DJ Second quarter 2020 results: Resilient results despite the COVID induced demand drop
Aperam S.A. / Key word(s): Quarter Results
Second quarter 2020 results: Resilient results despite the COVID induced
demand drop
29-Jul-2020 / 07:00 CET/CEST
Luxembourg, July 29, 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 June 30, 2020.
Highlights
· Health and Safety: LTI frequency rate of 0.6x in Q2 2020
compared to 1.9x in Q1 2020
· Steel shipments of 376 thousand tonnes in Q2 2020, 14%
decrease compared to steel shipments of 438 thousand tonnes in
Q1 2020
· EBITDA of EUR 49 million in Q2 2020, compared to EUR 70
million in Q1 2020
· Net income of EUR 21 million in Q2 2020, compared to EUR 29
million in Q1 2020
· Basic earnings per share of EUR 0.27 in Q2 2020, compared to
EUR 0.36 in Q1 2020
· Cash flow from operations amounted to EUR 57 million in Q2
2020, compared to EUR 63 million in Q1 2020
· Free cash flow before dividend of EUR 34 million in Q2 2020,
compared to EUR 18 million in Q1 2020
· Net financial debt of EUR 123 million as of June 30, 2020,
compared to EUR 108 million as of March 31, 2020
Strategic initiatives
· Leadership Journey?(R)2 Phase 3:? The annualized gains
reached EUR 21 million in Q2 2020. Aperam realized cumulative
annualized gains of EUR 171 million at the end of Q2 2020,
compared to the target of EUR 200 million by the end of 2020
Prospects
· EBITDA in Q3 2020 is expected to remain at a comparable
level versus Q2 2020
· Net financial debt is expected to reach its seasonal peak in
Q3 2020
Timoteo Di Maulo, CEO of Aperam, commented:
"I'm proud to report that we have kept our workforce on our
sites safe throughout the COVID crisis in the second quarter,
thanks to our strict protocols and the full collaboration of our
people. Our flexible and resilient business model enabled us to
cope well with the sudden demand drop. Strict cost management
across all divisions, stable contribution from Alloys and a good
performance in Brazil allowed us to remain profitable and cash
generative. Although demand has started to recover, we expect it
to remain clearly below the historical normal level. Unrevised
safeguard quotas that continue to support excessive imports pose
another strong headwind. We therefore expect the coming quarter
to remain as challenging as this one was."
Financial Highlights (on the basis of financial information prepared under
IFRS)
(in millions of Euros, unless Q2 20 Q1 20 Q2 19 H1 20 H1 19
otherwise stated)
Sales 818 1,049 1,090 1,867 2,268
Operating income 14 34 59 48 105
Net income attributable to equity 21 29 57 50 82
holders of the parent
Basic earnings per share (EUR) 0.27 0.36 0.69 0.63 0.99
Diluted earnings per share (EUR) 0.27 0.36 0.69 0.63 0.99
Free cash flow before dividend and 34 18 72 52 96
share buy-back
Net Financial Debt (at the end of 123 108 176 123 176
the period)
EBITDA 49 70 95 119 176
EBITDA/tonne (EUR) 130 160 204 146 182
Steel shipments (000t) 376 438 465 814 966
Health & Safety results
Health and Safety performance based on Aperam personnel figures and
contractors' lost time injury frequency rate was 0.6x in the second quarter
of 2020 compared to 1.9x in the first quarter of 2020.
Financial results analysis for the three-month period ending June 30, 2020
Sales for the second quarter of 2020 decreased by 22% to EUR 818 million
compared to EUR 1,049 million for the first quarter of 2020. Steel shipments
decreased from 438 thousand tonnes in the first quarter of 2020, to 376
thousand tonnes in the second quarter of 2020.
EBITDA decreased during the quarter to EUR 49 million from EUR 70 million
for the first quarter of 2020. Volumes in both Europe and Brazil were
substantially impacted by the COVID induced demand drop. Prices remained
under pressure. Lower raw material prices caused negative inventory
valuation effects. The gains from the Leadership Journey(R) were not
sufficient to offset these negative factors.
Depreciation and amortization was EUR (35) million for the second quarter of
2020.
Aperam had an operating income for the second quarter of 2020 of EUR 14
million compared to an operating income of EUR 34 million for the previous
quarter.
Financing costs including the FX and derivatives result for the second
quarter of 2020 were positive at EUR 9 million, including cash cost of
financing of EUR (2) million and exceptional interest income of EUR 15
million in Brazil for PIS/Cofins tax credits related to prior periods.
Income tax expense for the second quarter of 2020 was EUR (2) million.
The Company recorded a net income of EUR 21 million for the second quarter
of 2020.
Cash flows from operations for the second quarter of 2020 were positive at
EUR 57 million, with a working capital increase of EUR 37 million. CAPEX for
the second quarter was EUR (23) million.
Free cash flow before dividend for the second quarter of 2020 amounted to
EUR 34 million.
During the second quarter of 2020, the cash returns to shareholders amounted
to EUR 37 million, consisting fully of dividend.
Operating segment results analysis
Stainless & Electrical Steel (1)
(in millions of Euros, unless Q2 20 Q1 20 Q2 19 H1 20 H1 19
otherwise stated)
Sales 632 827 842 1,459 1,773
EBITDA 43 53 79 96 131
Depreciation, amortisation & (28) (30) (30) (58) (60)
impairment
Operating income 15 23 49 38 71
Steel shipments (000t) 364 426 440 790 919
Average steel selling price 1,678 1,876 1,856 1,785 1,864
(EUR/t)
(1) Amounts are shown prior to intra-group eliminations
The Stainless & Electrical Steel segment had sales of EUR 632 million for
the second quarter of 2020. This represents a 24% decrease compared to sales
of EUR 827 million for the first quarter of 2020. Steel shipments during the
second quarter were 364 thousand tonnes, a decrease of 15% compared to
shipments of 426 thousand tonnes during the previous quarter. The COVID
induced demand drop caused volumes in Europe to decline substantially
despite lower import pressure. The COVID crisis also negatively impacted
volumes in Brazil in a seasonally stronger quarter. Average steel selling
prices for the Stainless & Electrical Steel segment decreased by 11%
compared to the previous quarter.
The segment generated EBITDA of EUR 43 million for the second quarter of
2020 compared to EUR 53 million for the first quarter of 2020. The negative
volume impact was not fully compensated by a less negative inventory
valuation effect from raw material pricing and Leadership Journey(R) gains.
Depreciation and amortisation expense was EUR (28) million for the second
quarter of 2020.
The Stainless & Electrical Steel segment had an operating income of EUR 15
million for the second quarter of 2020 compared to an operating income of
EUR 23 million for the first quarter of 2020.
Services & Solutions(1)
(in millions of Euros, unless Q2 20 Q1 20 Q2 19 H1 20 H1 19
otherwise stated)
Sales 310 450 453 760 973
EBITDA 5 9 16 14 32
Depreciation & amortisation (4) (3) (4) (7) (6)
Operating income 1 6 12 7 26
Steel shipments (000t) 132 186 182 318 396
Average steel selling price 2,212 2,331 2,374 2,281 2,341
(EUR/t)
(1) Amounts are shown prior to intra-group eliminations
The Services & Solutions segment had sales of EUR 310 million for the second
quarter of 2020, representing a decrease of 31% compared to sales of EUR 450
million for the first quarter of 2020. For the second quarter of 2020, steel
shipments were 132 thousand tonnes compared to 186 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 5 million for the second quarter of 2020
compared to EBITDA of EUR 9 million in the first quarter of 2020. EBITDA
decreased mainly due to a significant 29% drop in volumes quarter on quarter
that was not compensated by a less negative inventory valuation effect and
Leadership Journey(R) gains.
Depreciation and amortisation was EUR (4) million for the second quarter of
2020.
The Services & Solutions segment had an operating income of EUR 1 million
for the second quarter of 2020 compared to an operating income of EUR 6
million for the first quarter of 2020.
Alloys & Specialties(1)
(in millions of Euros, unless Q2 20 Q1 20 Q2 19 H1 20 H1 19
otherwise stated)
Sales 142 155 156 297 309
EBITDA 11 9 12 20 24
Depreciation & amortisation (1) (3) (2) (4) (4)
Operating income 10 6 10 16 20
Steel shipments (000t) 9 9 9 18 19
Average steel selling price 16,038 16,572 16,122 16,311 15,705
(EUR/t)
(1) Amounts are shown prior to intra-group eliminations
(MORE TO FOLLOW) Dow Jones Newswires
July 29, 2020 01:00 ET (05:00 GMT)
DJ Second quarter 2020 results: Resilient results -2-
The Alloys & Specialties segment had sales of EUR 142 million for the second
quarter of 2020, representing a decrease of 8% compared to EUR 155 million
for the first quarter of 2020. Steel shipments were stable during the second
quarter of 2020 at 9 thousand tonnes. Average steel selling prices were
lower during the quarter.
The Alloys & Specialties segment achieved EBITDA of EUR 11 million for the
second quarter of 2020 compared to EUR 9 million for the first quarter of
2020. The increase in EBITDA was due to a combination of stable volumes, a
less negative raw material induced inventory valuation effect and the
disappearance of COVID related costs from temporary plant closures that
impacted the previous quarter.
Depreciation and amortisation expense for the second quarter of 2020 was EUR
(1) million.
The Alloys & Specialties segment had an operating income of EUR 10 million
for the second quarter of 2020 compared to an operating income of EUR 6
million for the first quarter of 2020.
Recent developments
· On May 6, May 28, and June 2, 2020, Aperam announced shareholding
notifications by Société Générale SA for crossing upwards and downwards
the 5% voting rights threshold with reference to Transparency Law.
· On June 30, 2020, Aperam strengthened its liquidity profile by closing
an additional bank credit line for a total commitment of EUR 100 million
valid until June 30, 2021. In the context of COVID-19 outbreak, this
financing contract is guaranteed by the "Office du Ducroire Luxembourg".
New developments
· On July 29, 2020, Aperam published its Half-Year Report for the six
month period ended June 30, 2020. 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.
Investor conference call / webcast
Aperam management will host a conference call / webcast for members of the
investment community to discuss the second quarter 2020 financial
performance at the following time:
Date New York London Luxembourg
Wednesday, 08:00 am 01:00 pm 02:00 pm
July 29, 2020
Link to the webcast:
https://channel.royalcast.com/webcast/aperam/20200729_1/ [1]
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/20200729_1/ [1]
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 with an average carbon footprint of 0.48 tons of CO2 per ton
of slabs, making it the world's lowest CO2 footprint stainless steel
producer.
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) June 30, March 31, June 30,
2020 2020 2019
ASSETS
Cash & cash equivalents (C) 263 297 189
Inventories, trade receivables and 662 641 747
trade payables
Prepaid expenses and other current 81 85 84
assets
Total Current Assets & Working 1,006 1,023 1,020
Capital
Goodwill and intangible assets 435 445 491
Property, plant and equipment (incl. 1,524 1,555 1,598
Biological assets)
Investments in associates, joint 4 4 34
ventures and other
Deferred tax assets 121 126 163
Other non-current assets 58 70 80
Total Assets (net of Trade Payables) 3,148 3,223 3,386
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term debt and current portion 18 40 190
of long-term debt (B)
Accrued expenses and other current 347 274 303
liabilities
Total Current Liabilities (excluding 365 314 493
Trade Payables)
Long-term debt, net of current 368 365 175
portion (A)
Deferred employee benefits 145 146 146
Deferred tax liabilities 122 124 129
Other long-term liabilities 43 45 56
Total Liabilities (excluding Trade 1,043 994 999
Payables)
Equity attributable to the equity 2,101 2,225 2,383
holders of the parent
Non-controlling interest 4 4 4
Total Equity 2,105 2,229 2,387
Total Liabilities and Shareholders' 3,148 3,223 3,386
Equity (excluding Trade Payables)
Net Financial Debt (D = A+B-C) 123 108 176
APERAM CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in million Three Months Ended Six Months Ended
of EURO)
June 30, March 31, June 30, June 30, June 30,
2020 2020 2019 2020 2019
Sales 818 1,049 1,090 1,867 2,268
EBITDA (C = 49 70 95 119 176
A-B)
EBITDA margin 6.0% 6.7% 8.7% 6.4% 7.8%
%
Depreciation, (35) (36) (36) (71) (71)
amortisation
& Impairment
(B)
Operating 14 34 59 48 105
income (A)
Operating 1.7% 3.2% 5.4% 2.6% 4.6%
margin %
Financing 9 (7) (6) 2 (20)
costs, net
Income before 23 27 53 50 85
taxes
Income tax (2) 2 4 - (3)
benefit
(expense)
Effective tax 8.3% (8.0)% (8.0)% (0.4)% 3.7%
rate %
Net income 21 29 57 50 82
attributable
to equity
holders of
the parent
Basic 0.27 0.36 0.69 0.63 0.99
earnings per
share (EUR)
Diluted 0.27 0.36 0.69 0.63 0.99
earnings per
share (EUR)
Weighted 79,816 79,816 81,583 79,816 82,554
average
common shares
outstanding
(in
thousands)
Diluted 80,218 80,076 82,644 80,218 82,895
weighted
average
common shares
outstanding
(in
thousands)
APERAM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in million Three Months Ended Six Months Ended
of EURO)
June 30, March 31, June 30, June 30, June 30,
2019 2019
2020 2020 2020
Operating 14 34 59 48 105
income
Depreciation, 35 36 36 71 71
amortisation
& Impairment
Change in (37) (21) 32 (58) 13
working
capital
Income tax 2 (3) - (1) 2
(paid) /
refund
Interest (1) (1) (2) (2) (3)
paid, (net)
Other 44 18 (28) 62 (20)
operating
activities
(net)
(MORE TO FOLLOW) Dow Jones Newswires
July 29, 2020 01:00 ET (05:00 GMT)
Net cash 57 63 97 120 168
provided by
operating
activities
(A)
Purchase of (23) (45) (26) (68) (73)
PPE,
intangible
and
biological
assets
(CAPEX)
Other - - 1 - 1
investing
activities
(net)
Net cash used (23) (45) (25) (68) (72)
in investing
activities
(B)
Proceeds (22) (45) (91) (67) 63
(payments)
from payable
to banks and
long term
debt
Purchase of - - (93) - (93)
treasury
stock (share
buy back)
Dividends (37) (32) (39) (69) (72)
paid
Other (3) (2) (2) (5) (4)
financing
activities
(net)
Net cash (62) (79) (225) (141) (106)
provided by
(used in)
financing
activities
Effect of (6) (17) - (23) -
exchange rate
changes on
cash
Change in (34) (78) (153) (112) (10)
cash and cash
equivalent
Free cash 34 18 72 52 96
flow before
dividend and
share
buy-back (C =
A+B)
Appendix 1a - Health & Safety statistics
Health & Safety Statistics Three Months Ended
June 30, March 31, December 31,
2019
2020 2020
Frequency Rate 0.6 1.9 1.9
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
June 30, 2020
Operational
information
Steel Shipment 364 132 9 (129) 376
(000t)
Average steel 1,678 2,212 16,038 2,113
selling price
(EUR/t)
Financial
information
Sales (EURm) 632 310 142 (266) 818
EBITDA (EURm) 43 5 11 (10) 49
Depreciation & (28) (4) (1) (2) (35)
Amortisation
(EURm)
Operating 15 1 10 (12) 14
income / (loss)
(EURm)
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)
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.
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.
1104491 29-Jul-2020 CET/CEST
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