Slide 1: Q1 2020 results
Q1 2020 results 6 May 2020 The sustainable top yielding company in Euro Materials 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: Content
Content 1. Q1 2020 highlights page 4 2. Financial results page 11 3. Value Strategy page 16 4. ESG page 25 5. Business Overview page 37 • Group Segments & corporate structure page 38 • Stainless & Electrical Steel Europe page 44 • Stainless & Electrical Steel South America page 48 • Services & Solut
Slide 4: Health & Safety Performance
Health & Safety Performance Health & Safety frequency rate of 1.9 in Q1 2020 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 1Q 07 3Q 07 1Q 08 3Q 08 1Q 09 3Q 09 1Q 10 3Q 10 1Q 11 3Q 11 1Q 12 3Q 12 1Q 13 3Q 13 1Q 14 3Q 14 1Q 15 3Q 15 1Q 16 3Q 16 1Q 17 3Q 17 1Q 18 3Q 18 1Q 19 Q3 19 1Q 20 Health & Safety of our pe
Slide 5: Q1 2020 Operational highlights
Q1 2020 Operational highlights Q1 was a seasonally normal quarter till the second half of March when COVID related disruptions resulted in extra costs Q1 2020 key developments adj EBITDA was impacted by COVID related costs and higher inventory valuation effects. Solid cash flow despite seasonal incr
Slide 6: Q1 2020 Financial highlights
Q1 2020 Financial highlights Inventory devaluation and COVID costs caused qoq adj EBITDA decrease Solid free cash flow despite seasonally higher working capital Q1 key comments • Seasonal pick up in shipments was EURm Q1 20 Q4 19 qoq Q1 19 yoy supported by full import quotas Sales 1,049 1,000 5% 1,1
Slide 7: Aperam is a resilient company
Aperam is a resilient company Our solid balance sheet forms the basis for weathering the pandemic Convincing financial scorecard Aperam was FCF positive in every year since 2008 • Solid balance sheet with 0.3x NFD/EBITDA 500 10% 9% 12% 400 8% • No earnings related covenants in any 300 4% 6% 6% 6% 5%
Slide 8: Environment & markets
Environment & markets Market share of imports has contracted but remains elevated. Inventory and price premium versus Asia are both in normal range Market share of imports drops to 24.6% - Nickel spike has completely reversed stable CR, clearly lower HR and stainless price followed 450,000 40% 3,500
Slide 9: Outlook & COVID response
Outlook & COVID response Quick & decisive action has been taken Operational & financial measures • Health & safety measure in all plants to keep our employees safe • Capacity is aligned with demand. All production plants are operating without bottlenecks • Raw material supply is fully secured • Maxi
Slide 10: Corporate Access
Corporate Access Post Q1 2020 schedule • 12. May Investor calls France Oddo • 12. May 2020 Global Metals, Mining and Steel conf. Bank of America • 13. May 2020 Global Metals, Mining and Steel conf. Bank of America • 14. May Investor calls France Oddo • 15. May Investor calls UK & Ireland JP Morgan •
Slide 11: Financial Results
Financial Results Middle East Training Center, Beirut Rafic Hariri International Airport, Lebanon - Khatib & Alami Executed using grade316L with Uginox Méca 8ND fini 11
Slide 12: Financial results Q1 2020: Negative inventory valuation and COVID costs conceal a good start
Financial results Q1 2020: Negative inventory valuation and COVID costs conceal a good start to the year Stainless & Electrical Steel Services & Solutions Alloys & Specialties 75 1,489 177 1,237 48 124 989 109 28 adj EBITDA* adj EBITDA* adj EBITDA* (EURm) (EURm) (EURm) 71 16 a dj EBITDA/t a dj EBITD
Slide 13: Financial results Q1 2020: Volumes rebound seasonally but price pressure remained high
Financial results Q1 2020: Volumes rebound seasonally but price pressure remained high and COVID shutdown added costs Shipments rebound seasonally and benefitted Q1 adj. EBITDA reflects negative inventory valuation from quota restrictions and COVID-19 related costs 12.3% 517 11.6% 508 501 11.0% 150
Slide 14: Financial results Q1 2020: Upstream reflects COVID related plant shutdown costs
Financial results Q1 2020: Upstream reflects COVID related plant shutdown costs and neg valuation. S&S benefits from higher volumes One-off items hide a good start to the year EPS: taxes balanced lower EBITDA adj. EBITDA (EURm) 0.99 0.99 0.94 0.87 0.69 71 0.47 53 85 80 0.36 0.36 72 0.30 57 49 37 25
Slide 15: Financial results Q1 2020: Solid cash generation with 90% cash conversion
Financial results Q1 2020: Solid cash generation with 90% cash conversion. Seasonally higher working capital in line with higher volumes Minor net debt increase due to increase in working capital Solid FCF despite volume driven working capital build and dividend payment EURm 200 140 100 72 62 35 45
Slide 16: Value Strategy
Value Strategy Adobe stock © Adobe Stock 16
Slide 17: Investment case & value strategy: Guiding principle
Investment case & value strategy Guiding principle: Being a sustainable safe and profitable company Aperam foundation Lowest cost footprint Industry leading in Europe cash flow & & sole producer financial discipline in S. America Strong balance sheet & highest dividend Self help strategy (Leadership
Slide 18: Investment case & value strategy: Financial policy
Investment case & value strategy Financial policy: Strong balance sheet, investment in long term growth & sustainability and solid cash returns to shareholders Financial Policy 2020 ~EUR50m maintenance Company Sustainability, Upgrade and Transformation ~EUR15m Leadership Journey© ~EUR35m capex in Ge
Slide 19: Leadership Journey: Self help has turned Aperam into a resilient company
Investment case & value strategy Leadership Journey© Self help has turned Aperam into a resilient, profitable and cash generative company Phase 1 (USD350m): Phase 2 (USD225m): Phase 3 (EUR200m): 2011-13 Restructuring 2014-17 Asset upgrade 2018-20 Transformation Realized cost savings Number of produc
Slide 20: Track record: Aperam a solid performer even in challenging times
Investment case & value strategy Track record: Aperam a solid performer even in challenging times Transformation yields a positive net income even Solid operating performance despite market headwind in a recessionary market environment 12.7% 4.00 3.39 11.8% 2.47 10.6% 10.8% 1.99 1.82 8.9% 0.91 8.0%
Slide 21: Resilience: Strong balance sheet, high liquidity and low maintenance capex
Investment case & value strategy Resilience: Strong balance sheet, high liquidity and low maintenance capex A strong balance sheet forms a solid base Low maintenance capex + solid investment in a volatile industry* in growth improvement 3.7 200 2.3 175 150 47 84 1.1 125 61 0.6 619 0.3 0.1 0.2 100 44
Slide 22: Shareholder focus: High and stable FCF
Investment case & value strategy Shareholder focus: We care about investors and can support it due to a high & stable FCF Solid cash generation through the cycle 126% 112% High profitability 69% 78% 85% 67% 59% 45% 377 374 400 354 295 Low cash taxes* 212 184 152 2012 2013 2014 2015 2016 2017 2018 20
Slide 23: Portfolio improvement: Top line strategy
Investment case & value strategy Portfolio improvement: Top line strategy Constant innovation to shift portfolio into attractive growth / margin segments New products in sales 130 125 120 Growth Niches Index 2015=100 115 Margin management / 110 demand driven 105 100 95 New Asian 90 competition 85 80
Slide 24: ESG excellence: Take a look at Aperam from an ESG perspective
Investment case & value strategy ESG excellence: Take a look at Aperam from an ESG perspective Our mission is to produce reliable, 100% recyclable, green stainless steel Products Non toxic, long lifespan and 100% indefinitely recyclable without loss of quality Climate change We have the lowest CO2 f
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 Aperam produces the greenest stainless steel globally 25
Slide 26: ESG summary: ESG is core at Aperam and starts at the top
ESG summary ESG is core at Aperam and starts at the top We take E, S and G seriously Governance & Stakeholders Social • Our high ethical standards are reflected • Our people are colleagues with whom we share in our robust corporate governance and values and a common future – Their safety is our non-
Slide 27: ESG summary: Our products are environmentally friendly
ESG summary Our products are environmentally friendly Our mission is to produce reliable, 100% recyclable, green stainless steel • Our stainless & alloy products are 100% recyclable - without any loss of quality • Our products have a very long useful life – they support and enable a sustainable glob
Slide 28: ESG summary: Aperam produces sustainably and responsibly
ESG summary Aperam produces sustainably and responsibly Our mission is to produce reliable, 100% recyclable, green stainless steel Renewable energy Recycling In our BioEnergia unit, based in Brazil, we produce charcoal from our FSC-certified sustainably cultivated eucalyptus forests in Minas Gerais
Slide 29: Aperam supports the United Nations' Sustainable Development Goals
ESG summary Aperam supports the United Nations’ Sustainable Development Goals We take broad responsibility: our Products and Environmental and Social action Gender balance is ranked In our forestry, located on highly on our priority list as hydric-stressed areas like from 2017 and has received our o
Slide 30: ESG summary Social: Our people are our asset
ESG summary Social: Our people are our asset Criteria 2020 Target Aperam 2019 status Steel industry 2017* Lost-time injury frequency rate <1 1.7 ! 2.93 Employee satisfaction1 N/A 86% 78% Women 12% of staff Diversity Increase 20% of exempts Training hours/FTE Increase 35.5 Absenteeism 2.0 3.1 Safet
Slide 31: ESG summary Environment: A best in class footprint
ESG summary Environment: A best in class footprint² Criteria Target 2030 Aperam 2019 status Steel industry 2017 Energy intensity* 12.1 GJ/t -5% vs 2015 13.3 GJ/t +4% ! CO2 intensity** 0.45 t/t -15% vs 2015 0.48 t/t -11% 0.95 t/t² Water consumption 5.9 m3 /t -40% vs 2015 11.8 m3 /t +16% ! Dust inte
Slide 32: Environment: convincing environmental track record and clear improvement targets
ESG summary Environment: Aperam has a convincing environmental track record and clear improvement targets. Low volumes impacted 2019 CO2 emissions (t/t crude steel)* Energy consumption (GJ/t crude steel) 0.78 0.70 0.72 14.7 14.0 13.8 14.0 13.6 13.6 0.61 13.3 0.58 13.0 12.8 12.8 12.4 12.5 0.54 12.1 0
Slide 33: Aperam's CO2 footprint: industry leading CO2 footprint
ESG Aperam’s CO2 footprint: Aperam has a industry leading CO2 footprint and produces the greenest stainless steel globally Aperam has a convincing track record and clear improvement targets set for 2030 0.47 t CO2 /t* Raw materials EU Taxonomy** Electricity Threshold 0.352 t/t Stainless scrap APAM 0
Slide 34: Environment: Bio Energia & recycling give best in class footprint
ESG summary Environment: Bio Energia & recycling give Aperam a best in class climate change footprint Aperam energy mix 2019 Aperam’s has the smallest CO2 footprint in the industry* CO2 t/t scope 1+2 2% 1.0 29% 0.5 37% Aperam Stainless Industry 1% CO2 t/t ** 31% Factor 4x >8 ~2 Charcoal Natural Gas
Slide 35: Governance: Our leadership team
ESG summary Governance: Our leadership team Key facts & compensation A diverse & experienced team • Entrusted with day-to-day management of the Company • Appointed by the Board of Directors • Experience and industry know how • Average age: 49 / 6 Nationalities • CEO: responsible for Aperam’s sustain
Slide 36: Governance: Board of directors and shareholder structure
ESG summary Governance: Board of directors and shareholder structure Principles of our board Shareholder structure ● Responsible for strategic direction and oversight of the business, as well as for appointing senior management ● Election subject to shareholder approval. Directors are 8% elected for
Slide 37: Business overview
Business overview Musée © Musée des Confluences in Lyon, France. Architect: Coop Himmelb(l)au des Confluences, Sergio Lyon - France Pirrone. Stainles COOP steel used: HIMMELB(L)AU Aperam © Sergio 316L/1.4404 Pirrone with Uginox MeExecuted using grade 316L - microblasted finish 37
Slide 38: Group segments & corporate structure
Group segments & corporate structure 38
Slide 39: Group: Segments & corporate structure
Business overview Group: Segments & corporate structure* Stainless & Electrical Steel Services & Solutions Alloys & Specialties 2.5mt production capacity 40 kt production capacity 1.7mt of gross shipments 706kt of gross shipments 36kt of gross shipments 73% of group adj EBITDA 13% of group adj EBITD
Slide 40: Group: Segments & corporate structure II
Business overview Group: Segments & corporate structure II Production assets in Europe and South America Châtelet, Belgium Genk, Belgium Gueugnon, France Isbergues, France Timóteo, Brazil Imphy, France Location & facts Location & facts Location & facts Location & facts Location & facts Location & fa
Slide 41: Group: Segments & corporate structure III
Business overview Group: Segments & corporate structure III Aperam’s value chain Slabs Hot rolling Cold rolling / Finishing Service Isbergues Direct Châtelet 0.35Mt Sale 1.0Mt Service Center Châtelet Genk Stainless 2.8Mt 0.7Mt flat Direct Genk Sale End customers 1.0Mt Gueugnon Service Steel service
Slide 42: Group: A balanced risk profile and customer structure
Business overview Group: A balanced risk profile and customer structure Shipment split by segment 2019* Adj EBITDA contribution by segment 2019* 13% 29% S&E Europe S&E Europe S&E S. America 14% 42% S&E S. America 45% 1% A&S A&S S&S S&S 25% 31% Revenue by region 2019 Revenue by customer industry 2019
Slide 43: Group: Self help has transformed the group
Business overview Group: Self help has transformed the group. Higher cash generation and profitability even in adverse market conditions Adj EBITDA by segment (EURm) Shipment by segment (kt) 600 559 504 1,936 1,972 1,917 451 455 1,886 500 368 1,813 340 1,786 400 1,728 300 220 1,683 168 200 100 - 201
Slide 44: Stainless & Electrical Steel Europe
Stainless & Electrical Steel Europe 44
Slide 45: S&E Steel Europe: Self-help measures yield robust operational performance
Business overview S&E Steel Europe: Self-help measures yield a robust operational performance despite a price and volume squeeze Major adj EBITDA contributor 2019 Robust profitability capitalizing on restructuring 12.8% 11.1% 8.8% 9.1% 13% 6.7% 352 6.0% S&E Europe 2.7% 258 260 14% 42% S&E S. America
Slide 46: S&E Steel Europe: Leverage Aperam's unique position
Business overview S&E Steel Europe: Leverage Aperam’s unique position European stainless steel industrial footprint Aperam key competitive advantage Finishing line Steel making • The only integrated upstream Sourcing Sourcing operations in the heart of Europe • Superior access to scrap supply Outoku
Slide 47: EU trade action update
EU trade action update Further actions against unfair trade have been initiated in addition to the existing Safeguard NEW Safeguard Anti-dumping (AD) Countervailing duties (CVD) • Maintain traditional trade flows • Duty on imports that are priced below • Neutralize effect of subsidies that Aim fair
Slide 48: Stainless & Electrical Steel South America
Stainless & Electrical Steel South America 48
Slide 49: S&E Steel South America: A flexible, agile and highly profitable asset
Business overview S&E Steel South America: A flexible, agile and highly profitable asset A significant adj EBITDA contributor 2019 despite Earnings reflect weak domestic economic environment demanding conditions 17% 19% 17% 13% 14% 13% 13% 176 13% 167 162 S&E Europe 8% 14% 42% S&E S. America 120 113
Slide 50: S&E Steel South America: Our Brazil asset is unique
Business overview S&E Steel South America: Our Brazil asset is unique – the only stainless steel producer in South America Aperam South America footprint Upstream integration Caracas (Venezuela) Cost competitive & environmentally Cost competitive & environ-mentally friendly charcoal from own Bio Ene
Slide 51: S&E Steel South America: Brazil can switch flexibly between products and markets
Business overview S&E Steel South America: Brazil can switch flexibly between products and markets to maximize profitability Key pillars Aperam’s asset optimization in South America • A wide range of products and geographical Flexible product mix Flexible regional mix sales enables further optimizat
Slide 52: S&E Steel South America: Ample opportunity for cyclical and structural growth
Business overview S&E Steel South America: Brazil offers ample opportunity for both cyclical and structural growth Brazil consumes substantially below the global trend line Brazil opportunities Short term: reviving the normal investment cycle in the economy. Large scale infrastructure & energy pro
Slide 53: S&E Steel South America: Brazilian protections against unfair market behaviour
Business overview S&E Steel South America: Brazilian protections against unfair market behaviour Type of products Import duties status Anti-dumping status China, Taiwan Stainless Steel Flat Normal import duties are 14% AD duties starting October 4th, 2019 for 5 years Products China USD175/t
Slide 54: Services & Solutions
Services & Solutions 54
Slide 55: Services & Solutions: stronger partnership with customers enhances margins
Business overview Services & Solutions: stronger partnership with customers enhances margins A significant adj EBITDA contributor 2019 despite trough A profitable Services & Solutions thanks to its focus on conditions service oriented customers 100 19,000 80 17,000 13% 83 15,000 S&E Europe 60 65 70
Slide 56: Services & Solutions: Adding value downstream
Business overview Services & Solutions: Adding value downstream Services & Solutions value chain Input - - - - - - Service Centers - - - - - - Hot rolled coil / Cutting/ Polishing Packaging Logistics Customer Cold rolled coil Slitting Brushing Slit / Machined & Slit deburred deburred Square Round -
Slide 57: Alloys & Specialties
Alloys & Specialties 57
Slide 58: Alloys & Specialties: attractive niche market with high margins
Business overview Alloys & Specialties: attractive niche market with high margins High profitability due to end products & end user Aperam’s high value-added segment 2019 orientation 1,407 1,278 1,385 1,191 1,219 1,264 1,147 13% 864 50 S&E Europe 43 44 44 46 46 39 14% 42% S&E S. America 26 A&S S&S 3
Slide 59: Alloys & Specialties: global top player in nickel alloys
Business overview Alloys & Specialties: attractive niche market with high margins Aperam is global top player in nickel alloys and strong in Aperam Alloys & Specialties geographical footprint long products (kt) Rescal Amilly Imhua Wire The magnetic parts drawing company n n nnn n n n Imphy ICS (JV)
Slide 60: Alloys & Specialties: Specialty alloys add stability and profitable growth
Business overview Alloys & Specialties: Specialty alloys add stability and profitable growth element Innovation is key for premium …to cater for highly sophisticated …yielding growth opportunities and specialties… and evolving needs… margin stability R&D intensive industry High growth end market app
Slide 61: Appendix
Appendix 61 Résidence Hôtelière du Rail, Montparnasse station, Paris - France - aasb_agence d‘architecture suzelbrout - Executed using grade 304L, with Uginox Mat finish
Slide 62: Key stainless product categories by alloy content
Appendix Key stainless product categories by alloy content Martensitic Ferritic (400 series) Austenitic (300 series) <0.1% <0.1% <0.1% 17% 16-21% 10.5- 30% <1.5% 6-26% <4.5% <7% Car exhausts, conveyor chains, cooking utensils, Boiler, aeronautics, electronic components, Cutlery, cutting tools, const