Slide 1: 2019 results
2019 results Christel BORIES Chairman and CEO 19 February 2020
Slide 2: Disclaimer
Disclaimer Certain information contained in this presentation including any information on Eramet’s plans or future financial or operating performance and any other statements that express management’s expectations or estimates of future performance, constitute forward-looking statements. Such state
Slide 3: Contents
Contents Introduction 1– Safety 2– Financial results 3– Operational performance 4– Strategic transformation Conclusion and outlook 3 Eramet – 2019 results
Slide 4: Delivering on our strategic roadmap…
Delivering on our strategic roadmap… Mining targets exceeded in 2019 4.8 Mt in manganese ore (vs 4.1 Mt in 2017, +15% over 2 yrs) Operational 1.6 Mwmt in nickel ore exports (vs 0.9 Mt in 2017, c.+80%) performance 735 kt in mineral sands concentrate SLN cash positive in H2 H2 cash-cost reduction vs H
Slide 5: …but financial performance adversely impacted in 2019 by manganese prices and non-recurring items
…but financial performance adversely impacted in 2019 by manganese prices and non-recurring items Deteriorated manganese price environment -21% on average for manganese ore1 prices -€268m EBITDA impact -7% on average for refined manganese alloys’1 prices vs 2018 -5% on average for standard manganese
Slide 6: 2019 EBITDA showing solid operating performance, in a context of lacklustre manganese pricing momentum
2019 EBITDA showing solid operating performance, in a context of lacklustre manganese pricing momentum High Performance Erasteel Mining and Metals Alloys Division 6% Division Sales €3,671m 23% 77% -4% vs 2018 Aubert & Duval 17% Mineral Sands €3,671m BU Manganese BU 8% 48% Nickel BU 21% EBITDA €630
Slide 7: Safety
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Slide 8: Further strong decline in accident frequency rate in 2019, but still too many severe accidents
Further strong decline in accident frequency rate in 2019, but still too many severe accidents Eramet accident frequency rate (FR21,2) Increased safety awareness of all 21 employees and managers, particularly 20 20.0 through “on the ground” interactions 19 18 17 17.3 16.8 16 Focus on risk analysis a
Slide 9: Financial results
Financial results 2
Slide 10: Key financial figures
Key financial figures €m 2019 2018 Sales 3,671 3,825 EBITDA 630 843 % Sales 17% 22% Current operating income 341 581 % Sales 9% 15% Net income – Group share (184) 53 Net debt (Net cash) 1,304 717 Net debt (Net cash), excl. IFRS 16 non cash impact 1,207 717 Gearing (Net debt-to-equity ratio), excl. I
Slide 11: Net income-Group share at €(184)m, penalised by non-recurring items
Net income-Group share at €(184)m, penalised by €(114)m of non-recurring items at High Performance Alloys Division and exceptionally high level of taxes €m 2019 2018 Sales 3,671 3,825 Current operating income 1 341 581 Other operating income and expenses (118) (116) o/w: Non-current provisions (A&D
Slide 12: All Mining & Metals Division's activities EBITDA positive
All Mining & Metals Division’s activities EBITDA positive Continued solid EBITDA contribution from Manganese BU (89% of Group EBITDA), despite lacklustre pricing momentum Nickel BU back to positive EBITDA contribution for the first time since 2014 Mineral Sands BU driven by strong operational perfor
Slide 13: Income highly sensitive to metal prices
Income highly sensitive to metal prices Annual impact on EBITDA SENSITIVITIES Change (+/-) Manganese ore prices (CIF China 44%) +$1/dmtu c.€150m1 Manganese alloys’ prices +$100/t c.€70m1 Nickel prices (LME) +$1/lb c.€110m1 Nickel ore prices (CIF China 1.8%) +$10/wmt c.€20m1 Exchange rates +$/€0.1 c.
Slide 14: Positive operating performance offset by external factors and one-off items
Positive operating performance offset by external factors and one-off items (€m) 8 -46 35 -23 107 -18 843 1 2 -46 22 -36 -€216m 3 External factors -268 A&D one- 630 off items 17 -19 21 35 -62 60 +€39m 4 4 5 Operating performance 2018 Mn SLN Ni SLN FeNi Sand- TiZir HP Alloys’ Fixed Others A&D Mn pric
Slide 15: €423m industrial cash capex in 2019, o/w €192m growth capex and projects early works
€423m industrial cash capex in 2019, o/w €192m growth capex and projects early works €231m related to safety & environment (10%), productivity (21%) and maintenance (69%) of industrial equipment €60m growth capex including Transgabonese railway renovation programme €132m early works for the expansio
Slide 16: Net debt impacted by €(274)m non-recurring cash outflows
Net debt impacted by €(274)m non-recurring cash outflows 1 3 2019 early capex for Comilog expansion (€51m) and Exceptional payments to the Gabonese state: lithium project (€81m) advance payment of 2019 income tax (€71m), tax adjustment (€43m) 2 A&D logistics issue one-off items: mainly negative 4 im
Slide 17: Continued high liquidity at €2.3bn
Continued high liquidity at €2.3bn Group financial liquidity (€m) Undrawn lines to date as of 31st December 2019: 3,000 2,806 2,500 2,468 Revolving credit facility ("RCF") 2,299 > €981m RCF maturing 2024 2,000 1,825 848 1,367 Term loan: > €350m loan granted in December with a 2- 1,500 year maturity
Slide 18: Issuance of 2025 bond allowing for repurchase of part of 2020 bond
Issuance of 2025 bond allowing for repurchase of part of 2020 bond; no major debt maturity within the next 3 years Group gross debt at €2,055m at 31 December 2019 (excl. IFRS 16 non cash items) Extension of debt maturity in November 2019: repurchase of 2020 bonds for €227m and issuance of new bonds
Slide 19: Strict cash control in 2020
Strict cash control in 2020 Optimising cash flow and closely monitoring net debt level Available cash of €848m and 63%1 gearing (as calculated for covenant purposes) at 2019 year-end (74%, excl. IFRS 16 only) 2020 cash control plan Postponing of some project capex: modularity and flexibility Opex an
Slide 20: Operational performance
3 Operational performance
Slide 21: Mining and Metals Division
ZZN Mining and Metals Division
Slide 22: Manganese BU
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Slide 23: New historical record for global carbon steel production
New historical record for global carbon steel production Global carbon steel production up 3.6%, almost exclusively driven by China (+8.3%); rest of world receding overall (-1.3%) mainly driven by Europe (-5.1%), whereas India production up (+1.8%) 2019 production at full capacity of all global mang
Slide 24: Manganese ore prices down 21% in 2019, current price up at USD 4.5/dmtu
Manganese ore prices down 21% in 2019, current price up at USD 4.5/dmtu Average manganese ore prices significantly down at USD 5.63 /dmtu in 2019 (-21%), particularly in Q4 (-34% vs average price of 9mFY19); slight rebound in Q1 2020 Likewise, decline in manganese alloys’ prices (-7% for refined fer
Slide 25: New record manganese ore production at Comilog: 4.8 Mt in 2019
New record manganese ore production at Comilog: 4.8 Mt in 2019 (+10%), above target Record manganese ore production driven by new dry mining process (+0.5 Mt); new record targeted in 2020: > 5 Mt Ore volumes transported at 4.6 Mt, up 17%, thanks to railway logistics improvement; +70% transport capac
Slide 26: Nickel BU
Nickel BU
Slide 27: Global stainless steel production up significantly in 2019
Global stainless steel production up significantly in 2019 Global stainless steel production up +4.2% in 2019, mainly in low nickel content grades, and driven by growth in China (+12.2%); production cuts for stainless steel mills forecast in H1 2020, following H2 high level of production in excess o
Slide 28: Nickel prices showed high volatility in 2019, fuelled by the Indonesian ban announcement
Nickel prices showed high volatility in 2019, mainly fuelled by the announcement of the Indonesian ban Indonesian ban announcement in September has introduced strong market volatility with speculative effect both on prices and inventory, against a background of international tensions Supply/demand b
Slide 29: SLN rescue plan: decisive breakthroughs achieved in 2019 for major enablers
SLN rescue plan: decisive breakthroughs achieved in 2019 for major enablers New business model for SLN: metallurgy and exports ✔ 4 Mwmt/year licence for low grade ore exports, granted by New Caledonian government (4 Mwmt/year to be achieved in 2021) Enablers for productivity gains and fixed cost red
Slide 30: Record Ni ore export; FeNi production down following disrupted mining operations
Record Ni ore export; FeNi production down following disrupted mining operations at East Coast centres New working hours agreement led to higher Ferronickel production down 13% in 2019, nickel ore production of 4.7 Mwmt (+15%) due to lower-grade ore loaded into the furnaces Volumes of low grade (1.5
Slide 31: SLN back to cash generation in H2 (+€31m)
SLN back to cash generation in H2 (+€31m), evidencing the relevance of the new business model 5% decrease of cash cost in H2 vs H1 Significant positive impact from ore exports, first lever of SLN rescue plan Favourable external factors, mainly €/$ FX rate SLN cash-cost hampered by lower ferronickel
Slide 32: SLN mineral resources x4 thanks to new business model
SLN mineral resources x4 thanks to new business model SLN amongst Tier one nickel industry players, thanks to significant mineral resources, Poum SLN 2021 targeted mining production SLN mineral resources of 1,050 Mt1 on Spur R average (1.85% grade), equivalent to Tiebaghi Kouaoua c.19.4 Mt nickel co
Slide 33: Sandouville plant: significant progress towards break-even in EBITDA in 2020
Sandouville plant: significant progress towards break-even in EBITDA in 2020 Improved operating rate thanks to support of experts’ task force since the start of the year High purity nickel production (6.9 kt) and sales volume (6.7 kt) almost doubled in 2019 Improved key financial indicators EBITDA l
Slide 34: Mineral sands BU
Mineral sands BU
Slide 35: Stable end-markets for titanium products with price increase for premium CP slag
Stable end-markets for titanium products with overall price increase for premium CP slag Stable pigment market (90% of titanium-based end-products1) Sustained global demand in TiO2 feedstocks from Pigments producers in 2019 for high-end TiO2 intermediates such as CP grade titanium dioxide slag (“CP
Slide 36: Zircon product markets: prices at high level, slight erosion in Q4
Zircon product markets: prices at high level, slight erosion in Q4 Ceramics and Chemicals markets (~50% and 20% respectively of zircon's end-uses) Global demand for zircon down 10% in 2019 vs 2018: particularly Ceramics sector; other main segment (chemicals) stable Supply/demand balance for zircon s
Slide 37: Sustained level of production in Senegal and Norway
Sustained level of production in Senegal and Norway HMC1 production (titanium ore and zircon): Norwegian plant functioning close to nominal -5% to 735 kt, thanks to high operational capacity in 2019, except for taping incident last performance (OEE rate: +6% vs 2018), despite summer expected lower g
Slide 38: High Performance Alloys Division
High Performance Alloys Division
Slide 39: 2019 sales adversely impacted by logistics issue at A&D and depressed automotive market
2019 sales adversely impacted by logistics issue at A&D and depressed automotive market at Erasteel Sales by segment A&D1 sales (-19% vs 2018) -6.2% -13% decrease in aerospace segment (c.70% of A&D sales) -16.9% due to delays impacting sales in a stable market environment 1,087 1,020 No significant
Slide 40: High Performance Alloys' results impacted by overall sales decline and margin squeeze
High Performance Alloys’ results impacted by overall sales decline and margin squeeze at Erasteel A&D1 EBITDA at €1m, including logistics one-offs Significant slowdown in shipments, linked to delivery delays resulting from quality processes’ conformity review: -€49m EBITDA impact in 2019, vs -€13m i
Slide 41: In-depth restructuring of the Division for a sustainable performance recovery
In-depth restructuring of the Division for a sustainable performance recovery ORGANISATION OPERATIONAL & MANAGEMENT PERFORMANCE Corporate culture Results’ improvement Implementation of 3 Business Units, High focus on the sales development supported by empowered management and delivery recovery plan
Slide 42: Strategic transformation
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Slide 43: Continuing Group strategic transformation in 2020
Continuing Group strategic transformation in 2020: increasing cash generation and portfolio diversification 3 2 EXPAND our portfolio in GROW metals for the energy in our attractive businesses transition Lithium: 1 Manganese ore ▪ pilot plant at Centenario FIX / REPOSITION ▪ Growth in volumes in depo
Slide 44: New modular approach for brownfield expansion of Moanda manganese ore operations
New modular approach for brownfield expansion of Moanda manganese ore operations A HIGHLY COMPETITIVE MINE IN GABON A NEW MODULAR EXPANSION Operated by Comilog for 50 years Target to produce > 5 Mt manganese ore in 2020: Strong quality high-grade oxide commercial ore > Enhance production of the Bang
Slide 45: Weda Bay nickel: highly competitive NPI production in Indonesia to start in H1 2020
Weda Bay nickel: highly competitive NPI production in Indonesia to start in H1 2020, mine ramping-up MINING & METALS BUSINESS MODEL ATTRACTIVE METRICS Weda Bay Nickel business model balanced Production Production in 2 activities: mining and metallurgy target - Ore target - NPI 6 Mwmt1/year 30 kt2/ye
Slide 46: Lithium project in Argentina on hold until required conditions are met
Lithium project in Argentina on hold until required conditions are met HIGHLY VALUE-ACCRETIVE PROJECT STATUS UPDATE: PROJECT ON HOLD Long life low cost and scalable project, c.10 Mt Required conditions for launch not yet been LCE1 drainable resources, c.50 years of resources met, o/w: Battery grade
Slide 47: A leap in CSR management in 2019
A leap in CSR management in 2019 Launch of 2018-2023 CSR Roadmap Improvement of non-financial rating 3 components to meet Eramet’s challenges Vigeo Eiris rating’s progression in assessed ESG domains 13 objectives set for 2023 with an annual measurement 47 Eramet – 2019 results
Slide 48: Strong CSR Performance in 2019
Strong CSR Performance in 2019 Increase in the CSR Performance index* 112 representing +12 points compared with 2019 target 80% of industrial sites ISO14001 certified 87% of purchased electricity produced with carbon- 1.2 free footprint Ratio of rehabilitated / cleared areas -35% €20m accidents Inve
Slide 49: Conclusion and outlook
Conclusion and outlook
Slide 50: Committed to delivering in 2020, facing strong market headwinds
Committed to delivering in 2020, facing strong market headwinds Unpredictable and bumpy market start in 2020 Coronavirus outbreak being monitored; no significant impact to date Lower manganese prices at start of the year compared with previous year Strict cash control in 2020 and actions to tackle o
Slide 51: Q&A
Q&A Committed to women and men Committed to our planet A socially responsible, committed and contributory corporate citizen Responsible economic player
Slide 52: Appendices
Appendices
Slide 53: Coronavirus outbreak being monitored
Coronavirus outbreak being monitored ERAMET SALES IN CHINA ERAMET IN CHINA Mining and Metals 3 Locations 135 Division headcount 94% 1 Sales office HPA Division 6% Eramet Trading Ltd. Mineral (Shanghai) 31 Sands BU 5% 2019 1 Distribution center Manganese $980m BU 51% Aubert & Duval Moulds and Die Tec
Slide 54: Manganese BU – Key figures
Manganese BU – Key figures In €m 2019 2018 Sales 1,765 1,857 EBITDA 560 784 COI 459 699 CAPEX cash (214) (171) Operating cash flow(1) 317 529 54 Eramet – 2019 results (1) EBITDA + Δ(simplified WCR) – cash CAPEX
Slide 55: Nickel BU – Key figures
Nickel BU – Key figures In €m 2019 2018 Sales 778 738 EBITDA 38 (18) COI (58) (111) CAPEX cash (39) (57) Operating cash flow(1) 0 (51) 55 Eramet – 2019 results (1) EBITDA + Δ(simplified WCR) – cash CAPEX
Slide 56: Mineral sands BU – Key figures
Mineral sands BU – Key figures In €m 2019 2018(2) Sales 286 212 EBITDA 106 62 COI 64 35 CAPEX cash (13) (12) Operating cash flow(1) 84 53 (1) EBITDA + Δ(simplified WCR) – cash CAPEX (2) TiZir 50% until 30 June 2018, 100% from 1st July 2018 onwards 56 Eramet – 2019 results
Slide 57: High Performance Alloys Division - Key figures
High Performance Alloys Division - Key figures In €m 2019 2018 Sales 847 1,020 EBITDA (26) 46 COI (68) (8) CAPEX cash (56) (61) Operating cash flow(1) (87) (41) 57 Eramet – 2019 results (1) EBITDA + Δ(simplified WCR) – cash CAPEX
Slide 58: CRU price trends in manganese alloys (refined and standard) in Europe
CRU price trends in manganese alloys (refined and standard) in Europe CRU price trends for manganese alloys in Europe between January 2014 and January 2020 €/t 2,000 1,500 1,000 500 0 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Janv.-20 Medium-carbon ferromanganese High-carbon ferromanganese Silicoman
Slide 59: Reconciliation Group reporting and published accounts
Reconciliation Group reporting and published accounts Full Year Full year Full Year Full year Joint-venture Joint-venture €m 2019 2019 2018 2018 Published1 contribution Reporting2 Published1 contribution Reporting2 Sales 3,671 0 3,671 3,725 100 3,825 EBITDA 630 0 630 828 16 843 Current operating inc
Slide 60: Group income statement
Group income statement €m 2019 2018 Sales 3,671 3,825 EBITDA 630 843 % Sales 17% 22% Current operating income 341 581 % Sales 9% 15% Other operating income and expense (118) (116) Operating income 223 465 Financial result (134) (95) Pre-tax income 89 371 Share of income of equity affiliates (7) (3)
Slide 61: Cash-flow table
Cash-flow table €m 2019 2018 Operating activities EBITDA 630 843 Cash impact on items under EBITDA (420) (345) Cash from operating activities 210 498 Change in WCR (124) (49) Net cash generated by operating activities (1) 86 449 Investment activities Industrial investments (455) (281) Other investme
Slide 62: Group Balance Sheet at 31 December, 2019
Group Balance Sheet at 31 December, 2019 4,054 4,054 3,646 3,646 1,398 1,605 241 3,294 3,030 303 1,091 995 20 26 1,304 616 760 717 2018 2019 2018 2019 Fixed assets Equity-Group share Provisions and net deferred tax Net debt WCR Minority interests Financial instruments 62 Eramet – 2019 results
Slide 63: Bond maturities
Bond maturities Amount at Maturity €m Currency Initial amount 31/12/19 date Interest rate (in m) 2013 bond issue € 525 234 Nov-2020 4.5% 2016 ODIRNAN bond issue € 100 97 perpetual 4% TiZir bond renewal - July 2017 USD 300 285 July-2022 9.50% February September 2017 bond issue € 500 500 4.20% 2024 No
Slide 64: Shareholding at 31 December, 2019
Shareholding at 31 December, 2019 Number of shares issued: 26,636,000 Other float Duval Family: 32.1% SORAME + CEIR 36.9% 1.3% BRGM** 4.0% STCPI* 25.6% APE * STCPI (Société Territoriale Calédonienne de Participation Industrielle): entity owned by the New Caledonian provinces ** BRGM (Bureau de Reche
Slide 65: Contacts
CONTACTS Executive VP Strategy & Innovation – Investor Relations Philippe GUNDERMANN philippe.gundermann@eramet.com Investor Relations Manager Sandrine NOURRY-DABI sandrine.nourrydabi@eramet.com