DJ Aperam S.A.: Second quarter 2019 results
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
(MORE TO FOLLOW) Dow Jones Newswires
July 31, 2019 01:00 ET (05:00 GMT)
DJ Aperam S.A.: Second quarter 2019 results -2-
Steel shipments (000t) 182 214 217 396 447 Average steel selling price 2,374 2,313 2,428 2,341 2,389 (EUR/t) (1) Amounts are shown prior to intra-group eliminations The Services & Solutions segment had sales of EUR 453 million for the second quarter of 2019 compared to EUR 520 million for the first quarter of 2019. For the second quarter of 2019, steel shipments were 182 thousand tonnes compared to 214 thousand tonnes during the previous quarter. The Services & Solutions segment had higher average steel selling prices during the period compared to the previous period. The segment had EBITDA of EUR 16 million for the second quarter of 2019, compared to EUR 16 million for the first quarter of 2019. Lower volumes were compensated by lower costs and the absence of inventory valuation effects. The Services & Solutions segment had an operating income of EUR 12 million for the second quarter of 2019, compared to EUR 14 million for the first quarter of 2019. Alloys & Specialties(1) (in millions of Euros, unless Q2 19 Q1 19 Q2 18 H1 19 H1 18 otherwise stated) Sales 156 153 149 309 280 EBITDA 12 12 16 24 30 Depreciation and amortisation (2) (2) (1) (4) (3) Operating income 10 10 15 20 27 Steel shipments (000t) 9 10 9 19 19 Average steel selling price 16,122 15,303 15,220 15,705 14,082 (EUR/t) (1) Amounts are shown prior to intra-group eliminations The Alloys & Specialties segment had sales of EUR 156 million for the second quarter of 2019 compared to EUR 153 million for the first quarter of 2019. Steel shipments during the second quarter of 2019 were at 9 thousand tonnes compared to 10 thousand tonnes during the first quarter of 2019. Average steel selling prices increased over the quarter. The Alloys & Specialties segment achieved an EBITDA of EUR 12 million for the second quarter of 2019 compared to EUR 12 million for the first quarter of 2019. Lower volumes were compensated by a price/mix improvement. The Alloys & Specialties segment had an operating income of EUR 10 million for the second quarter of 2019 compared to an operating income of EUR 10 million for the first quarter of 2019. Recent developments ? On June 13, 2019, Aperam announced that it has requested to be withdrawn from the credit rating services of S&P Global Ratings and Moody's Investor Service, while reaffirming to maintain investment grade financial ratios: ? On June 27, 2019, Moody's Investors Service withdrew the 'Baa3' long-term issuer rating with stable outlook of Aperam S.A. ? On July 15, 2019, S&P Global Ratings withdrew its 'BBB-' long-term issuer credit rating with stable outlook of Aperam S.A. ? On June 27, 2019, Aperam announces the completion of its share buyback program announced on 6 February 2019. In aggregate, 3,700,000 shares were bought under this Program, representing an equivalent amount of EUR 92.6 million. New developments ? On July 18, 2019, 1,800,0000 shares acquired under the 2018 share buyback program were cancelled in line with the announced purpose of the program. The total number of shares outstanding (Net of Treasury Shares 3,899,921) as of July 18, 2019 is 79,796,359 shares. ? On July 31, 2019, Aperam published its Half-Year Report for the six month period ended June 30, 2019. The report is available in the Luxembourg Stock Exchange's electronic database OAM on www.bourse.lu and on www.aperam.com under Investors > Investors Essentials > Financial Reports section. ? On July 31, 2019, Aperam announced the resignation of Mrs. Laurence Mulliez for personal considerations effective August 1, 2019. Mrs. Mulliez joined the Board in May 2011 and chaired its Audit and Risk Management Committee since May 2013. The members of the Board of Directors extended their warmest gratitude and appreciation for Mrs. Mulliez's valuable contribution to the Board. Mrs. Bernadette Baudier will replace Mrs. Mulliez as Chairperson of the Audit and Risk Management Committee. Investor conference call Aperam management will host a conference call for members of the investment community to discuss the second quarter of 2019 financial performance at the following time: Date New York London Luxembourg Wednesday, 08:00 am 13:00 pm 14:00 pm July 31, 2019 The dial-in numbers for the call are: France (+33 (0) 1767 00794); USA (+1 631 510 7495) and international (+44 (0) 2071 928000). The participant access code is: 6091614#. A replay of the conference call will be available until August 7, 2019: France (+33 (0) 170950348); USA (+1 (917) 677-7532) and international (+44 (0) 3333 009785). The participant access code is 6091614#. Contacts Corporate Communications / Laurent Beauloye: +352 27 36 27 103 Investor 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) June 30, March 31, June 30, 2019 2019 2018 ASSETS Cash & cash equivalents (C) 189 342 217 Inventories, trade receivables and 747 773 702 trade payables Prepaid expenses and other current 84 86 89 assets Total Current Assets & Working 1,020 1,201 1,008 Capital Goodwill and intangible assets 491 494 486 Property, plant and equipment (incl. 1,598 1,605 1,506 Biological assets) Investments in associates, joint 34 33 31 ventures and other Deferred tax assets 163 160 172 Other non-current assets 80 97 130 Total Assets (net of trade payables) 3,386 3,590 3,333 LIABILITIES AND SHAREHOLDERS' EQUITY Short-term debt and current portion 190 272 235 of long-term debt (B) Accrued expenses and other current 303 267 295 liabilities Total Current Liabilities (excluding 493 539 530 trade payables) Long-term debt, net of current 175 176 2 portion (A) Deferred employee benefits 146 148 155 Deferred tax liabilities 129 130 133 Other long-term liabilities 56 65 106 Total Liabilities (excluding trade 999 1,058 926 payables) Equity attributable to the equity 2,383 2,528 2,403 holders of the parent Non-controlling interest 4 4 4 Total Equity 2,387 2,532 2,407 Total Liabilities and Shareholders' 3,386 3,590 3,333 Equity (excluding trade payables) Net Financial Debt (D = A+B-C) * 176 106 20 * Increase in Net Financial Debt by EUR128 million from EUR48 million as of December 31, 2018 to EUR176 million as of June 30, 2019 primarily due to accounting effects (+EUR56 million out of which IFRS 16 Leases +EUR29 million and Convertible Bonds 2021 repurchases +EUR27 million), share buyback (+EUR93 million), dividend paid (+EUR72 million) and other items (+EUR3 million), partly offset by free cash-flow generated during the first six months (-EUR96 million).
(MORE TO FOLLOW) Dow Jones Newswires
July 31, 2019 01:00 ET (05:00 GMT)
DJ Aperam S.A.: Second quarter 2019 results -3-
APERAM CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (in million Three Months Ending Six Months Ending of EURO) June 30, March 31, June 30, June 30, June 30, 2019 2019 2018 2019 2018 Sales 1,090 1,178 1,218 2,268 2,434 EBITDA (C = 95 81 150 176 291 A-B) EBITDA 8.7% 6.9% 12.3% 7.8% 12.0% margin % Depreciation (36) (35) (35) (71) (70) and amortisation (B) Operating 59 46 115 105 221 income (A) Operating 5.4% 3.9% 9.4% 4.6% 9.1% margin % Result from - - 1 - 1 other investments and associates Net interest (5) (16) (5) (21) (10) expense and other net financing costs Foreign (1) 2 (3) 1 1 exchange and derivative gains / (losses) Income 53 32 108 85 213 before taxes Income tax 4 (7) (28) (3) (48) benefit / (expense) Effective -8.0% 22.8% 25.7% 3.7% 22.6% tax rate % Net income 57 25 80 82 165 attributable to equity holders of the parent Basic 0.69 0.30 0.94 0.99 1.93 earnings per share (EUR) Diluted 0.69 0.30 0.73 0.99 1.57 earnings per share (EUR) Weighted 81,583 83,536 84,990 82,554 85,151 average common shares outstanding (in thousands) * Diluted 82,644 83,774 92,931 82,895 93,326 weighted average common shares outstanding (in thousands) * Number of shares outstanding as of June 30, 2019 (in thousands): 79,796 (85,496 issued shares, net of 5,700 treasury shares) APERAM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (in millions Three Months Ending Six Months Ending of Euros) June 30, March 31, June 30, June 30, June 30, 2018 2019 2019 2019 2018 Operating 59 46 115 105 221 income Depreciation 36 35 35 71 70 & amortisation Change in 32 (19) (18) 13 (134) working capital Income tax - 2 (18) 2 (21) (paid) / refund Interest (2) (1) (1) (3) (2) paid, (net) Other (28) 8 (12) (20) 9 operating activities (net) Net cash 97 71 101 168 143 provided by operating activities (A) Purchase of (26) (47) (41) (73) (88) PPE, intangible and biological assets (CAPEX) Other 1 - 2 1 3 investing activities (net) Net cash (25) (47) (39) (72) (85) used in investing activities (B) Proceeds (91) 154 (27) 63 (26) (payments) from payable to banks and long term debt Purchase of (93) - (55) (93) (55) treasury stock Dividend (39) (33) (35) (72) (63) paid Finance (2) (2) - (4) - lease payments Net cash (225) 119 (117) (106) (144) used in financing activities Effect of - - (2) - (3) exchange rate changes on cash Change in (153) 143 (57) (10) (89) cash and cash equivalent Free cash 72 24 62 96 58 flow before dividend and share buy-back (C = A+B) Appendix 1a - Health & Safety statistics Health & Safety Three Months Ending Statistics June 30, March December 31, 2018 31, 2019 2019 Frequency Rate 1.2 1.1 0.8 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 Ending Stainless & Services & Alloys & Others & Total June 30, 2019 Electrical Solutions Specialt eliminati Steel ies ons Operational information Steel Shipment 440 182 9 (166) 465 (000t) Average steel 1,856 2,374 16,122 2,272 selling price (EUR/t) Financial information (EURm) Sales 842 453 156 (361) 1,090 EBITDA 79 16 12 (12) 95 Depreciation & (30) (4) (2) - (36) amortisation Operating 49 12 10 (12) 59 income / (loss) Quarter Ending Stainless & Services & Alloys & Others & Total March 31, 2019 Electrical Solutions Specialt eliminati Steel ies ons Operational information Steel Shipment 479 214 10 (202) 501 (000t) Average steel 1,871 2,313 15,303 2,272 selling price (EUR/t) Financial information (EURm) Sales 931 520 153 (426) 1,178 EBITDA 52 16 12 1 81 Depreciation & (30) (2) (2) (1) (35) amortisation Operating 22 14 10 - 46 income 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 and share buy-back: 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: 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(R) 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(R) - the Transformation Program - was initially targeting EUR 150 million of additional EBITDA gains per year by end of 2020. In February 2019, the
(MORE TO FOLLOW) Dow Jones Newswires
July 31, 2019 01:00 ET (05:00 GMT)
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. Attachment Document title: Aperam Q2 2019 ER_EN Document: http://n.eqs.com/c/fncls.ssp?u=KQHUXPWYGN [1] Dissemination of a Financial Wire News, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement. 849159 31-Jul-2019 CET/CEST 1: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=728df0e341d781eee01b83c8f2227e35&application_id=849159&site_id=vwd&application_name=news
(END) Dow Jones Newswires
July 31, 2019 01:00 ET (05:00 GMT)