Aperam S.A. · EURONEXT:APAM
Aperam — Global Steel and Mining Conference, Credit Suisse 2016
35 slides from Aperam's conference presentation, Sep 12, 2016
Slide 1: Global Steel and Mining Conference, Credit Suisse
Global Steel and Mining Conference, Credit Suisse September 12th, 2016 Timoteo Di Maulo – Chief Executive 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 fundamentals
Global Steel and Mining Conference, Credit Suisse Aperam’s fundamentals
Slide 4: Solid and diversified sources of profitability
Aperam’s fundamentals Solid and diversified sources of profitability Aperam sales breakdown by destination (FY 2015) Aperam EBITDA breakdown (FY 2015) USA Alloys & Asia & Africa 7% Services & Specialties 10% Solutions 8% 8% Stainless & Electrical Steel Europe Brazil & Latin 46% America 18% Europe 65
Slide 5: 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 10 500 600 GENK ISBERGUES GUEUGNON 10 000 500 HA&P HAP 3 HAP 3 RD 79 lines 9 500 400 CR mi
Slide 6: 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 Range of products Caracas (Venezuela) A complete range of stainless steel grades Stainless steel Colombia (austenitics, ferritics, duplex, martensitics) Ecuador Grain oriented electric steel
Slide 7: An industrial footprint in Europe and South America
Aperam’s fundamentals An industrial footprint in Europe and South America, perfectly complemented with global service centres and sales network Steel making Finishing line Sales subsidiaries and representative offices Sales agencies Steel Service Centers Services & Solutions Division offers a key co
Slide 8: A leading position in nickel alloys
Aperam’s fundamentals A leading position in nickel alloys Global nickel alloys producers (kt in 2014) Aperam Alloys & Specialties geographical footprint Rescal Amilly Imhua Wire drawing The magnetic parts company 40 35 nn Transformation 30 n workshop 25 n n 20 Imphy 15 ICS (JV) 10 5 0 Meltshop, wire
Slide 9: Strong cash generation throughout the cycle
Aperam’s fundamentals Strong cash generation throughout the cycle Cumulative free cash flow 2011-H1’16 (USD million) Free cash flow evolution (USD million) 700 300 600 250 500 200 400 150 300 100 200 50 100 0 0 2011 2012 2013 2014 2015 H1 2016 2011 2012 2013 2014 2015 H1 2015 H1 2016 Aperam has gene
Slide 10: A solid Balance Sheet
Aperam’s fundamentals A solid Balance Sheet Total Financial Debt breakdown Financial Debt maturity profile (USD million) as of June 30, 2016 [1] as of June 30, 2016 [1] 600 500 400 300 200 100 0 Convertible bonds BBF Others 2016 2017 2018 >2019 A robust balance sheet and debt structure, mainly repre
Slide 11: Environment and markets
Global Steel and Mining Conference, Credit Suisse Environment and markets
Slide 12: Asian stainless steel overcapacity remains
Environment and markets Asian stainless steel overcapacity remains Upstream operational capacity of the Chinese industry Downstream operational capacity of the Chinese industry (in million tonnes) (in million tonnes) 40 20 30 15 20 10 10 5 - - Domestic consumption and net exports Overcapacity Domest
Slide 13: European restructuring is completed
Environment and markets European restructuring is completed Upstream operational capacity of the European industry Downstream operational capacity of the European industry (in million tonnes) (in million tonnes) 8,5 4,5 8,0 7,5 4,0 7,0 6,5 3,5 2011 2012 2013 2014 2015 2015E 2016F 2011 2012 2013 2014
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) 3,5 8,5 80 75 3,0 75 70 2,5 8,0 70 65 2,0 65 60 7,5 60 1,5 55 55 1,0 50 7
Slide 15: South American stainless steel apparent demand remains stable
Environment and markets South American stainless steel apparent demand remains stable at 2015 level Stainless steel Brazilian apparent consumption Stainless steel flat stainless steel consumption per capita (in thousand tonnes) (kg/year) 350 400 8 350 7 300 300 6 250 250 5 200 200 4 150 150 3 100 10
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: 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) 21 000 500 19 000 400 17 000 400 15 000 300 13 000 300 11 000 200 9 000 200 100 7 000 5 000 100 0 2013 20
Slide 18: European stainless steel prices have shown the best resilience
Environment and markets European stainless steel prices have shown the best resilience CR stainless steel products imports in Europe Chinese versus European CR 304 2B 2mm coil transaction (in %) price (USD/t) 30% 5000 4500 20% 4000 3500 3000 10% 2500 2000 0% 1500 2012 2013 2014 2015 H1 2016 Chinese
Slide 19: Aperam's performance
Global Steel and Mining Conference, Credit Suisse Aperam’s performance
Slide 20: 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 in Q1 due to market Health and frequency & Safety internal initiatives butinQ2 rate of 2.1 Q2expected 2016 to be more challenging * WorldSteel-standard: Fr = lost time Injuries per
Slide 21: Solid evolution of profitability
Aperam’s performance Solid evolution of profitability Ebitda evolution Net result evolution (USD million) (USD million) 12,3% 85 0,9 10,6% 11,0% 10,4% 9,7% 9,7% 75 0,85 0,8 65 0,68 0,7 0,63 55 0,6 0,54 45 0,40 0,42 0,5 155 133 35 66 0,4 123 108 105 112 53 25 49 0,3 42 15 31 33 0,2 5 0,1 -5 0 Q1 2015
Slide 22: Second quarter operating performance
Aperam’s performance Second quarter operating performance Shipments (‘000t) Q2 2016 EBITDA per division (USD million) [1] 520 486 483 476 101 95 455 90 90 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 EBITDA (USD million) 155 123 27 108 105 112 19 19 8 8 67 6 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q4 201
Slide 23: Leadership Journey
Aperam’s performance 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), Gueugnon (CAP10) Tranche 1 and Timoteo (Sendzimir Mill #1). 550 USD52m of Capex • Upgra
Slide 24: Sustainable cash flow from operations
Financial results Sustainable cash flow from operations Aperam net debt and gearing[1] evolution Aperam Net Debt / Ebitda evolution, x (USD million) 29% 4,0 3,76 1 200 30% 26% 26% 3,5 1 000 23% 25% 3,0 20% 2,60 800 20% 2,5 2,36 2,20 14% 2,0 600 15% 1066 11% 878 1,5 400 816 10% 690 0,98 1,0 536 0,63
Slide 25: Steep reduction in net interest and financing costs
Financial results Steep reduction in net interest and financing costs Net interest & financing costs (USD million) Aperam Debt restructuring actions Strong decrease of net interest and financing costs, especially 70 cash interest costs, thanks to the financing restructuring actions 59 taken since 20
Slide 26: Credit Rating: one of the fastest re-rating
Financial results Credit Rating: one of the fastest re-rating Aperam rating evolution with S&P Aperam rating evolution with Moody’s BBB- 5 Baa3 5 BB+ 4 Ba1 4 BB 3 Ba2 3 BB- Ba3 2 2 B+ B1 1 1 B B2 0 0 Dec-10 Jun-11 Dec-11 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Dec-10 Jun-11 Dec-11 Dec-12 Ju
Slide 27: Solid financial ratios
Aperam’s performance Solid financial ratios Profitability ratio Debt ratio 700 12% 6,0 120% 11% N/A N/A 10% 10% 600 10% 5,0 93% 100% 500 7% 8% 4,0 69% 80% 400 6% 3,0 60% 300 4% 35% 4% 2,0 33% 40% 200 3% 20% 2% 1,0 14% 20% 100 0 0% 0,0 0% FY 2014 FY2015 FY 2014 FY2015 FY 2014 FY2015 FY 2014 FY2015 FY
Slide 28: Aperam's value strategy
Global Steel and Mining Conference, Credit Suisse Aperam’s value strategy: A customer driven company focused on its self-help story
Slide 29: Unlocking Aperam's potential through Leadership Journey & Top line strategy
Aperam’s value strategy Unlocking Aperam’s potential through Leadership Journey & Top line strategy Leadership Journey® initiatives Top Line development plan (shipment in kt ) (Enhancing the potential of best performing assets) (Product & Service Differentiation) 250 Launched at the early stage of t
Slide 30: 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 31: 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 32: Priority on maintaining a strong Balance Sheet
Aperam’s value strategy Priority on maintaining a strong Balance Sheet consistent with Investment Grade Financial ratios. Cash resources to be allocated to: Company Invest in sustaining and upgrading the company’s assets base to continuously sustainability reinforce Leadership Journey and Top Line S
Slide 33: Q&A
Q&A
Slide 34: 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 35: Definitive European anti-dumping duties on China and Taiwan stainless steel imports
Environment and markets Definitive European anti-dumping duties on China and Taiwan stainless steel imports from August 27, 2015 Anti-dumping development • On May 13, 2014, Eurofer filed an antidumping complaint to European Commission • On June 26, 2014, European Commission started investigation on
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