Aperam S.a. · EURONEXT:APAM
Aperam — Q3 2022 Earnings Presentation
110 slides from Aperam's earnings presentation, Nov 10, 2022
Slide 1: Q3 Results
Sustainable by Design Made for Life Q3 Results 10 November 2022
Slide 2: Disclaimer
Disclaimer Forward Looking Statements This document may contain forward-looking information and statements about Aperam SA and its subsidiaries. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with
Slide 3: Content
CONTENT Q3 2022 highlights page 4 Value Strategy 14 ESG 25 Business Overview 41 • S&E Europe 48 • S&E South America 58 • Services & Solution 61 • Alloys & Specialties 74 • Recycling & Renewables 83 • Appendix 105 3
Slide 4: Q3 2022 Operational Highlights
Q3 2022 OPERATIONAL HIGHLIGHTS Second best ever Q3 despite considerable negative inventory valuation impact Europe reflects a strong inventory cycle, cost inflation and normalizing product prices. Stable business in South America at peak level Import window has closed and anti-dumping duties work ef
Slide 5: Q3 2022 Market Update
Q3 2022 MARKET UPDATE Pronounced Destocking Masks Solid underlying demand. Import window has closed CONSTRUCTION CONSUMER AUTOMOTIVE & INCREASING DISTRIBUTOR INVENTORY GOODS TRANSPORT 85,000 100 80,000 90 Projects postponement Demand softens due Components 75,000 80 due to raw material to reduced co
Slide 6: Q3 2022 Financial Highlights
Q3 2022 FINANCIAL HIGHLIGHTS Solid Adjusted EBITDA and 43% FCF yield³ EURm Q3 22 Q2 22 qoq Q3 21 yoy Q3-22 KEY COMMENTS Sales 1,818 2,457 -26% 1,257 45% Shipments: Seasonal increase in Brazil qoq, seasonal trough in Adj. EBITDA 235 402 -42% 278 -15% Europe together with a pronounced inventory cycle
Slide 7: Q3 2022 Net Debt Bridge & Cash Flow
Q3 2022 NET DEBT BRIDGE & CASH FLOW High Structural Cash Conversion Explains Solid FCF Only Minor Benefit from NWC SOLID NFD REDUCTION DESPITE EUR123m STRUCTURAL CASH CONVERSION OF ~90% CASH RETURN TO SHAREHOLDERS @ NEUTRAL NWC* 150 140% 100 120% 50 100% 0 -50 80% -100 60% -150 40% -200 20% -250 0%
Slide 8: Q3 2022 Segments
Q3 2022 SEGMENTS Earnings Headwind from Negative Inventory Valuation and Destocking but Strong Contributions from Brazil & R&R Recycling & Renewables Stainless & Electrical Steel Services & Solutions Alloys & Specialties adj. EBITDA (EURm) adj. EBITDA (EURm) adj. EBITDA (EURm) adj. EBITDA (EURm) 759
Slide 9: Leadership Journey
IMPROVEMENT & GROWTH Leadership Journey® added EUR17m in Q3 (Σ EUR97m since Q1-21) Initiative LJ Phase 4 (EUR150m gains) LJ Phase 5 Phase 4 Target Gains 2020 2021 2022 2023 2024 2025 150 Σ EUR150m Leadership Journey 125 Sche- Genk CRM Earnings increase matic gains (EURm) 100 75 Footprint Earnings in
Slide 10: Q4 Guidance & Other Forward Looking Items
OUTLOOK Q4 Guidance & Other Forward Looking Items Q4 2022 OUTLOOK OTHER ITEMS Q4 2022 shipments are expected at a slightly FY 2022 base dividend raised by 25 cent to higher level qoq (Brazil stable in a seasonally EUR2.00 (= EUR152 million) softer quarter, Europe marginally higher) Cash return to sh
Slide 11: Quarterly Financial Results
QUARTERLY FINANCIAL RESULTS Solid Profitability Despite Inventory Valuation and Inventory Cycle as Major Headwinds SHIPMENT VOLUMES ADJ. EBITDA & MARGIN NET INCOME & EPS* ELG consol. 24.7% ELG consol. 22.1% 5.56 673 20.6% 635 402 363 4.16 345 14.9% 16.0% 16.4% 278 262 12.9% 2.67 2.53 508 11.9% 235 2
Slide 12: Quarterly Financial Results II
QUARTERLY FINANCIAL RESULTS II Strong Cash Conversion Results in High Free Cash Flow Further Deleveraging Despite High Cash Return to Shareholders ADJ. EBITDA BY SEGMENT CASH FLOW NET FINANCIAL DEBT DEVELOPMENT 402 EURm 363 345 666 132 170 209 88 87 90 571 278 55 58 262 492 -103 482 235 1.1 0.6 0.3
Slide 13: Events Post Q3 2022 Results
CORPORATE ACCESS Events Post Q3 2022 Results EVENT ORGANIZATION 15 November CEO conference, Paris Exane BNP Paribas 16 November ESG conference, Paris Societe Generale 17 November Roadshow, London Morgan Stanley 22 November Roadshow, Madrid Kepler Cheuvreux 23 November Cannonball run, Genk Morgan Sta
Slide 14: Value Strategy
VALUE STRATEGY BODEGA IRIUS Barbastro, Huesca Espagne / Marino Pascual & Asociados Arquitectura © Adriana Landaluce / Executed using Aperam Aperam 316L Uginox Top finish 14
Slide 15: A Differentiated Value Chain
A DIFFERENTIATED VALUE CHAIN With cost, margin and cash synergies across the value chain + + + + RECYCLING & RENEWABLES STAINLESS & ELECTRICAL ALLOYS & SPECIALITIES SERVICES & SOLUTIONS SCRAP IS OUR KEY RAW MATERIAL, ONE OF THE LARGEST & MOST TOP 3 PRODUCER IN STABLE & FAST CHARCOAL OUR MAJOR ENERGY
Slide 16: Financial Policy
FINANCIAL POLICY Clear & Consistent Financial Policy is Matched by Real Action 1 Strong Balance Maintenance APERAM CASH RETURN TO SHAREHOLDERS Sheet CAPEX <1x NFD/EBITDA² ~EUR130m + EUR20m CO2 (EURm) 2 Dividend* Progressive Strategy 194 EUR2.0/shr = EUR156m 93 105 90 70 3 Organic Growth M&A IRR mi
Slide 17: Value Creation in a Circular, Clean Economy Via Agility
STRATEGY Value Creation in a Circular, Clean Economy Via Agility We are ambitious to grow Aperam into a more sustainable and profitable company COST IMPROVEMENT MIX IMPROVEMENT ESG PERFORMANCE OPPORTUNITIES Lowest cost position Leverage materials Build on industry Sustainable attractive M&A option i
Slide 18: No Progress Without Stainless, Electrical Steel & Special Alloys
GROWTH No Progress Without Stainless, Electrical Steel & Special Alloys Photo Voltaic Solar: 2 to 5 t/MWe Stainless Steel SOLAR Geothermal: CELLS GEOTHERMAL >50 t/MWe 40 kg per car eg bipolar plates FUEL Stainless Steel & Alloys embedded tanks for heavy CELLS duties vehicles - 200 kg per truck Small
Slide 19: The Leadership Journey - Distinct Phases
PERFORMANCE Gains The Leadership Journey® - 4 Distinct Phases in Response to a Changing Market PHASE 1 PHASE 2 PHASE 3 PHASE 4 (USD350M) 2011-13 (USD225M) 2014-17 (EUR200M) 2018-20 (EUR150M) 2021-23 Restructuring Asset upgrade Transformation Footprint & Growth Production Lines New technology Footpri
Slide 20: Leadership Journey Raises Peaks and Troughs over Time
RESILIENCE Leadership Journey® Raises Peaks and Troughs over Time Schematic BETTER SUPPORT THAN 2020² EUR1.xbn > Leadership Journey® - EUR150m gains target 2021-23 EUR559m - Fixed cost variabilization Adj. EBITDA* >2020 > Trade protection limits price EUR310m EUR293m disruption of imports by cutting
Slide 21: Striking the Fine Balance Between Growth & Shareholder Returns
CASH FLOW Striking the Fine Balance Between Growth & Shareholder Returns FURTHER IMPROVING FCF CONVERSION as % of adj. EBITDA Cash usage 2011-15 2016-21 2025e Tax Interest Capex NWC FCF Other (incl. deleveraging) 21
Slide 22: Leadership Journey Main Lever for Strategy 2025
STRATEGY 2025 The Leadership Journey® is our Main Lever to Turn Aperam into a more Resilient and Profitable Company OUR PLAN TRANSITIONS APERAM TO A HIGHER NORMALIZED EARNINGS LEVEL* More Our industrial plan will Profitable create significant value Our plan ~ Future Higher profitability will • Footp
Slide 23: Convincing Reasons to Look at Aperam from an ESG Perspective
ESG SUMMARY Convincing Reasons to Look at APERAM from an ESG Perspective Products Non toxic, long lifespan and 100% infinitely recyclable without loss of quality Process We have ambitious ESG targets and a convincing track record Environment We are recycling champion and >48% of our energy intake is
Slide 24: Why to Invest in Aperam
WHY TO INVEST IN APERAM Our products will A team with a Agility is our serve the future track record mantra Our responsible produced Diverse, experienced with We focus on adapting quickly solution are best positioned a proven track record of to changing business to serve customers in an mastering gr
Slide 25: ESG
ESG Silène luminaris sive Muflier de Borges, Miguel Chevalier Fondation Clément, Le François, Martinique France Fabrication : Serrurerie La Parette, Roquefort-la Bédoule Aperam stainless steel used : Aperam 316 Hot Rolled 25
Slide 26: Aperam Approaches ESG Holistically
ESG OVERVIEW Aperam Approaches ESG Holistically ENVIRONMENT SOCIAL GOVERNANCE Best in class CO2 e footprint Health & Safety is our prime High ethical standards with objective zero tolerance Clear improvement targets - Waste Human Rights, Inclusion & Responsible supply chain - Air diversity Majority
Slide 27: Recycling and Renewables Upstream Today
RECYCLING & RENEWABLES Recycling and Renewables Upstream Today ESG DUST & Leadership SCRAP RENEWABLE RESIDUES RECYCLING ENERGY RECYCLING Stakeholder Value Cost Benefit BioEnergia & Growth 27
Slide 28: A Best in Class Footprint & Clear Improvement Targets
ESG STATUS & TARGETS A Best in Class Footprint & Clear Improvement Targets² CRITERIA 2030 TARGET APERAM 2021 vs 2015 Energy intensity1 6.9 GJ/tcs² -11% vs 2015 7.8* GJ/tcs² 0% ! CO2 intensity³ 0.30 te/tcs² New objective 0.33* te/tcs² -39% ✓ Water consumption 6.1 m3 /tcs² -40% vs 2015 10.0* m3/tcs² -
Slide 29: Aperam Produces a Superior Product in a Sustainable Way
PRODUCT & PROCESS Aperam Produces a Superior Product in a Sustainable and Responsible Way Very long useful life Corrosion resistant Abrasion resistant SUPERIOR 100% recyclable Acid resistant Aesthetic PRODUCT Non toxic Fire proof Mechanically strong RENEWABLE Our blast furnace in Brazil uses 100% ch
Slide 30: We are Part of the Solution
PRODUCTS We are Part of the Solution e-Mobility solutions enable e-vehicle components such as converters, inverters, onboard-charges, motors, EPS, cooling solutions systems, air conditioning systems, current sensors, charging stations, fuel cells and battery packs Stainless and alloys help the marin
Slide 31: Recycling Content & Renewable Share Puts Aperam in Best-in-Class Position
GHG Recycling Content & Renewable Share puts Aperam in a Best-in-Class Position SCRAP USAGE REDUCES APERAM ENERGY MIX 2021 ELECTRICITY IS KEY FOR CO2 EMISSIONS SUBSTANTIALLY* DECARBONIZING 1000 900 31% 37% Re- 800 newable 700 kg CO 2/MWH Energy 600 3% 2021 500 400 300 29% 200 100 0 China USA Belgium
Slide 32: Transparent Plan for 0.30 tCO2e/tcs by 2030
GHG Aperam has a Transparent & Realistic Plan for Realizing 0.30 tCO2e/tcs by 2030 and Carbon Neutrality by 2050 APERAM CO2 EMISSION BY SCOPE APERAM CO2e EMISSION ROADMAP* MEASURES & CAPEX 0.33 te/tcs* Target: <0.3 tCO2e/tcs in 2030*² SCOPE 2 2.0 Electricity Global steel (Worldsteel) 1.8 ~33% are ba
Slide 33: 50% of our Energy is from Carbon Neutral Sources
APERAM ENERGY NEEDS & CO2 50% of our Energy is from Carbon Neutral Sources Natural Gas : ~48% ~29% Electricity ~16% Raw Materials ~7% Others (Electrodes) > Efficiency increase > Efficiency increase > Higher recycling content > No replacement > Electrification (renewable > Asset replacement (~30- > P
Slide 34: Aperam has an industry leading CO2e footprint
2 FOOTPRINT Aperam has an industry leading CO2e footprint1 Raw materials Electricity 0.43 t CO2e/t* Stainless scrap EU ETS (= scope 1) Ferronickel Consumables: Electricity Europe Ferrochrome Graphite Electrode Nat. gas Electricity Electricity Other alloys Natural gas Nat. gas EAF & Second Molten Sla
Slide 35: Health & Safety: Our Prime Objective
HEALTH & SAFETY Our Prime Objective ROADMAPS LTIFR IS HALF WITH 3 STRATEGIC AXES OF SS INDUSTRY* SEVERITY RATE** Prevent and control the risk 0 Fatality of fatal and severe accidents 2021 57 LTI 2020 - Detailed improvement plan 10 Restricted work 2019 121 Declared accident post a H&S audit of each s
Slide 36: Convincing environmental track record and clear improvement targets
ENVIRONMENT Aperam has a convincing environmental track record and clear improvement targets Dust emissions (g/t crude steel) CO2 emissions (t/t crude steel)* Water intake (m3/t crude steel) 0.8 0.7 0.6 0.5 0.4 0.3 11.8 0.72 0.61 0.50 0.48 0.48 0.54 0.58 0.49 0.49 0.50 0.47 0.34 0.30 11.5 10.7 10.2
Slide 37: Targets Have Been Linked to Management Compensation
ESG KPIs Targets Have Been Linked to Management Compensation HEALTH & SAFETY CO2 INTENSITY GENDER DIVERSITY (TRIR*) (t/t crude steel)** (in % of TOP1000) These KPIs are -4 -45% +36% reflected in the Management Long 0.55 30 7 3 0.34 0.3 22 Term Incentive Plan 2021 2026 2015 2021 2030 2019 2029 2022-2
Slide 38: Sustainable Development Goals
Sustainable Development Goals, in Particular: Gender balance ranks highly on our priority list since 2017 with a Lowering water consumption and special commitment from improving the quality of discharge are key concern and the priority in all our Management. Aperam established specific elements of o
Slide 39: Our Leadership Team: Diverse & Experienced
GOVERNANCE Our Leadership Team: Diverse & Experienced KEY FACTS & COMPENSATION Entrusted with day-to-day management of the Company Appointed by the Board of Directors Experience and industry know how Average age: 50 / 6 nationalities compliance CTO is also Head of Health, Safety & Environment Compen
Slide 40: Our Diverse Board of Directors Ensures Effective Governance
GOVERNANCE Our Diverse Board of Directors Ensures Effective Governance PRINCIPLES OF OUR BOARD SHAREHOLDER STRUCTURE Responsible for strategic direction and oversight of the business, as well as for appointing senior management 8% Election subject to shareholder approval. Directors are elected 23% 6
Slide 41: Business Overview
BUSINESS OVERVIEW Extension of the CTLES, Bussy-Saint-Georges - France / Antonini + Darmon © Pierre L'Excellent / Executed using Aperam grade 304L with Uginox Bright finish 41
Slide 42: Aperam is active in Stainless, Electrical & Specialty Steel & Scrap
BUSINESS OVERVIEW Aperam is active in Stainless, Electrical & Specialty Steel & Scrap #2 in Europe and the Only Producer in S. America Revenue by industry 2021 bn Sales* ~10,600 Employees 2.5mt Building & Construction Automotive Capacity Catering & Appliamces Energy & Chemicals 51 General Industry T
Slide 43: Group Segments
BUSINESS OVERVIEW Group Segments* RECYCLING & RENEWABLES STAINLESS & ELECTRICAL SERVICES & SOLUTION ALLOYS & SPECIALTIES 1.6mt Scrap & Charcoal shipments 2.5mt production capacity 646kt of gross shipments 40 kt production capacity 32kt superalloys shipments 1.6mt of gross shipments 13% of group adj
Slide 44: Aperam Value Chain and how it Splits into Segments
BUSINESS OVERVIEW Aperam Value Chain and how it Splits into Segments Raw. Mat. Slabs Hot rolling Cold rolling / Finishing Service Isbergues Direct Sale Châtelet 0.35Mt 1.0Mt Châtelet Genk Stainless 2.8Mt 0.7Mt flat Service ELG Center (Scrap) Genk End customers 1.2Mt 1.0Mt Gueugnon Steel service 0.4M
Slide 45: Main Production Sites
BUSINESS OVERVIEW Main Production Sites Châtelet, Belgium Genk, Belgium Gueugnon, France Isbergues, France Timóteo, Brazil Imphy, France Location & facts Location & facts Location & facts Location & facts Location & facts Location & facts Melt shop Melt shop Cold-rolling mill Cold-rolling mill Melt
Slide 46: A Balanced Risk Profile and Customer Structure
BUSINESS OVERVIEW A Balanced Risk Profile and Customer Structure SHIPMENT BY SEGMENT 2021* ADJ. EBITDA BY SEGMENT 2021* 17% S&E Europe S&E Europe 28% S&E S. America 5% 40% S&E S. America 46% A&S A&S 1% S&S S&S 38% 25% REVENUE BY REGION 2021 REVENUE BY CUSTOMER INDUSTRY 2021 5% Building & Constructio
Slide 47: Self-help has Transformed the Group
BUSINESS OVERVIEW Self-help has Transformed the Group SHIPMENT BY SEGMENT (KT) ADJ. EBITDA BY SEGMENT (EURm) 1,936 1,972 1,917 1,886 1,060 S&S S&S 1,819 1,786 A&S A&S 559 504 1,677 451 455 S&E 340 S&E 293 Group Net Group Adj. Shipments EBITDA 2015 2016 2017 2018 2019 2020 2021 2015 2016 2017 2018 20
Slide 48: Stainless & Electrical Europe
STAINLESS & ELECTRICAL EUROPE 48
Slide 49: Adding Product Differentiation to Cost Leadership
S&E EUROPE SUMMARY Adding Product Differentiation to Cost Leadership DIFFERENTIATORS EARNINGS GROWTH & VS VALUE DRIVERS European cost leader - Efficient footprint Genk downstream ramp-up adj. EBITDA - Logistics advantages Footprint improvement & Flexible production set up debottlenecking Product por
Slide 50: S&E Europe Track Record
S&E EUROPE TRACK RECORD Self-help Measures Yield a Robust Operational Performance Despite a Price and Volume Squeeze Major adj EBITDA contributor 2021 Robust profitability capitalizing on continuous improvement 11.1% 12.8% 14.5% 8.8% 9.1% 459 17% 6.0% S&E Europe 4.6% 352 5% 40% S&E S. America 258 26
Slide 51: Highly Flexible Integrated Multi-Plant Footprint
S&E EUROPE ASSETS Highly Flexible Integrated Multi-Plant Footprint with Superior Inbound and Outbound Logistics LOCATED IN THE EU FLEXIBLE, EFFICIENT INDUSTRIAL CORE AND RISK MINIMIZING FOOTPRINT plants efficiently operate as one integrated supply chain 51
Slide 52: Footprint Improvement through Leadership Journey 4
S&E EUROPE STRATEGIC TARGETS Footprint Improvement through Leadership Journey® 4 Strengthens our Core Strategic Pillars We aim to be the European cost leader in every product we deliver COST LEADER Footprint changes will realize additional cost leadership potential We continuously improve our mix by
Slide 53: Product Flow Optimization Secures Cost Leadership Positions
S&E EUROPE PRODUCT PORTFOLIO 2023 Product Flow Optimization Secures Cost Leadership Positions & enables mix improvement in Genk and Gueugnon Slabs Hot rolling Cold rolling / Finishing Service & distribution Customer Châtelet 1.0Mt Isbergues 0.35Mt Direct Sale End Châtelet 2.8Mt Genk 0.7Mt 0.9M Stain
Slide 54: Targeting European Cost Leadership Position
S&E COST POSITION 2023 Targeting European Cost Leadership Position in all Standard & Top Line Products Cost leading footprint 2020 Improved footprint post LJ4 in 2023 Market Standard products Top line products Market Standard products Top line products Austenitic HR Duplex 2000 wide Austenitic HR Du
Slide 55: Effective Measures against Unfair Trade
EU TRADE ACTION Effective Measures against unfair Trade have been put into Place Safeguard Anti-dumping duties (AD) Countervailing duties (AS) • Maintain traditional trade flows • Duty on imports that are priced • Neutralize effect of subsidies that Aim below fair market value benefit certain import
Slide 56: Anti-dumping Measures are Effective in Limiting Price Distortions
EU STAINLESS STEEL IMPORTS Anti-dumping Measures are Effective in Limiting Price Distortions HOT ROLLED COLD ROLLED TOTAL STAINLESS IMPORTS & MARKET SHARE IMPORTS & MARKET SHARE IMPORTS & MARKET SHARE 600 40% 000't 50% 400 40.0% Cold rolled (kt) 140 35.0% 500 35% Hot rolled (kt) 120 40% 300 30.0% 10
Slide 57: Segments with Minimal Energy Cost Impact
ENERGY COST 4 out of 5 Segments with Minimal Energy Cost Impact ENERGY COST ARE IMPACTING S&E EUROPE MAINLY* • Belgium (Chatelet. Genk) and France (Imphy, Gueugnon) are main EU LTM electricity consumers adj EBITDA • In Europe we buy from the grid both spot & forward • Germany: S&S (Haan) and ELG Maj
Slide 58: Stainless & Electrical Brazil
STAINLESS & ELECTRICAL BRAZIL 58
Slide 59: A Resilient, Profitable Business with Development Potential
S&E SOUTH AMERICA A Resilient, Profitable Business with Substantial Development Potential DIFFERENTIATORS EARNINGS GROWTH & VS VALUE DRIVERS Unique market position Debottlenecking & upgrade Very competitive cost investments: adj. EBITDA position - GO upgrade to HGO - Local raw material supply - HRM
Slide 60: A Flexible, Agile & highly Profitable Asset
S&E SOUTH AMERICA TRACK RECORD A Flexible, Agile & highly Profitable Asset Brazil Achieved a Record Year in 2021 Earnings Reflect a Better Mix and Favorable Pricing 11.1% 12.8% 14.5% 8.8% 9.1% 459 17% 6.0% S&E Europe 4.6% 352 5% 40% S&E S. America 258 260 220 A&S 150 101 38% S&S 2015 2016 2017 2018
Slide 61: Brazil is an Extremely Cost Competitive Asset Globally
S&E SOUTH AMERICA Brazil is an Extremely Cost Competitive Assets Globally With Significant Near and Medium Term Growth Options BRAZIL WORKS DIFFERENTLY 20 Low & stable energy costs USD/MMBtu 15 Nat. Gas 10 5 support excellent profitability 0 2019 2020 2021 Spot Resilient & very profitable even E
Slide 62: Our Brazil Footprint is Unique
S&E SOUTH AMERICA ASSETS Our Brazil Footprint is Unique Flexibly Switches Between Products and Markets to Maximize Profitability Aperam South America footprint Mix² Upstream integration Exports Raw material: Caracas (Venezuela) Domestic Cost competitive & CO2 neutral charcoal from our FSC BioEnergia
Slide 63: Brazil offers ample opportunity for cyclical and structural growth
S&E SOUTH AMERICA GROWTH Brazil offers ample opportunity for both cyclical and structural growth Brazil consumes substantially below OPPORTUNITIES EXAMPLES OF STAINLESS STEEL the global trend line USAGE IN THE AGRO BUSINESS Short term: Equipment for the transport China Reviving the economy. Large
Slide 64: Three pillars of trade protection
BRAZIL TRADE PROTECTION Three pillars of trade protection against unfair market behavior IMPORT DUTY LOGISTICS ANTI-DUMPING DUTY Stainless flat products: • China: up to USD629/t, Taiwan up to USD705/t since 4.10.19 for 5 years Brazil EU 28 Stainless steel welded tubes: Area (mn km2) 8.51 -45% 4.66 •
Slide 65: Services & Solutions
SERVICES & SOLUTIONS 65
Slide 66: Technology & Service Based Growth
S&S SUMMARY Technology & Service Based Growth DIFFERENTIATORS EARNINGS GROWTH & VS VALUE DRIVERS Largest and most profitable integrated Expand successful business model: lowest cost to serve adj. EBITDA stainless distributor +55m and lowest OWCR Secure supply & largest product range due to Strengthe
Slide 67: Stronger Partnership With Customers Enhances Margins
S&S TRACK RECORD Stronger Partnership With Customers Enhances Margins A significant adj EBITDA contributor 2020 Services & Solutions benefitted from higher demand and a in a record year for Services & Solutions favorable spot market 9.0% 17% S&E Europe 4.7% 5% 40% 3.4% 199 S&E S. America 2.5% 2.5% 2
Slide 68: Services & Solutions: worst year ROCE 9%, best year 42%
Services & Solutions WE ARE WE DO > arm, ~1,500 FTE > Cutting, slitting, polishing, just in time > 20 service centers , 15 agencies & rep offices > We provide market intelligence and leadership in 36 countries for the group > 6000+ active customers worldwide sell 40% of > Deep & wide customer reach
Slide 69: S&S Footprint
S&S FOOTPRINT INDUSTRIAL CENTERS LITHUANIA EFFICIENT DISTRIBUTION PHYSICALLY & ONLINE UNITED KINGDOM IRELAND NETHERLAND POLAND > Aperam has the biggest and GERMANY Genk most profitable integrated Haan Siemianowice distribution network in the Isbergues CZECHIA UKRAINE stainless steel industry Rodange
Slide 70: Distribution is the main route to 70% of our market
MARKET Distribution is the main route to 70% of our market MILLS MAJOR INDUSTRIAL REAL (Stainless & Electrical) CUSTOMERS DEMAND 30% Accept few month lead time < 200 30% customers Accept full coils 2-4 month lead time Distribution High contracted volumes 20-32 t full coils Independent Prefer big acc
Slide 71: Stainless Steel Distribution is still fragmented
COMPETITIVE LANDSCAPE Stainless Steel Distribution is still fragmented EU Stainless distribution SSCs characteristic Have number of transformation tools Provide wide product offer in grades, finishing and forms Mill supply Big End User Focus on big-midsize and/or contracts end users SSCs Master Shee
Slide 72: S&S is a strong contributor
EARNIGNS GROWTH S&S is a strong contributor we provide stability, depth and wide reach S&S Shipments (kt) EBITDA adjusted ( IMPROVING OUR SALES MIX IS OUR KEY 818 199 GROWTH DRIVER kt 726 646 80 mid-cycle kt 83 kt 70 43 45 38 2016 2017 2018 2019 2020 2021 Innovate and apply existing solutions to new
Slide 73: Profitable Development Strategy Based on a Strong Business Model
EARNINGS GROWTH We Pursue a Profitable Development Strategy Based on a Strong Business Model CONSIDERABLY HIGHER MARGINS S&S COST COMPETITIVENESS + RIGHT STRATEGY DOWNSTREAM + FLAT COST CURVE Further expand industry benchmark + LEAN INVENTORY cost to serve per ton & lower OWCR x6 Accelerate acquisit
Slide 74: Alloys & Specialties
operom ALLOYS & SPECIALTIES
Slide 75: Differentiated Assets, Products and Debottlenecking
A&S SUMMARY Differentiated Assets, Products and Debottlenecking make it our Highest Growth Segment DIFFERENTIATORS EARNINGS GROWTH & VS VALUE DRIVERS Technology competence : Debottlenecking of operations A&S solves problems for in flat products adj. EBITDA customers Very strong position in + Hot rol
Slide 76: Stable Niche Market with High Margins
A&S TRACK RECORD Stable Niche Market with High Margins Value Added Products & End User Orientation High Value-Added Segment 2021 Drive Profitability 1,933 1,407 1,385 1,456 1,278 17% 1,147 58 S&E Europe 50 864 46 46 45 5% 40% S&E S. America 39 26 A&S 38% S&S 2015 2016 2017 2018 2019 2020 2021 Adj. E
Slide 77: A Truly Global Footprint
A&S LOCATIONS A Truly Global Footprint Aperam sales office Other representation 77
Slide 78: Supplying a Highly Diversified Range of Industries
A&S SALES SPLIT Supplying a Highly Diversified Range of Industries Other E&E 1% 19% 20% Marine Aero 7% 7% Auto 23% Process 23% ind. O&G 78
Slide 79: A&S Grew organically into the Second Largest Alloys Producer
A&S COMPETITIVE POSITION A&S Grew organically into the Second Largest Alloys Producer Globally kt Long Products ROCE: A&S is profitable & stable Flat Products 20% 10% * 0% -10% -20% 2016 2017 2018 2019 2020 2021 Aperam US competitor 1 Asia 1 US 2 Asia 2 Asia 3 1% Strip 39% Plates 44% Bars Wire 3% 13
Slide 80: Commodities vs. Specialties
COMMODITIES VS. SPECIALTIES and is perceived by the customer as bringing a specific value above its primary purpose (e.g. service, image COMMODITIES SPECIALTIES 1 Price sensitive Value sensitive Understand total cost of ownership / life cycle costs 2 Standardized Tailor-made Adapt commercial offer t
Slide 81: E-mobility, New Energies and OLEDs are A&S Growth Markets
GROWTH & INNOVATION E-mobility, New Energies and OLEDS are A&S Growth Markets Meet technical requirements of Contribute to the challenge of efficiency Respond to the high precision required electrification for cars, trains, flying yield in future power generation for the production of new display ta
Slide 82: (e-)Mobility Solutions
APERAM ALLOY GRADES (e-)Mobility Solutions 82
Slide 83: Recycling & Renewables
RECYCLING & RENEWABLES DUST & SCRAP RENEWABLE RESIDUES RECYCLING ENERGY RECYCLING BioEnergia 83
Slide 84: Circular Economy & Strategic Supply
R&R SUMMARY Circular Economy & Strategic Supply DIFFERENTIATORS EARNINGS GROWTH & VS VALUE DRIVERS Strong global Platform: Natural growth of recycling • Top 3 in EU SS scrap volumes worldwide adj. EBITDA • US: leading position • Global leader in superalloys Superalloys to Benefit from Aerospace Reco
Slide 85: Aperam Recycling
Aperam Recycling 85
Slide 86: ELG is a Global Leader in Trading, Processing of Resources
APERAM RECYCLING ELG is a Global Leader in Trading, Processing of Resources for Stainless Steel as well as High Performance Materials GLOBAL FOOTPRINT KEY FIGURES 2021 Annual Tonnage 1.2 Mill t Sales 2.0 Bill EUR Employees (FTE) 1,150 CO2-EQ savings1 50+ locations 4.5 Mill t 18 countries 5 continent
Slide 87: Aperam Recycling: Business Divisions
APERAM RECYCLING: BUSINESS DIVISIONS Delivering value by identifying the best usage of collected resources and processing for the most suitable application STAINLESS STEEL SUPERALLOYS AMER | EMEA | APAC UTICA ALLOYS Trading, processing and recycling of alloyed Revert management of, trading, processi
Slide 88: Aperam is at the Heart of the European Circular Economy
CIRCULAR ECONOMY Aperam is at the Heart of the European Circular Economy. Scrap & Recycled Material are our Dominating Input Automotive Construction Other Aperam uses ~90% scrap in Transport its austenitic grades Customers 14 years 50 years 30 years 90% 85% 90% Scrap is sourced regionally in 12% 18%
Slide 89: Europe Stainless Steel & Superalloys Value Chain
EUROPE STAINLESS STEEL & SUPERALLOYS VALUE CHAIN ELG takes a key role in the value chain to supply high quality secondary raw materials SCRAP RECYCLING SCRAP SUPPLY MELTING, CASTING COLLECTION PROCESSING DISTRIBUTION Physical intake, inbound Sorting, sizing, shredding dilution of impurities & Just i
Slide 90: Stainless Scrap is Complex
INPUT MATERIAL MIX Stainless Scrap is Complex: Various Shapes & Alloys Make it a Value Adding Business SCRAP TYPES MATERIALS SHAPES ELG SERVICES ~4,000 suppliers world-wide MATERIAL Solid QUALITY Industrial “new” scrap Pure metals > Clippings > Cuttings COORDI- > Trimmings NATE > Bundles PHYSICAL Fe
Slide 91: ELG Utica Alloys Superalloys Trading and Tolling Model
SUPERALLOYS ELG Utica Alloys operates a trading model with a classical value chain and a tolling model Ti Co Ni W Cr Nb Mo COMPETITORS PRIMARY RAW MATERIALS ~30% Super Alloy & Titanium Specialists MELTERS ENSURE FORGING, CASTING, FABRICATION ~70%[1] OPTIMAL PROPORTION OF METALS PROCESSING OF METALS
Slide 92: We Actively Tap Global Growth in Europe and the Americas
APERAM RECYCLING: MARKET SEGMENT GROWTH We Actively Tap Global Growth Via our Strong Presence in Europe and the Americas - the Two Major Market Segments EXTERNAL STAINLESS SCRAP DEMAND RECOVER FROM THE AEROSPACE SUPPLY CHAIN In Mill mt CAGR CAGR 2021 - 2025 In K mt 2021 - 2025 +9.0% +8.6% +8.1% +10%
Slide 93: Re-defining the Scrap/mill Interface Unlocks EUR24m pa
SYNERGIES Re-defining the Scrap/mill Interface Unlocks EUR24m pa after three years FINANCIAL PERFORMANCE FOLLOWS THE WORKING WITH S&E and S&S STAINLESS STEEL CYCLE CREATES UNIQUE SYNERGIES 1.4 mn t EUR80m EUR750m TCO* Value Creation: PEAK • Optimize monetary benefits along the value chain • Increase
Slide 94: Growing Use of Stainless Means Growing Scrap Reserve
APERAM RECYCLING: SCRAP RESERVE Growing Use of Stainless Means Growing Scrap Reserve For Future Recycling GLOBAL SCRAP RESERVE CONTINUES TO GROW DESPITE RECYCLING OF 300m t OF STAINLESS BY 2025 Cumulative stainless usage to exceed Scrap Reserve/Material in 700 Mil t in 2025 Use. in Mill t 1995: 106
Slide 95: Recyco
operom RECYCO
Slide 96: Nickel Recycling With Substantial Growth Potential
RECYCO Nickel Recycling With Substantial Growth Potential PRODUCTION PROCESS BENEFITS GROWTH > Recyco uses waste (sludge, > Environmentally friendly re- > Higher input flexibility and shot, powdered dust) to use of otherwise obsolete broader scope of treatable produce metallic rich ferro- steel plan
Slide 97: Sustainability, Innovation, Efficiency
Sustainability Innovation Efficiency
Slide 98: Large Scale, Sustainable Forest Operations
BIOENERGIA Large Scale, Sustainable Forest Operations Subsidiary of Aperam South America World leader in 1,000 +45 patents charcoal employees 126 k ha Directly employed 76k ha planting 50k ha native 450k ton/year 06 charcoal Measurable positive impact on genetic material and + others production unit
Slide 99: More Than 40 Years of History
BIO ENERGIA TIME LINE More Than 40 Years of History Acesita S.A. creation Beginning of eucalyptus FSC® Certification Aperam plantations 1940‘s 1960‘s 1970‘s 1990‘s 2008 2010 2011 2021 Start of eucalyptus R&D Privatization OHSAS (H&S) 450 kton/year + genetic improvement & ISO (quality) certifications
Slide 100: BioEnergia Location
BIOENERGIA location Aperam BioEnergia Vale do Jequitinhonha Region 20km Distance: 350 km Travel time: ~5 hours Aperam South America Timóteo City 100
Slide 101: Know-how and Technology Driven Forestry Operations
BIOENERGIA Know-how and Technology Driven Forestry Operations: 1 - R&D 2 - Nursery 3 - Planting 4 - Silviculture Forest R&D activities focused on High quality seedling production Yearly planting of ~6.500 ha with Forest care and maintenance to the development of new high (30 MM/year capacity), both
Slide 102: BioEnergia is a critically important carbon offset asset
CO2 COMPENSATION PLAN BioEnergia is a critically important carbon offset asset* Forest management to produce Biomass density growth charcoal (biomass) is reducing increases the CO2e storage ~1 mt of CO2e pa FOREST SEQUESTERS capacity, resulting in an LARGE AMOUNTS OF CO2 additional CO2e sequestratio
Slide 103: Our Brazil operations are carbon neutral today
DECARBOIZATION ROADMAP Our Brazil operations are carbon neutral TODAY Charcoal Since the beginning charcoal was used as fuel. 100% since 2012 in both BFs FSC Sustainable forest management guarantees long term benefit can be maintained Certification More than 80% of Brazilian Electricity comes from r
Slide 104: Positive Impact on Regional Prosperity
SOCIAL IMPACT Our Activities have a Visible Positive Impact on Regional Prosperity HDI - Human Development Index 0,632 0,628 0,622 0,624 0,598 0,682 0,633 0,632 0,571 0,542 0,638 0,541 0,653 0,597 0,618 0,646 0,582 0,620 0,576 0,581 Source: IBGE (Brazilian Institute for Geography and Statistics) 201
Slide 105: Appendix
APPENDIX Résidence Hôtelière du Rail, Montparnasse Station, Paris - © Frédéric Delangle / Executed using grade 304L, with Uginox Mat finish 105
Slide 106: Key Prices & Exchange Rates
APPENDIX Key Prices & Exchange Rates NICKEL NICKEL PIG IRON STAINLESS SCRAP 40,000 270 35,000 2,300 30,000 220 25,000 1,800 20,000 170 1,300 15,000 10,000 120 800 Jan 19 Jul 19 Jan 20 Jul 20 Jan 21 Jul 21 Jan 22 Jul 22 Jan 19 Jul 19 Jan 20 Jul 20 Jan 21 Jul 21 Jan 22 Jul 22 Jan 19 Jul 19 Jan 20 Jul
Slide 107: Aperam is a Solid Performer in every Phase of the Cycle
APERAM TRACK RECORD Aperam is a Solid Performer in every Phase of the Cycle 2021 VOLUMES REFLECT THE A LEAN ORGINAZION BENEFITS FROM HIGHER MARGINS AND EXCEPTIONS ECONOMIC RECOVERY A JOINT PRICE & VOLUME RECOVERY GAINS TRIPLE HISTORIC PEAK EPS 20.8% 12.21 1,972 1,936 1,917 1,886 12.7% 11.8% 10.6% 10
Slide 108: High Cash Flow, Low Maintenance CAPEX and High Cash Returns
APERAM TRACK RECORD High Cash Flow, Low Maintenance CAPEX and High Cash Returns to Shareholders SOLID AVERAGE 8% FREE CASH FLOW CAPEX: LOW MAINTENANCE + BEST IN CLASS DISTRIBUTION TO YIELD* SOLID INVESTMENT IN GROWTH (EURm) SHAREHOLDERS 12% (EURm) 9% 10% 8% 7% 367 6% 5% 150 194 281 260 241 93 105 21
Slide 109: Maintaining a solid Balance Sheet Forms Basis of Financial Policy
APERAM TRACK RECORD Maintaining a solid Balance Sheet forms the Basis of our Financial Policy A STRONG BALANCE SHEET ADDS BALANCED MATURITY PROFILE & A SOLID MIX OF FINANCING SAFETY IN A VOLATILE INDUSTRY* AMPLE LIQUIDITY2 INSTRUMENTS 1100 1000 666 900 No credit arrangement 571 800 contains earnings
Slide 110: Key Stainless Product Categories by Alloy Content
APPENDIX Key Stainless Product Categories by Alloy Content MARTENSITIC Ferritic AUSTENITIC (400 SERIES) (300 SERIES) Exceptionally hard steel Resistant to stress Tough & strong in a wide corrosion & cheap temperature range Cutlery, razor blades, Car exhausts, conveyor Boiler, aeronautics, cutting to