Aperam S.A. / Key word(s): 9 Month figures
Aperam S.A.: Third quarter 2019 results: Solid free cash flow despite a
seasonal trough and challenging market conditions
06-Nov-2019 / 07:00 CET/CEST
Third quarter 2019 results1
"Solid free cash flow despite a seasonal trough and challenging market
conditions"
Luxembourg, November 6, 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 September
30, 2019
Highlights
? Health and Safety: LTI frequency rate of 2.2x in Q3 2019
compared to 1.2x in Q2 2019.
? Steel shipments of 418kt in Q3 2019, a 10% decrease compared
to steel shipments of 465kt in Q2 2019.
? EBITDA of EUR 79 million in Q3 2019 versus EUR 95 million in
Q2 2019 and down from EUR 123 million in Q3 2018.
? Net income of EUR 37 million in Q3 2019, compared to EUR 57
million in Q2 2019.
? Basic earnings per share of EUR 0.47 in Q3 2019, compared to
EUR 0.69 in Q2 2019.
? Cash flow from operations amounted to EUR 70 million in Q3
2019, compared to EUR 97 million in Q2 2019.
? Free cash flow before dividend and share buy-back of EUR 45
million in Q3 2019, compared to EUR 72 million in Q2 2019.
? Cash returns to shareholders amounted to EUR 35 million in
Q3 2019, consisting of dividend.
? Net financial debt of EUR 172 million as of September 30,
2019, compared to EUR 176 million as of June 30, 2019.
Strategic initiatives
? Transforming our footprint with state of the art
equipment: CAPEX Guidance 2019 at EUR 150 million.
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 105 million cumulated at end
Q3 2019 with good progress on all pillars.
Prospects
? EBITDA in Q4 2019 is expected to increase slightly compared
to EUR 79 million in Q3 2019.
? Net financial debt is expected to decrease in Q4 2019.
Timoteo Di Maulo, CEO of Aperam, commented:
"Despite the normal Q3 seasonal downturn, intensified import pressure and
market softness we delivered solid results and managed to maintain net debt
at a low level. This underlines the resilience of our business model.
Looking ahead, we expect demand conditions to remain challenging. Further
actions against unfair trade have been initiated this quarter with aim to
restore a level playing field. Meanwhile we continue to strengthen our
operations through ramping up EUR 200 million gains through Phase 3 of the
Leadership Journey(R)."
Financial Highlights (on the basis of financial information prepared under
IFRS)
(in millions of Euros, unless Q3 19 Q2 19 Q3 18 9M 19 9M 18
otherwise stated)
Sales 972 1,090 1,123 3,240 3,557
Operating income 43 59 88 148 309
Net income attributable to equity 37 57 72 119 237
holders of the parent
Basic earnings per share (EUR) 0.47 0.69 0.87 1.46 2.80
Diluted earnings per share (EUR) 0.47 0.69 0.87 1.46 2.46
Free cash flow before dividend and 45 72 15 141 73
share buy-back
Net Financial Debt (at the end of 172 176 64 172 64
the period)
EBITDA 79 95 123 255 414
EBITDA/tonne (EUR) 189 204 263 184 277
Steel shipments (000t) 418 465 467 1,384 1,492
Health & Safety results
Health and Safety performance based on Aperam personnel figures and
contractors' lost time injury frequency rate was 2.2x in the third quarter
of 2019 compared to 1.2x in the second quarter of 2019.
Financial results analysis for the three-month period ending September 30,
2019
Sales for the third quarter of 2019 were EUR 972 million, down from EUR
1,090 million for the second quarter of 2019. Steel shipments decreased from
465 thousand tonnes in the second quarter of 2019 to 418 thousand tonnes in
the third quarter of 2019.
EBITDA was EUR 79 million for the third quarter of 2019 compared to EUR 95
million for the second quarter of 2019. The sequential EBITDA decrease was
mainly due to seasonally lower volumes in Europe, partly balanced by a
positive price / mix effect. Brazil realized a seasonally higher EBITDA
despite temporarily higher iron ore costs. The Leadership Journey(R)
contributed EUR 16 million annualized gains to EBITDA. The cumulative
annualized savings for Phase 3 now stand at EUR 105 million.
Depreciation and amortisation was EUR (36) million for the third quarter of
2019.
Aperam had an operating income for the third quarter of 2019 of EUR 43
million compared to an operating income of EUR 59 million for the previous
quarter.
Net interest expense and other financing costs for the third quarter of 2019
were EUR (4) million. Realized and unrealized foreign exchange and
derivative gains were EUR 3 million for the third quarter of 2019.
Income tax result for the third quarter of 2019 was an income tax expense of
EUR (6) million.
The Company recorded a net income of EUR 37 million for the third quarter of
2019.
Cash flows from operations for the third quarter of 2019 were positive at
EUR 70 million, with a working capital decrease of EUR (2) million. CAPEX
for the third quarter was EUR (26) million.
Free cash flow before dividend and share buy-back for the third quarter of
2019 amounted to EUR 45 million.
During the third quarter of 2019, the cash returns to shareholders amounted
to EUR 35 million, consisting of EUR 35 million in dividends. Total cash
returned to shareholders during the first nine-months of the year 2019
amounted to EUR 200 million consisting of EUR 93 million of share buy-back
and EUR 107 million in dividends.
As of September 30, 2019, shareholders' equity was EUR 2,394 million and net
financial debt was EUR 172 million (as of September 30, 2019, gross
financial debt was EUR 529 million and cash and cash equivalents were EUR
357 million).
The Company had liquidity of EUR 657 million as of September 30, 2019,
consisting of cash and cash equivalents of EUR 357 million and undrawn
credit lines3 of EUR 300 million.
Operating segment results analysis
Stainless & Electrical Steel (1)
(in millions of Euros, unless Q3 19 Q2 19 Q3 18 9M 19 9M 18
otherwise stated)
Sales 771 842 917 2,544 2,927
EBITDA 57 79 101 188 335
Depreciation and amortisation (29) (30) (31) (89) (92)
Operating income 28 49 70 99 243
Steel shipments (000t) 401 440 449 1,320 1,444
Average steel selling price 1,861 1,856 1,983 1,863 1,969
(EUR/t)
(1) Amounts are shown prior to intra-group eliminations
The Stainless & Electrical Steel segment had sales of EUR 771 million for
the third quarter of 2019. This represents a 8.4% decrease compared to sales
of EUR 842 million for the second quarter of 2019. Steel shipments during
the third quarter were 401 thousand tonnes compared to 440 thousand tonnes
during the previous quarter. Seasonal factors, continued high imports into
Europe and weak demand in both Europe and Brazil explain the difference.
Average steel selling prices for the Stainless & Electrical Steel segment
remained stable compared to the previous quarter.
The segment had EBITDA of EUR 57 million for the third quarter of 2019
compared to EUR 79 million for the second quarter of 2019. The decrease in
profitability was primarily driven by lower volumes in Europe. Positive
price/cost and mix effects and positive contributions from the Leadership
Journey(R) were not sufficient to balance the headwind.
The Stainless & Electrical Steel segment had an operating income of EUR 28
million for the third quarter of 2019 compared to an operating income of EUR
49 million for the second quarter of 2019.
Services & Solutions(1)
(in millions of Euros, unless Q3 19 Q2 19 Q3 18 9M 19 9M 18
otherwise stated)
Sales 418 453 489 1,391 1,599
EBITDA 9 16 8 41 46
Depreciation and amortisation (2) (4) (2) (8) (6)
Operating income 7 12 6 33 40
Steel shipments (000t) 166 182 191 562 638
Average steel selling price 2,397 2,374 2,436 2,358 2,403
(EUR/t)
(1) Amounts are shown prior to intra-group eliminations
The Services & Solutions segment had sales of EUR 418 million for the third
quarter of 2019 compared to EUR 453 million for the second quarter of 2019.
For the third quarter of 2019, steel shipments were 166 thousand tonnes
compared to 182 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 9 million for the third quarter of 2019,
compared to EUR 16 million for the second quarter of 2019. Lower costs did
not offset seasonally lower volumes and negative valuation effects.
The Services & Solutions segment had an operating income of EUR 7 million
for the third quarter of 2019, compared to EUR 12 million for the second
quarter of 2019.
Alloys & Specialties(1)
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