Luxembourg, July 30, 2021 (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 ended June 30, 2021.
 

Highlights

Strategic initiatives

Prospects

Financial Highlights (on the basis of financial information prepared under IFRS)

Health & Safety results

Health and Safety performance based on Aperam personnel figures and contractors' lost time injury frequency rate was 2.3x in the second quarter of 2021 compared to 2.6x in the first quarter of 2021.

Financial results analysis for the three-month period ending June 30, 2021

Sales for the second quarter of 2021 increased by 8% to EUR 1,272 million compared to EUR 1,177 million for the first quarter of 2021. Steel shipments decreased from 493 thousand tonnes in the first quarter of 2021, to 481 thousand tonnes in the second quarter of 2021.

EBITDA increased during the quarter to EUR 271 million (including exceptional gains of EUR 9 million made of PIS/Cofins tax credits related to prior periods recognised in Brazil) from EUR 175 million for the first quarter of 2021. Brazil delivered its best quarter ever on the back of an excellent demand environment and a positive seasonality and Europe benefited from a normalizing price environment. Positive inventory valuation effects remained at a comparable level.

Depreciation and amortisation was EUR (36) million for the second quarter of 2021.

Aperam had an operating income for the second quarter of 2021 of EUR 235 million compared to an operating income of EUR 140 million for the previous quarter.

Financing costs, net, including the FX and derivatives result for the second quarter of 2021 were EUR (6) million, including cash cost of financing of EUR (3) million and exceptional interest income of EUR 6 million in Brazil for PIS/Cofins tax credits related to prior periods.

Income tax expense for the second quarter of 2021 was EUR (16) million, including the recognition of additional deferred tax assets on tax losses carried forward of EUR 32 million.

The Company recorded a net income of EUR 213 million for the second quarter of 2021.

Cash flows from operations for the second quarter of 2021 were positive at EUR 115 million, despite a working capital increase of EUR 118 million. CAPEX for the second quarter was EUR (27) million.

Free cash flow before dividend and share buyback for the second quarter of 2021 amounted to EUR 87 million.

During the second quarter of 2021, the cash returns to shareholders amounted to EUR 36 million, consisting fully of dividend (of which EUR 1 million paid to non-controlling interests).

Operating segment results analysis

Stainless & Electrical Steel (1)

(1) Amounts are shown prior to intra-group eliminations

The Stainless & Electrical Steel segment had sales of EUR 1,078 million for the second quarter of 2021. This represents a 10% increase compared to sales of EUR 977 million for the first quarter of 2021. Steel shipments during the second quarter were 472 thousand tonnes, a decrease of 2% compared to shipments of 483 thousand tonnes during the previous quarter. Volumes in Europe remained at a comparable level in a seasonally stronger quarter versus a restocking induced high base in Q1. Brazil demand continued to be at a stable high level and shipments increased seasonally. Average steel selling prices for the Stainless & Electrical Steel segment increased by 12% compared to the previous quarter.

The segment generated EBITDA of EUR 212 million for the second quarter of 2021 compared to EUR 140 million for the first quarter of 2021. Profitability increased due to higher prices, a better mix and tight cost control.

Depreciation and amortisation expense was EUR (30) million for the second quarter of 2021. 

The Stainless & Electrical Steel segment had an operating income of EUR 182 million for the second quarter of 2021 compared to an operating income of EUR 110 million for the first quarter of 2021.

Services & Solutions(1)

(1) Amounts are shown prior to intra-group eliminations

The Services & Solutions segment had sales of EUR 542 million for the second quarter of 2021, representing an increase of 2% compared to sales of EUR 531 million for the first quarter of 2021. For the second quarter of 2021, steel shipments were 189 thousand tonnes compared to 208 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 generated EBITDA of EUR 59 million, including EUR 9 million in Brazil due to PIS/Cofins tax credits related to prior periods, for the second quarter of 2021 compared to EBITDA of EUR 45 million for the first quarter of 2021. Higher prices and the exceptional PIS/Cofins gain were the main drivers for the higher EBITDA.

Depreciation and amortisation was EUR (3) million for the second quarter of 2021.

The Services & Solutions segment had an operating income of EUR 56 million for the second quarter of 2021 compared to an operating income of EUR 42 million for the first quarter of 2021.             

Alloys & Specialties(1)

(1) Amounts are shown prior to intra-group eliminations

The Alloys & Specialties segment had sales of EUR 132 million for the second quarter of 2021, representing an increase of 6% compared to EUR 125 million for the first quarter of 2021. Steel shipments increased by 20% during the second quarter of 2021 at 8 thousand tonnes. Average steel selling prices were lower during the quarter.

The Alloys & Specialties segment achieved EBITDA of EUR 16 million for the second quarter of 2021 compared to EUR 12 million for the first quarter of 2021. The increase in EBITDA was driven by higher volumes and tight cost control.

Depreciation and amortisation expense for the second quarter of 2021 was EUR (2) million.

The Alloys & Specialties segment had an operating income of EUR 14 million for the second quarter of 2021 compared to an operating income of EUR 10 million for the first quarter of 2021.

Recent developments during the quarter

• On May 10 and May 25, 2021, Aperam announced shareholding notifications by M&G plc for respectively crossing downwards and upwards the 5% voting rights threshold with reference to Transparency Law.

• On June 8, 2021, Aperam announced that the Annual General Meeting of shareholders held on June 8, 2021 approved all resolutions on the agenda by a large majority. 83% of the voting rights were represented at the General Meeting.

New developments

• On July 30, 2021, Aperam announced a share buyback program of up to EUR 100 million, and a maximum of 2.45 million shares under the authorization given by the annual general meeting of shareholders held on 7 May 2019. The details of the program are available in a separate Press Release.

• On July 30, 2021, Aperam published its Half-Year Report for the six month period ended June 30, 2021. The report is available in the Luxembourg Stock Exchange's electronic database OAM on www.bourse.lu and on www.aperam.com under Investors >Reports & Presentations > Annual reports.

Investor conference call / webcast

Pre-recorded management comments are available as from publication of this earnings release on our website at www.aperam.com, section Investors > Reports & Presentations > Quarterly results > Q2-2021 (Link).

Aperam management will host a conference call / webcast for members of the investment community to discuss the second quarter 2021 financial performance at the following time:

Link to the webcast: https://channel.royalcast.com/landingpage/aperam/20210730_1/

The dial-in numbers for the call are: France : +33 (0) 1 7037 7166; USA: +1 212 999 6659; UK: +44 (0) 33 0551 0200

The conference password is Aperam.

Contacts

Corporate Communications / Laurent Beauloye: +352 27 36 27 103; laurent.beauloye@aperam.com

Investor Relations / Thorsten Zimmermann: +352 27 36 27 304; thorsten.zimmermann@aperam.com

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 2020, Aperam had sales of EUR 3,624 million and steel shipments of 1.68 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 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

APERAM CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

APERAM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

 Appendix 1a - Health & Safety statistics

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

Appendix 2 - Terms and definitions3

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, amortisation 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 income (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.

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 fourth phase of the Leadership Journey(R) is targeting EUR 150 million gains for the period 2021 - 2023 via a combination of cost, growth and mix improvement measures.

3 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".