Aperam S.A. / Key word(s): Quarter Results
Aperam S.A.: Second quarter 2019 results
31-Jul-2019 / 07:00 CET/CEST
"Improved quarterly operational results in a challenging market environment"
Luxembourg, July 31, 2019 (07:00 CET) - Aperam (referred to as "Aperam" or
the "Company") (Amsterdam, Brussels, Luxembourg, Paris: APAM and NYRS:
APEMY), announced today results for the three month period ending June 30,
2019
Highlights
? Health and Safety: LTI frequency rate of 1.2x in Q2 2019
compared to 1.1x in Q1 2019.
? Steel shipments of 465 kt in Q2 2019, a 7% decrease compared
to steel shipments of 501 kt in Q1 2019.
? EBITDA of EUR 95 million in Q2 2019 versus EUR 81 million in
Q1 2019. H1 2019 EBITDA EUR 176 million, -40% yoy.
? Net income of EUR 57 million in Q2 2019, compared to EUR 25
million in Q1 2019.
? Basic earnings per share of EUR 0.69 in Q2 2019, compared to
EUR 0.30 in Q1 2019.
? Cash flow from operations amounted to EUR 97 million in Q2
2019, compared to EUR 71 million in Q1 2019.
? Free cash flow before dividend and share buy-back of EUR 72
million in Q2 2019, compared to EUR 24 million in Q1 2019.
? Cash returns to shareholders amounted to EUR 132 million in
Q2 2019, consisting of EUR 93 million of share buy-back and
EUR 39 million of dividend.
? Net financial debt of EUR 176 million as of June 30, 2019,
compared to EUR 106 million as of March 31, 2019.
Strategic initiatives
? Transforming our footprint with state of the art
equipment: CAPEX Guidance 2019 updated to EUR 150
million from EUR 175 million before. Genk cold
rolling and annealing & pickling line with a total
investment of EUR 130 million between 2018 and 2020
on track.
? Leadership Journey(R)2 (Phase 3 - Transformation
Program Target EUR 200 million annualized gains by
2020): Gains reached EUR 89 million cumulated at end
Q2 2019 with good progress on all pillars.
? Completion of the 2019 share-buyback: 3.7 million
shares have been bought back for EUR 92.6 million.
New number of shares outstanding as of June 30, 2019
is 79.8 million shares.
Prospects
? EBITDA in Q3 2019 is expected to decrease compared to Q2
2019, due to the seasonal slowdown in Europe, rising imports,
declining demand and low international prices.
? Net financial debt to remain stable at a low level in Q3
2019.
Timoteo Di Maulo, CEO of Aperam, commented:
"Aperam delivered an improved operational performance this quarter despite a
challenging global market environment. Imports start increasing once again
commanding a disproportionate market share and put extreme pressure on
pricing. The measures put in place by the European Commission are
ineffective so far, as Indonesia continues to remain exempted and import
quotas have been increased while demand has dropped.
Looking ahead, to counter these challenges our ability to realize further
gains via the Leadership Journey(R) will be key. We are also confident in
our ability to generate cash flow and rely on a solid balance sheet. We
continue to take all the necessary measures to weather a challenging market
environment."
Financial Highlights (on the basis of financial information prepared under
IFRS)
(in millions of Euros, unless Q2 19 Q1 19 Q2 18 H1 19 H1 18
otherwise stated)
Sales 1,090 1,178 1,218 2,268 2,434
Operating income 59 46 115 105 221
Net income attributable to equity 57 25 80 82 165
holders of the parent
Basic earnings per share (EUR) 0.69 0.30 0.94 0.99 1.93
Diluted earnings per share (EUR) 0.69 0.30 0.73 0.99 1.57
Free cash flow before dividend 72 24 62 96 58
Net Financial Debt (at the end of 176 106 20 176 20
the period)
EBITDA 95 81 150 176 291
EBITDA/tonne (EUR) 204 162 295 182 284
Steel shipments (000t) 465 501 508 966 1,025
Health & Safety results
Health and Safety performance based on Aperam personnel figures and
contractors' lost time injury frequency rate was 1.2x in the second quarter
of 2019 compared to 1.1x in the first quarter of 2019.
Financial results analysis for the three-month period ending June 30, 2019
Sales for the second quarter of 2019 were EUR 1,090 million, down from EUR
1,178 million for the first quarter of 2019. Steel shipments decreased from
501 thousand tonnes in the first quarter of 2019 to 465 thousand tonnes in
the second quarter of 2019.
EBITDA was EUR 95 million for the second quarter of 2019 compared to EUR 81
million for the first quarter of 2019. The sequential EBITDA increase was
mainly due to a partial recovery in base prices and a positive seasonality
in Brazil while the previous quarter additionally suffered from negative
inventory effects. Significantly lower volumes in Europe and temporarily
higher input costs in Brazil had negative effects, partly offset by Phase 3
of the Leadership Journey(R), which continued to progress over the quarter
with annualized gains of EUR 22 million to EBITDA. The cumulative annualized
savings for Phase 3 now stand at EUR 89 million.
Depreciation and amortisation was EUR (36) million for the second quarter of
2019.
Aperam had an operating income for the second quarter of 2019 of EUR 59
million compared to an operating income of EUR 46 million for the previous
quarter.
Net interest expense and other financing costs for the second quarter of
2019 were EUR (5) million. Realized and unrealized foreign exchange and
derivative losses were EUR (1) million for the second quarter of 2019.
Income tax result for the second quarter of 2019 was an income tax benefit
of EUR 4 million mainly due to a tax benefit amounting to a total of EUR 15
million applicable as from 2018.
The Company recorded a net income of EUR 57 million for the second quarter
of 2019.
Cash flows from operations for the second quarter of 2019 were positive at
EUR 97 million, with a working capital decrease of EUR 32 million. CAPEX for
the second quarter was EUR (26) million.
Free cash flow before dividend and share buy-back for the second quarter of
2019 amounted to EUR 72 million.
During the second quarter of 2019, the cash returns to shareholders amounted
to EUR 132 million, consisting of EUR 93 million of share buy-back and EUR
39 million of dividend. Total cash returned to shareholders during the first
semester 2019 amounted to EUR 165 million consisting of EUR 93 million of
share buy-back and EUR 72 million of dividend.
During the second quarter of 2019, the Company repurchased Convertible Bonds
2021 with a nominal amount of USD 137 million (EUR122 million) for a total
consideration of EUR131 million.
As of June 30, 2019, shareholders' equity was EUR 2,387 million and net
financial debt was EUR 176 million (as of June 30, 2019, gross financial
debt was EUR 365 million and cash and cash equivalents were EUR 189
million).
The Company had liquidity of EUR 489 million as of June 30, 2019, consisting
of cash and cash equivalents of EUR 189 million and undrawn credit lines3 of
EUR 300 million.
Operating segment results analysis
Stainless & Electrical Steel (1)
(in millions of Euros, unless Q2 19 Q1 19 Q2 18 H1 19 H1 18
otherwise stated)
Sales 842 931 1,016 1,773 2,010
EBITDA 79 52 123 131 234
Depreciation and amortisation (30) (30) (31) (60) (61)
Operating income 49 22 92 71 173
Steel shipments (000t) 440 479 499 919 995
Average steel selling price 1,856 1,871 1,976 1,864 1,963
(EUR/t)
(1) Amounts are shown prior to intra-group eliminations
The Stainless & Electrical Steel segment had sales of EUR 842 million for
the second quarter of 2019. This represents a 9.6% decrease compared to
sales of EUR 931 million for the first quarter of 2019. Steel shipments
during the second quarter were 440 thousand tonnes compared to 479 thousand
tonnes during the previous quarter. The weak economic environment led to
contraction of demand in Europe while Brazil saw the benefit of a seasonally
stronger quarter. Overall, average steel selling prices for the Stainless &
Electrical Steel segment slightly decreased compared to the previous quarter
due to a lower nickel price and mix effects.
The segment had EBITDA of EUR 79 million for the second quarter of 2019
compared to EUR 52 million for the first quarter of 2019. The increase in
profitability was primarily driven by partially recovering base prices in
Europe and the seasonal improvement in Brazil while the previous quarter
additionally suffered from negative inventory effects. The Leadership
Journey(R) contributed positively but significantly lower volumes in Europe
and temporarily higher costs in Brazil burdened the result meaningfully.
The Stainless & Electrical Steel segment had an operating income of EUR 49
million for the second quarter of 2019 compared to an operating income of
EUR 22 million for the first quarter of 2019.
Services & Solutions(1)
(in millions of Euros, unless Q2 19 Q1 19 Q2 18 H1 19 H1 18
otherwise stated)
Sales 453 520 548 973 1,110
EBITDA 16 16 17 32 38
Depreciation and amortisation (4) (2) (1) (6) (4)
Operating income 12 14 16 26 34
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