Eramet SA · EURONEXT:ERA
Eramet SA — Investor Presentation (December 2015)
57 slides from Eramet SA's investor presentation, December 2015
Slide 1: ERAMET Investors and Analysts Presentation - December 2015
ERAMET Investors and Analysts Presentation - December 2015
Slide 2: Disclaimer
DISCLAIMER This document and the materials appended to it (together, the “materials”) may include certain forward- looking statements, beliefs or opinions, including statements with respect to ERAMET’s business, financial condition and results of operations. These statements reflect ERAMET’s beliefs
Slide 3: Content
CONTENT ERAMET ERAMET: a Global Leader in Mining and Metallurgy 4 The Mining and Metallurgical Sector: Update 18 ERAMET Financial Position 37 Action Plan 44 Appendices 50 3 ERAMET - DECEMBER 2015
Slide 4: ERAMET: A Global Leader in Mining and Metallurgy
ERAMET: A GLOBAL LEADER IN MINING AND METALLURGY 4 ERAMET - DECEMBER 2015
Slide 5: ERAMET: A Presence in All the Raw Material Value Chain
ERAMET: A PRESENCE IN ALL THE RAW MATERIAL VALUE CHAIN ERAMET is a mining and metallurgical group Transformation Metallurgy / Products Elaboration Metallurgy Extractive Metallurgy Mine Exploration Recycling R&D and Engineering at each stage 5 ERAMET - DECEMBER 2015
Slide 6: A Global Leader in Each of Its Businesses
A GLOBAL LEADER IN EACH OF ITS BUSINESSES Sales breakdown by division (2014) French mining and metallurgical group operating in 3 divisions and listed on Euronext Paris. ERAMET Nickel: ≠1 ferronickel producer worldwide ≠3 high grade nickel producer worldwide ERAMET Manganese: ≠2 of high-gr
Slide 7: A History Spanning Over More Than Years, With Continuous Diversification
A HISTORY SPANNING OVER MORE THAN 100 YEARS, WITH CONTINUOUS DIVERSIFICATION INTO NEW MINING AND METALLURGICAL ACTIVITIES Inauguration of Moanda Metallurgical Complex. Launch of EcoTitanium, to establish the first European facility for recycling aviation grade titanium Establishment of MKAD closed-d
Slide 8: Historical and Stable Shareholders
HISTORICAL AND STABLE SHAREHOLDERS ERAMET’s shareholders – June 30th, 2015 Others 19,12% BRGM2 Duval Family : 1,34% SORAME + CEIR STCPI1 37,06% 4,03% Carlo Tassara 12,79% Bpifrance 25,66% ERAMET group is jointly controlled by the Duval family holdings and Bpifrance (which recovered the FSI participa
Slide 9: A Worldwide Geographic Presence
A WORLDWIDE GEOGRAPHIC PRESENCE (20 COUNTRIES) WITH AN EXPANDING FOOTPRINT IN EMERGING COUNTRIES Sales breakdown by geography (2014) Alloys powder and transformation plants Manganese alloys and titanium dioxide Manganese chemicals and High purity nickel and alloys melting and transformation plants r
Slide 10: Diversified Markets
DIVERSIFIED MARKETS ERAMET sales breakdown by end-market (2014) Pigments Batteries 1% 2% Chemistry Other Mn 5% 3% Other Alloys 4% Carbon steel 34% Energy 3% Tooling 6% Steels: 55% Aerospace 17% Other Ni 3% Stainless steel 21% 10 ERAMET - DECEMBER 2015
Slide 11: ERAMET Nickel at a Glance
ERAMET NICKEL AT A GLANCE Positioning Activity overview Main applications #1 ferronickel producer Integrated ferronickel producer ~ 65% worldwide nickel production worldwide used in stainless steel Operation of nickel mines in New ≠1 nickel chloride producer Caledonia (SLN) worlwide ~80% of nick
Slide 12: ERAMET Alloys at a Glance: Aubert & Duval and Erasteel
ERAMET ALLOYS AT A GLANCE: AUBERT & DUVAL AND ERASTEEL Positioning Activity overview Main applications #2 closed-die forging parts Producer of highly Use of high advanced producer worldwide technological advanced products in a wide range of steel products industries given technological Elabo
Slide 13: ERAMET Manganese at a Glance
ERAMET MANGANESE AT A GLANCE Positioning Activity overview Main applications #2 high-grade manganese ore Integrated manganese producer > 90% worldwide manganese worldwide Operation of a manganese mine in production used in carbon steel Gabon (COMILOG) Non substitutable element in #1 refined manganes
Slide 14: Resources Access: World-Class Mineral Deposits
RESOURCES ACCESS: WORLD-CLASS MINERAL DEPOSITS 5 world-class deposits Manganese Gabon 40+ years ressources Under operation since more than 50 years Nickel New Caledonia – SLN 50+ years ressources Under operation since the end of the 19th century Nickel Indonesia - Weda Bay 50+ years ressources Proje
Slide 15: Key Partnerships with Countries and Territories
KEY PARTNERSHIPS WITH COUNTRIES AND TERRITORIES ERAMET is associating the main countries and territories where it operates: New-Caledonia STCPI holds 34% of SLN’s share capital. STCPI holds around 4% of ERAMET’s share capital. Gabon Around 30% of COMILOG’s share capital is owned by the Gab
Slide 16: A Proactive Sustainable Development Policy
A PROACTIVE SUSTAINABLE DEVELOPMENT POLICY ERAMET has put sustainable development at the centre of its strategy To protect as a priority the health and safety of its employees. To develop industrial processes in compliance with environmental regulation. To reduce the environmental impacts of i
Slide 17: Conclusion
CONCLUSION ERAMET is a French mining and metallurgical diversified group The Group owns leadership positions on each of its businesses. Plans for competitiveness and restructuring have been established to cover the economic climate Critical advantages to ensure the future and sustainable growth
Slide 18: The Mining and Metallurgical Sector: Update
THE MINING AND METALLURGICAL SECTOR: UPDATE 18 ERAMET - DECEMBER 2015
Slide 19: Market Update: Raw Materials Markets Are Very Depressed
MARKET UPDATE THE RAW MATERIALS MARKETS, AND METALS PARTICULARLY, ARE VERY DEPRESSED In a global environment in which metal prices have reached their lowest level in 15 years, the ERAMET group is particularly impacted by the prices of nickel and manganese, which have fallen simultaneously to histori
Slide 20: Nickel Prices
NICKEL PRICES Although nickel prices improved on average in 2014 from 2013, nickel prices are back to a very low level in the first- half 2015. A variation of 1 USD/lb LME nickel price implies a variation of 100 €million of the ERAMET Current operating income Nickel spot prices November 30th: 3.96 $
Slide 21: Nickel Ore Availability
NICKEL ORE AVAILABILITY Nickel ore imports from the Philippines to China have declined Imports of nickel ore in China in million wet metric tonnes Indonesian ore - Mt Philippines ore - Mt 8,0 7,0 6,0 5,0 4,0 3,0 2,0 1,0 0,0 9 8 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 1 2 3 4 5 6 7 8 9 1
Slide 22: ERAMET and Its Competitors Positions on Production Cost Curve
ERAMET AND ITS COMPETITORS POSITIONS ON PRODUCTION COST CURVE – Q3 2015 Cash Cost C1* ERAMET ~6$/lb ($/lb Ni) Near the 6th decile 5 $/lb 12 Densheng Vale NC Pamco Hachinohe 10 Fujian Yangjiang RKEF NPI BF SLN Donoambo IM EAF QNI Yabulu Murrin Murrin Nippon Yakin Koniambo Fuan RKEF Mount Keith Vale M
Slide 23: Global Stainless Steel Production
GLOBAL STAINLESS STEEL PRODUCTION The stainless steel production should be stable in 2015 Forecast kt 45 000 40 900 40 000 37 784 35 336 35 000 33 206 30 904 China 30 000 52% 50% 46% 41% 25 000 36% 20 000 15 000 10 000 Rest of the world 64% 59% 54% 50% 48% 5 000 0 2010 2011 2012 2013 2014 2015 23 ER
Slide 24: Nickel Supply / Demand Balance
NICKEL SUPPLY / DEMAND BALANCE We expect the market to show a small surplus this year kt 200 167 150 150 100 73 50 30 20 0 -50 -78 -100 2010 2011 2012 2013 2014 2015 24 ERAMET - DECEMBER 2015
Slide 25: ERAMET Nickel Production
ERAMET NICKEL PRODUCTION Nickel metallurgical production at the Doniambo plant declined 4% in the first nine months of 2015, over the same period in 2014 kt 2015 Forecast 60 000 56 446 54 360 55 011 55 000 53 015 50 000 45 000 40 000 35 000 30 000 25 000 20 000 15 000 10 000 5 000 0 2011 2012 2013 2
Slide 26: Continued Growth in the Aerospace Market
CONTINUED GROWTH IN THE AEROSPACE MARKET Further rise in Boeing and Airbus deliveries Number Actual Forecast of aircraft 1 600 1352 1 400 1189 1 200 Deliveries 1274 979 1104 1 000 894 858 852 800 668 832 605 600 684 553 400 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 26 E
Slide 27: First Integrated Aircraft-Grade Titanium Supply Chain in Europe
IMPLEMENTATION OF THE 1ST INTEGRATED AIRCRAFT-GRADE TITANIUM SUPPLY CHAIN IN EUROPE 27 ERAMET - DECEMBER 2015
Slide 28: ERAMET and Its Competitors Positions on Production Cost
ERAMET AND ITS COMPETITORS POSITIONS ON PRODUCTION COST Manganese ore producers position • 4th • 1er quartile quartile Vale South 32 ERAMET Assmang P Privat P UMK • 3rd • 2nd quartile quartile 28 ERAMET - DECEMBER 2015
Slide 29: Mn Ore: World Supply and Demand Balance
Mn ORE: WORLD SUPPLY AND DEMAND BALANCE Mn ore destocking is likely in the near-term on the back of production cuts in Q4’15. Mn units demand vs. ore production (in million tonnes of Mn contained) Oversupply Destocking likely in Q4’15 29 ERAMET - DECEMBER 2015
Slide 30: Mn Ore: Production Cuts to Come?
Mn ORE: PRODUCTION CUTS TO COME? Mn ore production Mn units demand vs. Mn ore supply in China in million tonnes of Mn contained in million tonnes of Mn contained 30 ERAMET - DECEMBER 2015
Slide 31: Mn Ore: South Africa Focus
Mn ORE: SOUTH AFRICA FOCUS In Q3’15, the depreciated Rand contributed to a rebound of South African ore exports (+16% vs. Q2’15). In Q4’15, a supply adjustment is likely on the back of South32 suspending Mn ore production and UMK reducing output by 50% in December and January. South African manganes
Slide 32: Production of ERAMET Manganese
PRODUCTION OF ERAMET MANGANESE Manganese ore production increased in 2015 (9 months 2015: 2,950 kt). Historic peak: 1.97 million of tonnes moved to the Owendo port in the first half of 2015, in line with the target of 4 million of tonnes annual goal. MANGANESE ORE AND SINTER PRODUCTION 2015 Forecast
Slide 33: Global Carbon Steel Production
GLOBAL CARBON STEEL PRODUCTION Stable outlook for the world steel production compared to the historical trend Mt Forecast 1 800 1 643 1 586 1 519 1 533 1 500 50% 50% 49% China 1 200 46% 47% 49% 900 600 54% 53% 51% 50% 50% 51% Rest of the World 300 0 2011 2012 2013 2014 2015 2016 Source : World Steel
Slide 34: World Steel Production
WORLD STEEL PRODUCTION Stable outlook for the world steel production compared to the historical trend kt 1 800 China 1 661 1 600 Rest of World 1950-2014 1 400 World CAGR +3.3% 1 308 1 200 1 000 704 747 800 600 400 189 200 0 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1
Slide 35: TiZir: An Integrated Player in Titanium Dioxide and Zircon
TIZIR: AN INTEGRATED PLAYER IN TITANIUM DIOXIDE AND ZIRCON TiZir Titanium and Iron (TTI) TiZir presentation: Tyssedal, Norway JV with Mineral Deposits Limited (Australia) Grande Côte Operations (GCO) Diogo,Senegal 2 sites: GCO in Senegal and TTI in Norway Upstream: GCO Grande Côte Operations to
Slide 36: Mineral Sands: Production at Grande Côte in Senegal
MINERAL SANDS: PRODUCTION AT “GRANDE CÔTE” IN SENEGAL Extraction run rate in line with target: 5500 to 6500 t/h of mineral sands dredged according to grade in current operation area Q3 2015 results: 5 938 t/h of mineral sands dredged Heavy Minerals Concentrate (HMC) production: 176 kt 36 ERAMET
Slide 37: ERAMET Financial Position
ERAMET FINANCIAL POSITION 37 ERAMET - DECEMBER 2015
Slide 38: Key Figures
KEY FIGURES Millions of € H1 2015 H2 2014 H1 2014 Sales 1,626 1,610 1,534 EBITDA 78 206 157 % Sales 5% 13% 10% Current operating income (70) 61 14 % Sales (4%) 4% 1% Net income – Group share (83) (100) (59) Net financial debt (805) (547) (473) Net debt-to-equity ratio 30% 20% 16% The reported data a
Slide 39: Current Operating Income
CURRENT OPERATING INCOME in millions of € 500 400 300 Millions of € H1 2015 H1 2014 200 Nickel (98) (27) Nickel 100 Manganese 32 61 Alloys 0 Manganese Alloys 15 0 Group -100 Holding (19) (20) -200 Group (70) 14 -300 39 ERAMET - DECEMBER 2015
Slide 40: Change in Current Operating Income
CHANGE IN CURRENT OPERATING INCOME 25 in millions of € 37 13 14 91 -56 * -29 12** -43 -70 -119 -3 Current Volume/Mix Prices Depr. Prov. Currencies Cost of Productivity Provision Exceptional Hedging $** Current operating And others Factors Ni items operating income inventories income H1 2014 H1 2015
Slide 41: Change in Net Financial Debt
CHANGE IN NET FINANCIAL DEBT METAL PRICES ARE DIRECTLY IMPACTING RESULTS AND DEBT In 400 In June 2015 the gearing M€ 196 * 200 ratio was 30%. 0 End 2012 End 2013 End 2014 End June 2015 ERAMET’s gearing ratio is -200 below those of the other -218 mining companies -400 -600 No major debt maturities en
Slide 42: Total Debt
TOTAL DEBT DEBT REPAYMENT MATURITIES: In M€ 700 642 Holding 600 Nickel Manganese 500 Alloys New debt negotiate* 400 321 295 300 187 200 130 100 52 42 44 44 49 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 42 ERAMET - DECEMBER 2015
Slide 43: Strong Financial Position
STRONG FINANCIAL POSITION Financial liquidity of the Group remains at a high level: M€ 2 000 1 937 1 831 196 1 500 760 850 Other non drawn lines Cash available Revolving credit lines 500 981 981 0 30/06/2015 31/08/2015 43 ERAMET - DECEMBER 2015
Slide 44: Action Plan
ACTION PLAN 44 ERAMET - DECEMBER 2015
Slide 45: Actions to Face the Metal Crisis
ACTIONS TO FACES WITH THE METAL CRISIS The Board of Directors of the ERAMET group decided to strengthen the operational action plan to improve the Free Cash-Flow Press Release, 14 October 2015 45 ERAMET - DECEMBER 2015
Slide 46: Major Measures to Reduce Costs and Improve Productivity
MAJOR MEASURES TO REDUCE COSTS AND IMPROVE PRODUCTIVITY ARE BEING PURSUED 2014 2016 Total of : - € 360 million 2017 2014-2017 2015 Reinforcement of productivity actions to be implemented in 2016 in Nickel division. 46 ERAMET - DECEMBER 2015
Slide 47: Reduction in Investments
REDUCTION IN INVESTMENTS 25% year-on-year reduction in capital expenditure in H1 2015. Industrial investments will be essentially limited to safety and strict maintenance Millions of € 650 641 600 587 550 ERAMET Nickel 500 492 ERAMET Manganese ERAMET Alloys 450 419 400 346 350 326 300 286 250 -25% 2
Slide 48: Dividends, Asset Disposal
DIVIDENDS, ASSET DISPOSAL A strict cash policy to face the crisis: Dividends Asset disposal projects No dividends were paid Pursuit of asset to ERAMET disposal programme shareholders in 2013 underway and 2014 48 ERAMET - DECEMBER 2015
Slide 49: Conclusion
CONCLUSION Given the particularly deteriorated market conditions, the Board of Directors has decided to limit industrial investments and to suspend the ERAMET group’s major projects. The Board will review regularly the Group’s investment capacity All of our teams are strongly committed to pursuing w
Slide 50: Appendices
APPENDICES 50 ERAMET - DECEMBER 2015
Slide 51: Reconciliation Between Group Internal Reporting and Published Financial Statements
RECONCILIATION BETWEEN GROUP INTERNAL REPORTING AND PUBLISHED FINANCIAL STATEMENTS (€ million) 1sr half year Joint-venture 1st half year 1sr half year Joint-venture 1st half year Full year Joint-venture Full year 2015 contribution 2015 2014 contribution 2014 2014 contribution 2014 Published (1) Adju
Slide 52: Income Statement as at 30 June 2015
INCOME STATEMENT AS AT 30 JUNE 2015 Millions of € H1 2015 H1 2014 Sales 1,626 1,534 EBITDA 78 157 % Sales 5% 10% Current operating profit (loss) (70) 14 % Sales (4%) 1% Other operating income and expense (45) (43) Operating profit (loss) (115) (29) Net cost of debt (26) (16) Other financial income a
Slide 53: ERAMET Nickel: Key Figures
ERAMET NICKEL : KEY FIGURES Millions of € H1 2015 H1 2014 2014 2013 2012 Sales 396 381 781 704 898 Current operating income (98) (27) (52) (222) (38) Industrial investments 37 42 97 172 146 53 ERAMET - DECEMBER 2015
Slide 54: ERAMET Alloys: Key Figures
ERAMET ALLOYS : KEY FIGURES Millions of € H1 2015 H1 2014 2014 2013 2012 Sales 510 474 938 904 997 Current operating income 15 0 23 4 (5) Industrial investments 16 23 48 64 84 54 ERAMET - DECEMBER 2015
Slide 55: ERAMET Manganese: Key Figures
ERAMET MANGANESE : KEY FIGURES Millions of € H1 2015 H1 2014 2014 2013 2012 Sales 718 683 1,429 1,562 1,560 Current operating income 32 61 137 218 350 Industrial investments 77 110 199 346 399 55 ERAMET - DECEMBER 2015
Slide 56: Balance Sheet as at 30 June 2015
BALANCE SHEET AS AT 30 JUNE 2015 ASSETS LIABILITIES 12/31/2014 06/30/2015 06/30/2015 12/31/2014 4 425 In millions of € 4 425 4 255 4 255 2 278 2 322 3 482 3 407 388 432 847 862 848 943 805 547 107 92 Fixed assets Equity – Group Share Net debt Working Capital Requirement Minority interests Financial
Slide 57: Contact
CONTACT Vice President Strategy and Financial Communication Philippe Gundermann Tel: +33 (0)1 45 38 42 78 Investor Relations and Strategic Analyst Hughes-Marie Aulanier Tel: +33 (0)1 45 38 38 04 Strategy and Financial Communication Analyst Ludovic Donati Tel: +33 (0)1 45 38 42 88