Aperam S.A. · EURONEXT:APAM
Aperam — BofAML Global Metals, Mining & Steel Conference 2017
35 slides from Aperam's conference presentation, May 16, 2017
Slide 1: BofAML Global Metals, Mining & Steel Conference
BofAML Global Metals, Mining & Steel Conference May 16 & 17, 2017 Sandeep Jalan – Chief Financial Officer © Aperam 1
Slide 2: Disclaimer
Disclaimer 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 re
Slide 3: Aperam's unique investment case
Aperam’s unique investment case A solid and growing value, sustainably profitable • Diminishing raw material advantages in China 1. Attractive • European stainless steel market restructured outlook • Tariff measures in both Brazil and Europe • Brazilian growth potential 2. Cost • Optimized footprint
Slide 4: Aperam's fundamentals
BofAML Global Metals, Mining & Steel Conference Aperam’s fundamentals
Slide 5: Solid and diversified sources of profitability
Aperam’s fundamentals Solid and diversified sources of profitability Aperam sales breakdown by destination (FY 2016) Aperam Adjusted EBITDA* breakdown by division (FY 2016) USA Alloys & Asia & Africa 6% Services & Specialties 7% Solutions 6% 17% Stainless & Brazil & Latin Electrical Steel America Eu
Slide 6: A restructured and efficient European footprint
Aperam’s fundamentals A restructured and efficient European footprint able to seize market opportunities Aperam downstream rationalization in EU from 29 tools to 17 tools Aperam productivity evolution, average (in t) GENK ISBERGUES GUEUGNON 10500 600 HA&P 10000 500 HAP 3 HAP 3 RD 79 lines CR mills C
Slide 7: Unique asset base in South America well adapted to the market
Aperam’s fundamentals Unique asset base in South America well adapted to the market South American Footprint Upstream integration Blast furnace fuel needs fully covered Caracas (Venezuela) Bio Energia through cost competitive and environment friendly captive charcoal Colombia from own forests Range
Slide 8: Higher end-user exposure and value added thanks to Services & Solutions
Aperam’s fundamentals Higher end-user exposure and value added thanks to Aperam Services & Solutions division Services &Solutions division Services and Solutions adjusted EBITDA per shipments (USD/t) 00 90 100 30,000 Aperam Stainless & Electrical End- users 80 70 End- 80 25,000 users Services & 60 A
Slide 9: A leading position in nickel alloys
Aperam’s fundamentals A leading position in nickel alloys Global nickel alloys producers (kt in 2015) Aperam Alloys & Specialties geographical footprint Rescal Amilly Imhua 40 Wire drawing The magnetic parts company 35 nn Transformation 30 n workshop 25 n n 20 15 Imphy ICS (JV) 10 5 0 Meltshop, wire
Slide 10: Environment and markets
BofAML Global Metals, Mining & Steel Conference Environment and markets
Slide 11: Stainless steel prices
Environment and markets Stainless steel prices Nickel - LME Cash (USD/t) Chinese versus European CR 304 2B 2mm coil transaction price* (USD/t) 35 000 5000 4500 30 000 4000 25 000 3500 20 000 3000 2500 15 000 2000 10 000 1500 5 000 1000 Chinese price European prices Stainless steel selling prices sho
Slide 12: Diminishing raw material advantage of Chinese players
Environment and markets Diminishing raw material advantage of Chinese players Price equivalent of Nickel contained in NPI vs. LME Nickel price Breakdown of Chinese nickel imports (USD/t) (in kt) 21000 500 19000 400 17000 15000 300 13000 11000 200 9000 100 7000 5000 0 2013 2014 2015 2016 Q1'17 annual
Slide 13: China stainless steel overcapacity shows early signs of restructuring
Environment and markets China stainless steel overcapacity remains but shows early signs of restructuring Upstream operational capacity of the Chinese industry First signs of restructuring in China * (in million tonnes) 40 40 • “In December [2016], two Chinese stainless steel 30 30 mills were […] or
Slide 14: European stainless steel apparent demand is improving
Environment and markets European stainless steel apparent demand is improving CR stainless steel European apparent consumption Stocks of CR stainless steel in Germany – quarterly average (in million tonnes) (in number of days) 4,0 75 3,5 70 3,0 65 2,5 60 2,0 55 1,5 50 1,0 0,5 45 0 40 2012 2013 2014
Slide 15: Brazil stainless steel apparent demand is expected to recover
Environment and markets Brazil stainless steel apparent demand is expected to recover Stainless steel Brazilian apparent consumption Stainless steel flat stainless steel consumption per capita (in thousand tonnes) (kg/year) 400 8 350 7 300 6 250 5 200 4 150 3 100 2 50 1 0 0 2012 2013 2014 2015 2016E
Slide 16: Both domestic markets of Aperam have tariff measures
Environment and markets Both domestic markets of Aperam have tariff measures Chinese marginal cost player to landed costs in Brazil Chinese marginal cost player to landed costs in Europe (USD/t) (USD/t) Chinese marginal FOB, CIF, Imports Anti-dumping Chinese landed Chinese marginal FOB, CIF, Anti-du
Slide 17: Aperam's performance
BofAML Global Metals, Mining & Steel Conference Aperam’s performance
Slide 18: Health & Safety performance
Aperam’s performance Health & Safety performance Lost Time Injury Frequency rate* 4.0 3.0 2.0 1.0 0 Profit improvement Health in Q1 due to market & Safety Lossand internal Time Injury initiatives frequencybut rateQ2 of expected 1.1 in Q1 to be more challenging 2017 * WorldSteel-standard: Fr = lost t
Slide 19: Solid evolution of profitability
Aperam’s performance Solid evolution of profitability Adjusted EBITDA[1] evolution (USD million) Net result evolution (USD million) 2,75 11,8% 2,21 10,6% 10,0% 547 1,21 503 214 501 172 5,7% 490 95 4,1% 292 217 -111 -100 -1,28 -1,39 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Adj. Ebitda from o
Slide 20: Solid evolution of profitability (quarterly)
Aperam’s performance Solid evolution of profitability Quarterly adjusted EBITDA[1] evolution (USD m.) Quarterly Net income evolution (USD m.) 13,7% 100 100 1,20 1,40 1,40 13,4% 12,2% 90 90 1,20 1,20 1,20 10,4% 11,0% 80 80 1,00 1,00 0,75 70 70 0,68 0,69 0,63 0,80 0,80 0,75 60 60 0,68 0,69 171 0,63 93
Slide 21: Steep reduction in net interest and financing costs
Aperam’s performance Steep reduction in net interest and financing costs Net interest & financing costs (USD million) Aperam debt reduction / restructuring actions 116 Strong decrease of net interest and financing costs, especially 15 cash interest costs, thanks to strong cash flows and debt reducti
Slide 22: A solid Balance Sheet
Aperam’s performance A solid Balance Sheet Total Financial Debt breakdown Financial Debt maturity profile (USD million) as of March 31, 2017 as of March 31, 2017 [1] 600 500 400 300 200 100 0 2017 2018 2019 >2020 Company liquidity as of March 31, 2017 (USD million) Convertible bonds BBF Others Stron
Slide 23: Continued net debt decrease thanks to cash generation
Aperam’s performance Continued net debt decrease thanks to cash generation Aperam net debt and gearing[1] evolution Aperam Net Debt / EBITDA[2] evolution (USD million) 29% 11200 200 30% 4,0 3,76 26% 26% 1 100 11000 23% 25% 000 900 20% 3,0 2,60 800 20% 800 2,36 2,20 700 14% 600 15% 2,0 600 1066 500 8
Slide 24: Credit Rating and Listing
Aperam’s performance Credit Rating and Listing Aperam rating evolution with Moody’s Aperam rating evolution with S&P 5 Baa3 5 BBB- Ba1 4 BB+ 4 Ba2 3 BB/ 3 Ba3 2 BB- 2 B1 1 B+ 1 B2 0 B0/ Moody's rating S&P rating Moody's rating S&P rating • Aperam was upgraded to Investment Grade by Moody’s on • S&P
Slide 25: Aperam's value strategy
BofAML Global Metals, Mining & Steel Conference Aperam’s value strategy: A customer driven company focused on its self-help story
Slide 26: Unlocking value of best performing assets through the Leadership Journey
Aperam’s value strategy Unlocking value of Aperam’s best performing assets through the Leadership Journey® Leadership Journey ® cumulated gains (USD million) Asset upgrade program launched on best performing assets Status • Productivity improvement of the downstream 600 facilities in Genk (CAP2), Gu
Slide 27: Strengthening product and service differentiation through Top Line strategy
Aperam’s value strategy Strengthening product and service differentiation through the Top Line strategy Shipments of Top Line products developments in kT 350 350 300 300 • Toplines are commercial projects focusing on Top Line development of Aperam’s most profitable product, 250 250 mindset segment,
Slide 28: Leverage Aperam's unique position in Europe
Aperam’s value strategy Leverage Aperam’s unique position in Europe European stainless steel industry footprint after restructuring Key strengths of the European operations of Aperam Finishing line • The only integrated upstream Steel making Sourcing operations in the heart of Europe, with the best
Slide 29: Optimise value creation in South America
Aperam’s value strategy Optimise value creation in South America thanks to a perfectly adapted asset base and flexible sales management Key pillars of the mitigation plan in Brazil Aperam’s assets optimisation in South America • Ensure full utilisation rate with the best margin Product mix Geographi
Slide 30: Strong cash generator through the cycle
Aperam’s value strategy Strong cash generator through the cycle Cash-flow from operations evolution (USD million) Cash utilization in 2016 (USD million) 450 400 Company 129 350 sustainability (Capex) 300 Stable and growing 250 97 dividend 200 417 392 Debt repayment 14 and others 150 278 240 100 189
Slide 31: A financial policy to maximize long term growth
Aperam’s value strategy – Financial Policy A financial policy to maximize the long term growth of the company and the value accretion for its shareholders while maintaining a strong Balance Sheet consistent with Investment Grade Financial ratios Financial Policy 2017 CAPEX 2017 Company Invest in sus
Slide 32: Q&A
Q&A
Slide 33: Brazilian protections against unfair market behaviour
Environment and markets Brazilian protections against unfair market behaviour Type of products Import duties status Anti-dumping status Normal import duties are 14% AD duties starting October 4th, 2013 for 5 years from 236 USD/t to 1,077 USD/t. The case involves CR 304 and 430, in thicknesses be
Slide 34: European Union antidumping measures since 2014
Environment and markets European Union antidumping measures since 2014 Anti-dumping development in Europe • On May 13, 2014, Eurofer filed an antidumping complaint to European Commission “China and Taiwan have a structural • On June 26, 2014, European Commission started investigation on CR imports f
Slide 35: Share buyback program
Aperam’s value strategy - Financial Policy Share buyback program Description Aperam will appoint an investment services provider to execute the repurchases of shares in the open market during open and closed periods. Maximum amount of one hundred (100) million US dollars and a maximum of two (2)
Aperam — BofAML Global Metals, Mining & Steel Conference 2017 on 6ix