Aperam S.A. / Key word(s): Quarter Results
First quarter 2020 results
06-May-2020 / 07:00 CET/CEST
"A seasonally normal quarter until the COVID impact in March"
Luxembourg, May 6, 2020 (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, 2020.
Highlights
· Health and Safety: LTI frequency rate of 1.9x in Q1 2020
compared to 1.9x in Q4 2019
· Steel shipments of 438 thousand tonnes in Q1 2020, 9.0%
increase compared to steel shipments of 402 thousand tonnes in
Q4 2019
· Adj EBITDA of EUR 70 million in Q1 2020, compared to EUR 85
million in Q4 2019
· Net income of EUR 29 million in Q1 2020, compared to EUR 29
million in Q4 2019
· Basic earnings per share of EUR 0.36 in Q1 2020, compared to
EUR 0.36 in Q4 2019
· Cash flow from operations amounted to EUR 63 million in Q1
2020, compared to EUR 162 million in Q4 2019
· Free cash flow before dividend of EUR 18 million in Q1 2020,
compared to EUR 140 million in Q4 2019, including EUR 30
million from the divestment of the entire Gerdau stake
· Net financial debt of EUR 108 million as of March 31, 2020,
compared to EUR 75 million as of December 31, 2019
Strategic initiatives
· Leadership Journey?(R)2 Phase 3:? The annualized gains
reached EUR 23 million in Q1 2020. Aperam realized cumulative
annualized gains of EUR 146 million at the end of Q1 2020,
compared to the target of EUR 200 million by the end of 2020
Prospects
· Adj EBITDA in Q2 2020 is expected to decrease versus Q1 2020
due to up to 25% expected lower volumes
· Q2 2020 free cash flow is expected to be positive. Net
financial debt is expected to increase slightly
Timoteo Di Maulo, CEO of Aperam, commented:
"We started well into the year with a seasonal volume recovery
and the exhaustion of some import quotas increasing demand for
domestically produced material although prices remained low.
Towards the end of the quarter we faced significant COVID-19
related effects from temporary plant shutdowns as we continue to
do everything we can to support and look after our employees and
the people we serve. Looking ahead our order book indicates a
clear drop in volumes for the second quarter that will impact
earnings. We have taken all necessary operational and financial
mitigation measures. We continue to focus on Aperam's solid cash
generation, ample liquidity and strong balance sheet which will
allow us to emerge stronger from this crisis."
Financial Highlights (on the basis of financial information prepared under
IFRS)
(in millions of Euros, unless otherwise Q1 20 Q4 19 Q1 19
stated)
Sales 1,049 1,000 1,178
Operating income 34 59 46
Net income attributable to equity holders of 29 29 25
the parent
Basic earnings per share (EUR) 0.36 0.36 0.30
Diluted earnings per share (EUR) 0.36 0.36 0.30
Free cash flow before dividend and share 18 140 24
buy-back
Net Financial Debt (at the end of the period) 108 75 106
Adj. EBITDA 70 85 81
Exceptional items - 17 -
EBITDA 70 102 81
Adj. EBITDA/tonne (EUR) 160 211 162
EBITDA/tonne (EUR) 160 254 162
Steel shipments (000t) 438 402 501
Health & Safety results
Health and Safety performance based on Aperam personnel figures and
contractors' lost time injury frequency rate was 1.9x in the first quarter
of 2020 compared to 1.9x in the fourth quarter of 2019.
Financial results analysis for the three-month period ending March 31, 2020
Sales for the first quarter of 2020 increased by 5% to EUR 1,049 million
compared to EUR 1,000 million for the fourth quarter of 2019. Steel
shipments increased from 402 thousand tonnes in the fourth quarter of 2019,
to 438 thousand tonnes in the first quarter of 2020.
EBITDA decreased during the quarter to EUR 70 million from EUR 102 million
for the fourth quarter of 2019 (including exceptional gains of EUR 17
million for PIS/Cofins tax credits related to prior periods recognized in
Brazil). Europe benefited from seasonally higher volumes while Brazil
declined due to seasonal factors. Prices remained under pressure. Lower raw
material prices caused significant negative inventory valuation effects.
Also COVID-19 related costs burdened EBITDA due to temporary plant closures
and transportation disruptions starting mid March.
Depreciation and amortization was EUR (36) million for the first quarter of
2020.
Aperam had an operating income for the first quarter of 2020 of EUR 34
million compared to an operating income of EUR 59 million for the previous
quarter.
Financing costs including the FX and derivatives result for the first
quarter of 2020 were EUR (7) million, including cash cost of financing of
EUR (3) million.
Income tax benefit for the first quarter of 2020 was EUR 2 million.
The Company recorded a net income of EUR 29 million for the first quarter of
2020.
Cash flows from operations for the first quarter of 2020 were positive at
EUR 63 million, with a working capital increase of EUR 21 million. CAPEX for
the first quarter was EUR (45) million.
Free cash flow before dividend for the first quarter of 2020 amounted to EUR
18 million.
During the first quarter of 2020, the cash returns to shareholders amounted
to EUR 32 million, consisting fully of dividend.
Operating segment results analysis
Stainless & Electrical Steel (1)
(in millions of Euros, unless otherwise Q1 20 Q4 19 Q1
stated) 19
Sales 827 808 931
Adjusted EBITDA 53 71 52
Exceptional items - 16 -
EBITDA 53 87 52
Depreciation, amortisation & impairment (30) (34) (30)
Operating income 23 53 22
Steel shipments (000t) 426 402 479
Average steel selling price (EUR/t) 1,876 1,843 1,87
1
(1) Amounts are shown prior to intra-group eliminations
The Stainless & Electrical Steel segment had sales of EUR 827 million for
the first quarter of 2020. This represents a 2.4% increase compared to sales
of EUR 808 million for the fourth quarter of 2019. Steel shipments during
the first quarter were 426 thousand tonnes, an increase of 6.0% compared to
shipments of 402 thousand tonnes during the previous quarter. Volumes in
Europe increased seasonally and also benefited from the anti dumping
investigation on hot rolled coil against China, Indonesia and Taiwan, while
volumes declined seasonally in Brazil. Average steel selling prices for the
Stainless & Electrical Steel segment increased by 1.8% compared to the
previous quarter.
The segment generated EBITDA of EUR 53 million for the first quarter of 2020
compared to EUR 87 million for the fourth quarter of 2019 including
exceptional gains of EUR 16 million in Brazil for PIS/Cofins tax credits
related to prior periods. The positive impact from higher volumes in Europe
was fully compensated by negative inventory valuation effects from raw
material pricing and COVID-19 related costs.
Depreciation and amortisation expense was EUR (30) million for the first
quarter of 2020.
The Stainless & Electrical Steel segment had an operating income of EUR 23
million for the first quarter of 2020 compared to an operating income of EUR
53 million for the fourth quarter of 2019.
Services & Solutions(1)
(in millions of Euros, unless otherwise Q1 20 Q4 19 Q1
stated) 19
Sales 450 382 520
Adjusted EBITDA 9 4 16
Exceptional items - 1 -
EBITDA 9 5 16
Depreciation & amortisation (3) (5) (2)
Operating income 6 - 14
Steel shipments (000t) 186 144 214
Average steel selling price (EUR/t) 2,331 2,470 2,31
3
(1) Amounts are shown prior to intra-group eliminations
The Services & Solutions segment had sales of EUR 450 million for the first
quarter of 2020, representing an increase of 17.8% compared to sales of EUR
382 million for the fourth quarter of 2019. For the first quarter of 2020,
steel shipments were 186 thousand tonnes compared to 144 thousand tonnes
during the previous quarter. The Services & Solutions segment had lower
average steel selling prices during the period compared to the previous
period.
The segment generated EBITDA of EUR 9 million for the first quarter of 2020
compared to EBITDA of EUR 5 million, including EUR 1 million of PIS/Cofins
credits for the fourth quarter of 2019. EBITDA increased mainly due to a
pronounced 29% increase in volumes quarter on quarter that was more than
compensated for negative inventory valuation effects and COVID-19 related
costs from the temporary closure of our service center in Italy.
Depreciation and amortisation was EUR (3) million for the first quarter of
2020.
The Services & Solutions segment had an operating income of EUR 6 million
for the first quarter of 2020 compared to an operating income of less than
EUR 1 million for the fourth quarter of 2019.
Alloys & Specialties(1)
(in millions of Euros, unless otherwise Q1 20 Q4 19 Q1 19
stated)
Sales 155 160 153
EBITDA 9 14 12
Depreciation & amortisation (3) (1) (2)
Operating income 6 13 10
Steel shipments (000t) 9 9 10
Average steel selling price (EUR/t) 16,572 16,38 15,303
4
(1) Amounts are shown prior to intra-group eliminations
The Alloys & Specialties segment had sales of EUR 155 million for the first
quarter of 2020, representing a decrease of 3.1% compared to EUR 160 million
for the fourth quarter of 2019. Steel shipments were stable during the first
quarter of 2020 at 9 thousand tonnes. Average steel selling prices were
slightly higher during the quarter.
The Alloys & Specialties segment achieved EBITDA of EUR 9 million for the
first quarter of 2020 compared to EUR 14 million for the fourth quarter of
2019. The decrease in EBITDA was due to COVID-19 related disruptions that
also impacted shipments due to temporary plant closures. The segment also
recorded negative raw material induced inventory valuation effects.
Depreciation and amortisation expense for the first quarter of 2020 was EUR
(3) million.
The Alloys & Specialties segment had an operating income of EUR 6 million
for the first quarter of 2020 compared to an operating income of EUR 13
million for the fourth quarter of 2019.
Recent developments
· On February 26, 2020, Aperam announced the publication of its Annual
Report 2019 (Link [1]).
· On March 19, 2020, in the context of the coronavirus (COVID-19)
outbreak, Aperam announced additional actions to protect its employees and
contractors.
· On April 1, 2020, Aperam announced a prudent deferral of the start of
its share buy back program in the context of COVID-19.
· On April 3, 2020, Aperam announced the publication of the convening
notice (Link [2]) for its Annual General Meeting and Extraordinary General
Meeting of shareholders, to be held on Tuesday May 5, 2020 without
physical presence as permitted by Luxembourg law in context of the
Covid-19 outbreak. Arrangements were made to provide for the opportunity
for shareholders to vote electronically and by proxy voting.
· On April 7, 2020, Aperam announced the appointment of Sudhakar Sivaji as
the Company's new Chief Financial Officer, following the resignation of
Sandeep Jalan. Sudhakar Sivaji, 40, will become a member of Aperam's
Leadership Team and CFO of Aperam effective May 6, 2020.
· On April 15 and 20, 2020, Aperam announced shareholding notifications by
Société Générale SA for respectively crossing upwards and downwards the 5%
voting rights threshold with reference to Transparency Law.
· On April 30, 2020, Aperam announced the publication of its "made for
life" report for 2019, which constitutes Aperam's sustainability report.
· On May 5, 2020, Aperam announced that the Annual and Extraordinary
General Meetings of Shareholders of Aperam held in Luxembourg on May 5,
2020 approved all resolutions on the agenda by a large majority.
New developments
· On May 6, 2020, Aperam announced the nomination of Geert Verbeek, as CTO
and member of the Leadership Team with responsibilities for Health, Safety
& Environment, Industrial Risk & Innovation and Purchasing.
Investor conference call / webcast
Aperam management will host a conference call / webcast for members of the
investment community to discuss the first quarter 2020 financial performance
at the following time:
Date New York London Luxembourg
Wednesday, 09:30 am 02:30 pm 03:30 pm
May 6, 2020
Link to the webcast:
https://channel.royalcast.com/webcast/aperam/20200506_1/ [3]
The dial-in numbers for the call are: international +44 (0) 20 3003 2666;
USA +1 212 999 6659 . The conference password is Aperam.
A replay of the conference call will be available for one year at
https://channel.royalcast.com/webcast/aperam/20200506_1/ [3]
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 a flat Stainless and Electrical steel capacity of 2.5 million
tonnes in Brazil and Europe and is a leader in high value specialty
products. In addition to its industrial network, spread over six production
facilities in Brazil, Belgium and France, Aperam has a highly integrated
distribution, processing and services network and a unique capability to
produce stainless and special steels from low cost biomass (charcoal made
from its own FSC-certified forestry).
In 2019, Aperam had sales of EUR 4,240 million and steel shipments of 1.79
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. In
particular, the length and severity of the recent COVID-19 (coronavirus)
outbreak, including its impacts in the sector, macroeconomic conditions and
in Aperam's principal local markets may cause our actual results to be
materially different than those expressed in our forward-looking statements.
APERAM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(in million of EURO) March 31, December 31, March 31,
2020 2019 2019
ASSETS
Cash & cash equivalents (C) 297 375 342
Inventories, trade receivables 641 655 773
and trade payables
Prepaid expenses and other 85 84 86
current assets
Total Current Assets & Working 1,023 1,114 1,201
Capital
Goodwill and intangible assets 445 479 494
Property, plant and equipment 1,555 1,653 1,605
(incl. Biological assets)
Investments in associates, 4 4 33
joint ventures and other
Deferred tax assets 126 128 160
Other non-current assets 70 81 97
Total Assets (net of Trade 3,223 3,459 3,590
Payables)
LIABILITIES AND SHAREHOLDERS'
EQUITY
Short-term debt and current 40 85 272
portion of long-term debt (B)
Accrued expenses and other 274 263 267
current liabilities
Total Current Liabilities 314 348 539
(excluding Trade Payables)
Long-term debt, net of current 365 365 176
portion (A)
Deferred employee benefits 146 146 148
Deferred tax liabilities 124 130 130
Other long-term liabilities 45 52 65
Total Liabilities (excluding 994 1,041 1,058
Trade Payables)
Equity attributable to the 2,225 2,414 2,528
equity holders of the parent
Non-controlling interest 4 4 4
Total Equity 2,229 2,418 2,532
Total Liabilities and 3,223 3,459 3,590
Shareholders' Equity (excluding
Trade Payables)
Net Financial Debt (D = A+B-C) 108 75 106
APERAM CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in million of EURO) Three Months Ended
March 31, December 31, 2019 March 31,
2020 2019
Sales 1,049 1,000 1,178
Adjusted EBITDA (E = C-D) 70 85 81
Adjusted EBITDA margin 6.7% 8.5% 6.9%
(%)
Exceptional items (D) - 17 -
EBITDA (C = A-B) 70 102 81
EBITDA margin % 6.7% 10.2% 6.9%
Depreciation, (36) (43) (35)
amortisation & Impairment
(B)
Operating income (A) 34 59 46
Operating margin % 3.2% 5.9% 3.9%
Financing costs, net (7) (2) (14)
Income before taxes 27 57 32
Income tax benefit 2 (28) (7)
(expense)
Effective tax rate % (8.0)% 50.4% 22.8%
Net income attributable 29 29 25
to equity holders of the
parent
Basic earnings per share 0.36 0.36 0.30
(EUR)
Diluted earnings per 0.36 0.36 0.30
share (EUR)
Weighted average common 79,816 79,818 83,536
shares outstanding (in
thousands)
Diluted weighted average 80,076 80,078 83,774
common shares outstanding
(in thousands)
APERAM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in million of EURO) Three Months Ended
March 31, December 31, 2019 March 31,
2020 2019
Operating income 34 59 46
Depreciation, 36 43 35
amortisation & Impairment
Change in working capital (21) 70 (19)
Income tax (paid) / (3) (6) 2
refund
Interest paid, (net) (1) (1) (1)
Other operating 18 (3) 8
activities (net)
Net cash provided by 63 162 71
operating activities (A)
Purchase of PPE, (45) (52) (47)
intangible and biological
assets (CAPEX)
Other investing - 30 -
activities (net)
Net cash used in (45) (22) (47)
investing activities (B)
Proceeds (payments) from (45) (84) 154
payable to banks and long
term debt
Dividends paid (32) (35) (33)
Other financing (2) (3) (2)
activities (net)
Net cash provided by (79) (122) 119
(used in) financing
activities
Effect of exchange rate (17) - -
changes on cash
Change in cash and cash (78) 18 143
equivalent
Free cash flow before 18 140 24
dividend and share
buy-back (C = A+B)
Appendix 1a - Health & Safety statistics
Health & Safety Statistics Three Months Ended
March 31, December 31, 2019 March
31,
2020
2019
Frequency Rate 1.9 1.9 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
Quarter Ending Stainless & Services & Alloys & Others & Total
Electrical Solutions Specialt Eliminati
Steel ies ons
March 31, 2020
Operational
information
Steel Shipment 426 186 9 (183) 438
(000t)
Average steel 1,876 2,331 16,572 2,332
selling price
(EUR/t)
Financial
information
Sales (EURm) 827 450 155 (383) 1,049
EBITDA (EURm) 53 9 9 (1) 70
Depreciation & (30) (3) (3) - (36)
Amortisation
(EURm)
Operating 23 6 6 (1) 34
income / (loss)
(EURm)
Quarter Ending Stainless & Services & Alloys & Others & Total
Electrical Solutions Specialt Eliminati
Steel ies ons
December 31,
2019
Operational
information
Steel Shipment 402 144 9 (153) 402
(000t)
Average steel 1,843 2,470 16,384 2,393
selling price
(EUR/t)
Financial
information
(EURm)
Sales (EURm) 808 382 160 (350) 1,000
Adjusted EBITDA 71 4 14 (4) 85
(EURm)
Exceptional 16 1 - - 17
items (EURm)
EBITDA (EURm) 87 5 14 (4) 102
Depreciation, (34) (5) (1) (3) (43)
amortisation &
Impairment
(EURm)
Operating 53 - 13 (7) 59
income / (loss)
(EURm)
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:
Adjusted EBITDA: operating income before depreciation, amortization and
impairment expenses and exceptional items.
Adjusted EBITDA/tonne: calculated as Adjusted EBITDA divided by total steel
shipments.
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.
Exceptional items: consists of (i) inventory write-downs equal to or
exceeding 10% of total related inventories values before write-down at the
considered quarter end (ii) restructuring (charges)/gains equal to or
exceeding EUR 10 million for the considered quarter, (iii) capital
(loss)/gain on asset disposals equal to or exceeding EUR 10 million for the
considered quarter or (iv) other non-recurring items equal to or exceeding
EUR 10 million for the considered quarter.
Financing costs: Net interest expense, other net financing costs and foreign
exchange and derivative results.
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 - is targeting cumulated annualized EBITDA gains of
EUR 200 million by year end of 2020.
Dissemination of a Financial Wire News, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
1036857 06-May-2020 CET/CEST
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(END) Dow Jones Newswires
May 06, 2020 01:00 ET (05:00 GMT)
