selling price (EUR/t) |
1,871 |
2,313 |
15,303 |
|
2,272 |
|
|
|
|
|
|
Financial information |
|
|
|
|
|
Sales (EURm) |
931 |
520 |
153 |
(426) |
1,178 |
EBITDA (EURm) |
52 |
16 |
12 |
1 |
81 |
Depreciation & Amortisation (EURm) |
(30) |
(2) |
(2) |
(1) |
(35) |
Operating income (EURm) |
22 |
14 |
10 |
- |
46 |
Quarter Ended December 31, 2018 |
Stainless & Electrical Steel |
Services & Solutions |
Alloys & Specialties |
Others & Eliminations |
Total |
Operational information |
|
|
|
|
|
Steel Shipment (000t) |
470 |
181 |
9 |
(180) |
480 |
Average steel selling price (EUR/t) |
1,859 |
2,513 |
14,989 |
|
2,280 |
|
|
|
|
|
|
Financial information |
|
|
|
|
|
Sales (EURm) |
913 |
467 |
138 |
(398) |
1,120 |
EBITDA (EURm) |
87 |
(3) |
7 |
(1) |
90 |
Depreciation & Amortisation (EURm) |
(34) |
(3) |
(1) |
- |
(38) |
Operating income / (loss) (EURm) |
53 |
(6) |
6 |
(1) |
52 |
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: 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
and / or Net cash: 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 - was initially targeting EUR 150 million of
additional EBITDA gains per year by end of 2020. In February 2019,
the annualized gains target has been increased by EUR 50 million to
reach EUR 200 million by year end 2020.3 Includes revolving credit
facility of EUR 300 million.
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